Ep. 38: Battle of the Red Packets

In episode 38 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma dive into this year’s Battle of the Red Packets. The name refers to the custom of money-giving, which is an important part of the Chinese New Year experience. It has also been taken over by Chinese internet companies as one of their main user acquisition events of the year.

Rui and Ying-Ying begin by sharing the history of hongbao, or “red packet.” In the Ming and Qing dynasties, the traditional gift was simply a stack of coins tied up with red string. With the popularity of paper money came the introduction of the red envelopes we see now. The so-called Battle of the Red Packets emerged in 2014, when WeChat fundamentally changed the rules of the game by allowing users to send digital red packets to the chat groups they are in within the app. WeChat essentially gamified the experience, coining the term 抢红包, or “grabbing red packets.” In the first year, 5 million users grabbed 20 million WeChat red packets 75 million times, from New Year’s Eve to 4 p.m. the next day.

Since 2014, the yearly phenomenon has taken on a life of its own. Listen to hear Rui and Ying-Ying discuss: What additional features has WeChat added to the red packets’ function? What was the link between WeChat and the CCTV Chinese New Year’s Gala? How does WeChat’s approach contrast with those of other platforms, such as Alibaba’s Alipay? What moves has Baidu made in all of this, and especially this year? What about relative newcomers Douyin and Kuaishou? Finally, in what way do red packets reflect real-life social concepts in China, such as reciprocity and hierarchy (so much so that a Tsinghua University professor has characterized WeChat red packets as a form of social capital accumulation)?

As always, you can find these stories and more at pandaily.com. Do let us know what you think of the show by leaving us an iTunes review, liking our Facebook page, and tweeting at us at @techbuzzchina to win some swag! Thanks also to our listeners over at our partner, dealstreetasia.com.

We’d like to give a shout-out to our friends over at Panda Club Stories, a bilingual children’s podcast with a big vision: to help raise multilingual and multicultural children through storytelling. Season 1 features well-known tales (and some lesser-known stories) of Chinese mythology. For our listeners who have kids: Join Panda Cub as she dives into the seas of dragon kings and explores jade palaces in the sky!


(Y: Ying-Ying Lu; R: Rui Ma;)

[00:00] R: Hey Techbuzzers! Happy Year of the Pig! 新年快乐!Today we are going to talk about the Battle of the Red Packets, or the custom of money-giving that is core to the Chinese New Year experience and which has been taken over by the Chinese internet companies as one of their main user acquisition events for the year.

Y: Especially when paired up with the largest TV event in China, the Spring Festival Gala, which regularly clocks in at over a billion viewers. You don’t get to collect much more human attention than that. So without further ado, because we have a lot to cover, let’s get started!

[1:01] Y: Hi everyone! We are TechBuzz China by Pandaily, powered by the Sinica Podcast Network!

R: We are a weekly podcast focused on giving you a peek into what’s buzzing within the tech community in China.   

Y: We uncover and contextualize unique insights, perspectives and takeaways on headline tech news that don’t always make it into English language coverage. So you can be smarter about the world of China tech.

R: TechBuzz China is a part of Pandaily.com, an English language site that tells you “everything about China’s innovation.” I’m one of your two co-hosts, Rui Ma.

Y: And I’m your other co-host, Ying-Ying Lu. We’d like to acknowledge our partners DealStreetAsia and SupChina, creator of the Sinica Podcast Network! In addition to TechBuzz, you can also find Sinica which covers current affairs, NuVoices on women, the business-oriented ChinaEconTalk, and the Caixin-Sinica Business Brief from China’s leading business magazine. Check these out, guys!

R: In the spirit of today’s topic, if you leave us a review on iTunes or whatever other platform you use, please send us a screenshot, and we’ll be happy to send you a small holiday hongbao in WeChat! Just e-mail us at rui at pandaily dot com, rui@pandaily.com, for further instructions.  As you might say, 恭喜发财,红包拿来!

[2:30] Y: So before we get started, let’s learn a little history lesson is helpful for setting context today. Hongbao, 红包 which literally means “red packet,” is also known as 压岁钱, which is a sort of play on words that means “money to ward off evil or bad luck.”  

R: Right, in fact, it wasn’t until after paper money became popular that hongbaos were in the red envelopes we see now. A long time ago, in the Ming and Qing dynasties, it would just be a stack of coins tied up with red string.

Y: And traditionally, it was only given between family and friends for good luck during New Year’s.  At least the substantial amounts. Between strangers and acquaintances, unless you are talking about red packets as an euphemism for bribery, in which case, the sky’s the limit, the idea is to give some nominal amount that’s also a lucky number, usually ending with an 8.  

