Ten­cent claims surge in dig­i­tal red en­velopes over New Year

The Pak Banker - - COMPANIES/BOSS -

Ten­cent Hold­ings Ltd has re­ported a ten­fold surge in the num­ber of dig­i­tal red en­velopes, known as hong­bao in Chi­nese, sent on WeChat dur­ing the week­long Spring Fes­ti­val hol­i­day, de­spite both its main In­ter­net ri­vals launch­ing cam­paigns to lure mo­bile-pay­ment users.

Ten­cent said 516 mil­lion WeChat users ex­changed 32.1 bil­lion cash-filled vir­tual en­velopes be­tween Feb 7 and 12, com­pared with 3.27 bil­lion last year.

The huge rise in num­ber came as Baidu Inc and Alibaba Group Hold­ings Ltd both joined the com­pe­ti­tion, in­vest­ing heav­ily to make ex­chang­ing dig­i­tal en­velopes a vi­ral phe­nom­e­non dur­ing this year's hol­i­day.

Of­fer­ing red en­velopes stuffed with cash to fam­ily mem­bers and friends is one of the fes­ti­val's age-old tra­di­tions, but it was given a dig­i­tal twist, first by Ten­cent in 2014, be­fore be­com­ing a three-way fight this year be­tween the Chi­nese In­ter­net ti­tans.

Ex­chang­ing dig­i­tal en­velopes re­quires users to con­nect their debit cards with their ac­counts on the firms' ap­pli­ca­tions.

An­a­lysts say that the com­pe­ti­tion is re­ally about gain­ing con­trol of China's boom­ing mo­bile pay­ments mar­ket, which was es­ti­mated at 1.6 tril­lion yuan ($246.15 bil­lion) in 2015 by con­sul­tancy Analysys In­ter­na­tional.

Ali­pay Wal­let, the mo­bile pay­ment app af­fil­i­ated with Alibaba, said more than 100 mil­lion peo­ple par­tic­i­pated in its red en­ve­lope cam­paign on Feb 7 alone, the Lu­nar New Year's Eve.

It spent 800 mil­lion yuan on pro­mot­ing its cam­paign, prac­ti­cally send­ing peo­ple free money to en­cour­age them to par­tic­i­pate.

Baidu Wal­let, Baidu's mo­bile pay­ment arm, said it gave out 4.2 bil­lion yuan worth of dig­i­tal en­velopes, in­clud­ing coupons and cash, at­tract­ing 11.2 bil­lion vis­its on Feb 7 and 8.

Li Chao, an an­a­lyst at In­ter­net con­sul­tancy iRe­search Con­sult­ing Group, said Ten­cent's WeChat red en­velopes re­mained the clear win­ner among mo­bile In­ter­net users, with 516 mil­lion users send­ing them, out of China's to­tal of 620 mil­lion mo­bile In­ter­net users.

"But that doesn't mean Alibaba and Baidu's ef­forts were in vain," he said, adding Alibaba had gained some key data that will help it fur­ther de­velop its In­ter­net fi­nance ser­vices.

"Ali­pay Wal­let made it a rule, that peo­ple had to con­nect with friends on the ap­pli­ca­tion first be­fore re­ceiv­ing any free red en­velopes. "The com­pany can now tap into that data, to im­prove risk con­trols for its fi­nan­cial ser­vices," he said.

Ali­pay claimed re­cently its red en­ve­lope cam­paign helped se­cure 1.1 bil­lion pairs of friends on its mo­bile pay­ment ap­pli­ca­tion. Cao Lei, di­rec­tor at Hangzhou-based China E-Com­merce Re­search Cen­ter, said dig­i­tal red en­velopes have man­aged to con­nect more peo­ple us­ing cash via smart­phones.

Tra­di­tion­ally, Chi­nese peo­ple gives red en­velopes filled with money, known as "Hong­bao," to friends and rel­a­tives dur­ing the Lu­nar New Year cel­e­bra­tions.

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