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February 8, 2017

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‘Lucky money’ falls prey to digital gimmicks

THE digital age is transforming the old and beloved Spring Festival tradition of giving “lucky money” in red packets, or hongbao.

The red envelopes with Lunar New Year holiday designs were once given primarily to children and young singles, but recipients have expanded as the gift-giving went online in a big way.

But are consumers tiring of the new fad?

Tencent and Alibaba, the two Internet giants of online hongbao, apparently worry about that. They are now seeking to forge new gimmicks, including closer ties between online giving and offline redemption of lucky money and coupons. New Pokemon Go-style features are also being adopted.

The trend toward online hongbao really kicked off in 2015, when Tencent sponsored the annual Spring Festival gala on China Central Television and expanded the idea of online “lucky money” to a nationwide audience.

Many of Tencent’s WeChat users were eager to send digital red packets, even outside of the holiday.

It’s all part of the commercialization of online payments and linked services to offline retail. Consumers are encouraged to link their credit and debit cards to their WeChat accounts and pay by smartphone apps.

Watching CCTV Spring Festival gala anchors reading out hongbao clues on WeChat and Alipay to remind viewers to turn to their smartphones instead of their TV screens, and seeing staggering, hourly figures on the number of red packets being sent made some people shake their head in sorrow about the way in which Lunar New Year traditions are being hijacked for profit.

Like it or not, the marketing gimmick has paid off. Since WeChat started to use its digital payment function as a major marketing tool during the 2015 Spring Festival, the digital payment scenario has changed a lot.

The so-called “hongbao wars” have been accused of inciting “phubbing,” the practice of being glued to one’s phone and ignoring people around you. That can be especially irritating to the older generation as whole families gather for traditional holiday get-togethers.

This year, both Tencent and Alibaba embraced augmented reality features in their hongbao pitches.

When the smartphone camera is enabled at certain locations, such as shopping malls, restaurants or fast-food outlets, virtual cartoon figures would appear on screen, sending gift cards, cash coupons and virtual red packets.

It all adds up to a feeling of being bombarded with endless digital marketing stunts. However, one fact was different this year. The television Spring Festival Gala didn’t have an official sponsor, after Tencent and Alibaba participation in 2015 and 2016.

This year, the Internet duo was encouraging users to turn to offline treasure hunts, enabled by clues sent via smartphones.

Alipay allowed users to mark “virtual red packets” on a digital map, with specific amounts and numbers set by each user. Other users could open these red packets by completing simple tasks while in the vicinity of those locales.

More than 160 million Alipay users collected the five “virtual lucky signs” needed to enter a lucky draw on Chinese New Year’s Eve. The number of participants in this new function and the volume of red packets sent by individual users over the holiday weren’t disclosed.

New realities

On the Lunar New Year’s Eve, digital red packets sent through WeChat rose three-quarters of a percent from a year earlier to 14.2 billion, with 760,000 per second at the peak period around midnight.

An augmented reality function was introduced on QQ, another popular chatting and social networking tool operated by Tencent. The campaign attracted 257 million QQ users over five days, with 250 million yuan (US$36 million) of cash and 3 billion yuan worth of coupons distributed at more than 4 million locations in 369 mainland cities. About two-thirds of participants were born after 1990.

Augmented reality provides easy connection with offline locations, one of the major reasons why both Internet giants are embracing the technology in their hongbao competition.

That rivalry for consumers is changing the digital equation. WeChat used to be considered the strongest in social networking and peer-to-peer communications, while Alibaba’s Alipay had the edge in payments and related financial services.

Now, the market share of Tencent’s payment arm Tenpay is quickly catching up with rival Alipay, hitting 38 percent against Alipay’s 50.4 percent at the end of the third quarter of last year, according to Internet consultancy Analysys International. At the end of 2015, Tenpay had only a 20.6 percent market share.

“Alipay hopes to accumulate resources in payment and other financial scenarios to better develop payment businesses,” said Alipay executive Guan Hua. “Social networking is not on our agenda.”

Consultant firm iResearch Inc noted that Tencent doesn’t want to rely on a single platform to market its payment services, so this year it is relying on QQ instead of WeChat for promotional activities.



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