R: So 8 RMB, 18 RMB … of that nature.  WeChat’s randomly generated New Year’s red packets, for example, had amounts like 0.99 to 9.99 RMB, also lucky numbers, and that translates to a maximum of about $1.50, not very much at all, maybe enough for a bottle of milk tea at Family Mart.

[3:45] Y: Today’s topic, the Battle of the Red Packets, or 红包大战 as it’s known in Chinese, is actually relatively new. Tencent kickstarted it in 2014, but 2015 was the first year where it reached red-hot status and all the major internet brands began to get in on the action.

R: So listeners, take yourself back to 2014, the year of the Wooden Horse.  What a fitting year, by the way, for Tencent WeChat to use its digital hongbao strategy as a Trojan horse to attack Alipay’s dominant status in mobile payments.

Y: See, before WeChat, hongbaos were disbursed in what I would call an organized manner, you know, one-to-one.  But WeChat’s 2014 New Year’s app update introduced the group hongbao format, which led to 抢红包, or literally, fighting for hongbaos, sometimes translated also as “snatching” red envelopes.  

R: Those terms sounded either vaguely violent or seedy to us, so we are going to refer to it as grabbing hongbaos here on out, to make it a bit more civilized!

[4:54] Y: Yup, prior to WeChat’s campaign, digital hongbaos given out by the apps were primarily from businesses, a lot in the form of what are effectively coupons.  The whole spin a wheel or some other gamified mechanism to get a coupon that’s called a “red packet”. That has been around for a very long time.

R: A very long time.  I personally almost invested in a startup that was focused on making a SaaS tool for these and other Taobao promotions.  So it’s just a very common tactic, and is commonly used during events like Single’s Day. Pretty much the same idea coupons you might get here in the US that can be applied towards your next purchase.

Y: But WeChat, because it is built on your social graph, made the hongbao experience to be between friends instead.  Or at least that was the initial idea, but then people got so into it that they began creating groups just for hongbao-getting that were just collections of people who didn’t know each other.  

R: It’s still mostly between friends though. So before it got that crazy, the concept is basically this — you can send a hongbao to the chat group of your friends or family, which pretty much every Chinese person on WeChat has, and specify the total amount, as well as how many people, a maximum limit if you will, you wanted it to go to.  

[6:14] Y: For me, I always set it to the total number of people in the group, but if your hongbao had less recipients than the total number of group members, then you had to be quick with your fingers, not to mention basically always be on your phone, and click as soon as someone sent one out, to grab it before other people do.

R: You can either set a random or fixed amount for what people will receive, and people can receive it just by clicking on it.  The general chat will display who has clicked on which hongbao, but won’t show the amount they received unless you click through, in which case it then displays the names of each recipient and their corresponding amount.

Y: For the person who clicked on the red packet, you see an animation with the randomized amount and the corresponding greeting which this year, could be a selfie sticker made by the sender if they chose the new “Holiday Red Packet” option.  

R: By the way, those were really fun and I definitely used them very liberally last week. But onto the default option for dollar amounts “stuffed” into each hongbao.  It’s a randomized amount, which makes the whole experience take on a lottery or kind of gambling characteristic. And as we all know, Chinese people love to gamble, and they love feeling lucky.  I don’t personally gamble, but I imagine the biochemical reaction in the hongbao recipient’s brain is probably identical to when you are playing a slot machine.

[7:39] Y: Grabbing hongbaos became such a big deal, a competitive sport of sorts, that people wrote scripts to try to always be first to grab the red packet, or otherwise hack the WeChat app in some way.  People even did comparisons of how fast certain mobile phones were at grabbing red packets.

R: The winner last year, if you must know, is Huawei’s Mate 10 Pro, which supposedly consistently beat the Apple iPhone X in grabbing hongbaos.  That’s the degree of obsession people have over this activity, and also, that’s the degree of localization we are talking about when it comes to domestic brands over foreign brands.  But that’s a topic for another episode.

Y: Well, not just that, but there’s a whole category of apps that help you “grab red packets,” which is obviously against WeChat rules, and which they have to warn users against every year and do ban people for.

R: So yeah, people are crazy about grabbing hongbaos.  Even in its first year back in 2014, 5mm users grabbed WeChat red packets from New Year’s Eve to 4PM the next day.  In this 40-hour period, 20mm hongbaos were snatched 75mm times. Tencent disclosed that one particularly attentive hongbao grabber got 869 hongbaos in the few days of holidays leading up to New Year’s Eve, making him the champion of all snatchers.

[9:05] Y: There was even an incident where it was rumored that Chen Guangbiao, a noted philanthropist in China, committed to giving out over $3mm worth of cash via WeChat hongbaos by New Year’s Eve.  This was of course fake, but some “clever” users changed their avatar to his photo and their nickname to his name and got added to many hongbao-specific WeChat groups by more gullible users.  Instead of giving out money, they joined the groups to grab red packets. It’s pretty smart, right?

