As people around the world prepare for the Lunar New Year, which is also the biggest annual celebration in China, internet companies are gearing up to dole out billions of renminbi via virtual red packets.
Red packets, or hongbaos, are cash gifts that signal good fortune. Powered by internet companies and the growth of e-commerce, the tradition has taken an electronic form. They are now routinely given out as promotions to entice customers with cash rewards and coupons.
The transformation took place six years ago, when Tencent’s WeChat introduced, through WeChat Pay, its first digital red packet. That year, in 2014, 16 million packets went from one hand to another during the Lunar New Year holiday. Only three years after that, the number increased by 570% to hit 46 billion red packets.
WeChat Pay’s biggest competitor, Alipay, quickly jumped on the wagon and rolled out a campaign in 2016 for its users to capture a set of five fu (“good fortune”) cards on its app. Users with the five cards would then share a red packet worth RMB 215 million (USD 31 million) on that Lunar New Year Eve.
Eventually, 790,000 users each got RMB 271.66 (USD 39.56) that year. Although some users were also reportedly unhappy because they didn’t get a share from Alipay’s rich red packet lottery, the campaign was popular enough to inspire other internet companies to also launch Lunar New Year’s promotions and giveaways.
In 2019, 450 million people, roughly one in every three Chinese, participated in Alipay’s five fu cards collecting activity.
In 2020, just a few days ahead of the Lunar New Year, industry leaders have declared a total of RMB 10 billion (USD 1.45 billion) in forthcoming gift cards and cash prizes. Contrary to the previous year, 2020 will see a group of “newcomers” spending big, even more than the three commonly known BATs —Baidu, Alipay, and Tencent.
E-commerce platforms Pinduoduo and Taobao will burn over RMB 4 billion and RMB 2 billion, respectively, for holiday sales, while ByteDance’s Douyin will give away more than RMB 2 billion in red packets to its users.
China Central Television’s (CCTV) Spring Festival Gala is the apex of TV advertising in the country, with many internet companies jostling to partner with the event. This year, short-video app Kuaishou (known internationally as Kwai) formed an exclusive interactivity partnership, beating Alibaba, Pinduoduo, and ByteDance. It promises to dole out a record-breaking RMB 1 billion in digital red packets to its users.