Tencent, Alibaba Send Lunar New Year Revelers Money-Hunting

(Beijing) — Homebodies may miss out on lucky money doled out by China’s tech giants in the coming Lunar New Year, while their more-adventurous counterparts will be busy hunting for millions of yuan worth of digital coupons and cash that’s scattered across China.

The latest campaigns from Internet giants Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are a cybertwist to the tradition of giving and receiving red packets of auspicious gift money, or hongbao, during the Spring Festival. The pastime has become a hot topic for dinner conversations during the weeklong celebration and even an obsession for some, as friends and family try to “snatch” virtual envelopes on Tencent’s WeChat and on Alipay, the former financial arm of Alibaba.

Tencent and Alibaba have ramped up the “red-envelope wars” with augmented reality (AR) and location-based services in this year’s annual bid to boost their services.

Both have announced red-envelope treasure hunts inspired by the popular Pokemon Go mobile game for this year’s holiday, which falls at the end of January. Users can grab prize money and vouchers by completing simple tasks in the vicinity of locations where virtual hongbao are marked on a digital map.

Analysts say the fierce internet rivals may be using similar gimmicks, but their motives are quite different.

“Tencent is striving to increase its edge in payments through social circles and offline retail, while Alibaba’s edge remains with larger merchants and e-commerce,” said Wang Pengbo, an analyst at market research firm Analysys.

Tencent is using its popular QQ instant messaging app to front its red-envelope wars this year, eschewing its better-known WeChat. QQ users within 100 meters of a clue marked on their map can guess which one of three red envelopes on their mobile screen contains prize money placed by friends and sponsors. The company said it has hidden 550 million yuan ($79.3 million) worth of cash and vouchers across the nation.

Tencent chose QQ in a bid to diversify from WeChat, which was the chief battleground for its virtual hongbao wars in the past. In 2016 alone, about 8 billion yuan changed hands on WeChat between friends, relatives and promotions to welcome the Lunar New Year.

“Tencent doesn’t want to be overly independent on one platform and wants to drive traffic back onto QQ,” said Li Chao, analyst at Beijing based consultancy IResearch. “As WeChat matures, Tencent cannot risk losing all its users should a competitor come up with something better.”

Meanwhile, Alipay will use similar technology in its hongbao promotion this year. Users can scan a Chinese character for luck and fortune and receive one of five tickets. They can then drop their tickets along the map, to be picked up by friends who approach the location. Those who collect all five tickets win eligibility to split 200 million yuan in cash.

Large brands like Procter & Gamble Co., KFC and Coca-Cola Co. will also be sprinkling lucky cash and vouchers along the map.

Unlike previous years, when Alipay’s red-envelope promotions were seen as a move to encroach on Tencent’s dominance in social networking, the same will not be the case this year. “Alipay hopes to accumulate resources in payment and other financial scenarios, so to better develop payment businesses. Social networking is not on our agenda,” said Alipay executive Guan Hua.

While the two rivals say their end goals are different, one place they agree is on the importance of human interaction during the annual family gatherings that are at the heart of the Spring Festival. Hongbao wars have been accused of inducing “phubbing,” or neglecting people in favor of a cellphone, as young and old alike ignore loved ones for fear of missing digital red envelopes.

“We hope that the experiment this year fusing AR technology will put human warmth back into the holidays, and enhance relationships instead of allowing a smartphone to get all your attention,” Guan said.

Tencent Vice President Yin Yi offered a similar sentiment. “We want to remind people the basic essence of hongbao, which is communication,” Yin said.

Contact reporter April Ma (fangjingma@caixin.com)