R: But this rumor was so viral and it got so crazy that the billionaire philanthropist had to make an official statement clarifying that this was all a hoax. I just checked my WeChat message histories and sure enough, I still have messages from that time asking “Is 陈光标 in this group?”

Y: But why would WeChat do this? It’s because while receiving or grabbing a hongbao is simple, and requires you to just tap on the graphic, actually receiving the funds, or cashing it out of WeChat, and using it in an actual transaction, requires you to link your bank account.  

R: So just like that, WeChat has completed the loop.  They used this very simple mechanism to greatly expand the number of people who now linked their real life traditional banking relationships to the app. And that’s why the 抢红包 WeChat tactic has been likened to the attack on Pearl Harbor by Jack Ma.  I’m not sure that’s the best or most politically correct metaphor but those are indeed his words.

[10:37] Y: Yeah, he also said that this attack had us crawling and looking for our teeth, because I guess he felt like he’d been punched in the face, which I thought was pretty funny.

R: But now I think we’ve made it clear.  WeChat didn’t care about being the platform on which the most dollar amount in hongbaos was exchanged.  In the beginning at least, this was just a guerilla tactic to get more users onto its payment system.

Y: And in fact, that’s evident in their reporting.  Sure they disclosed how many times hongbaos were shared, but they didn’t share the total dollar amount, which was probably not that much, since the average hongbao grabbed was not even 11 RMB, or about $1.50.

R: The mass migration during the Spring Festival is also very attractive to tech companies who are seeking to have their products penetrate different social strata and age groups. Most Chinese people my age probably have had the experience of showing a grandparent or elderly relative how to use WeChat during a holiday visit.  Most likely, in addition to showing them the app, you showed them how to give a hongbao.

[11:41] Y: But let’s compare this to Alibaba’s Alipay, which had the opposite strategy. They made a big deal out of the dollar amount, but not the number of transactions that took place, which remained undisclosed, because let’s face it, they were already the leading payments platform and they were not looking for new users as much as they were looking for growth in transaction volume.

R: If you must know, that year, 2014, the largest hongbao given on Alipay was almost $30,000, and the average hongbao size was 5 times that of WeChat.  While Tencent made it into a social game, which is precisely their strength, Alipay’s competitive advantage was completely different.  

Y: That only makes sense right, since you don’t really add all your friends or family on Alipay, the people you would be giving hongbaos to, unless you were engaging in some kind of transaction with them, whereas WeChat being a social tool, has all those contacts.  No wonder then Alipay was still thinking hongbaos are a payments tool, and a great way to rack up transaction volume.

R: In fact, you couldn’t get a $30,000 hongbao on WeChat even if someone wanted to send it to you. Individual red packets were limited to $30, and you could only send $1200 in total over the course of entire new year’s period. Again, WeChat didn’t want to make you rich, they wanted to make the barrier so low that you would send hongbaos to as many people as possible, even if they were just pennies. So they were going through virality here, not dollar volume.

[13:18] Y: However, what ended up being an interesting side effect of the hongbao grabbing craze popularized by the Horse Lunar New Year was that well, it stayed popular, even beyond New Year’s.  As a Tsinghua professor explained, WeChat hongbaos actually became a form of social capital accumulation.

R: The choice of who gives out hongbaos, the size of the hongbaos in question, and the groups in which people participate in these exchanges, are all clues and signals of the real-life web of relationships between individuals.  This could explain why senior citizens love the hongbao function so much, by the way, in China they are using it an average of 27 times per month and giving out $60 in total.

[14:04] Y: The flow of hongbaos says a lot about group order and hierarchy and people tend to think of it as a favor that they will reciprocate.  It’s not just a few dollars here and there, but a form of communication in and of itself, and even transcends social capital to be a form of emotional communication.  Which is why we are happy to give you a small hongbao to show our appreciation for your podcast reviews!

R: Hongbaos definitely affect peoples’ perception of you and is a tool to shape your personal image, or your “face.”  You know how we Chinese people love to save face, and we want face, 要脸, but you probably don’t know there’s also a “grow face,” or 长脸, which is what happens when you do something to increase your social status, of which hongbao dispensing might be considered a very minor example.

Y: When people share good news, they often might gift a hongbao to share or show off their good fortune along with it.  And for sure when they ask for a favor, such as asking for a retweet. In fact, at this point the influence of WeChat’s hongbao function is so pervasive that when people say gifting hongbao, unless it’s for a formal event, like a wedding, or unless you’re referring to something shady, like a bribe, WeChat really becomes the first thing you think of.

[15:25] R: Anyways, so all that was 2014.  What happened after?

Y: Well, 2015 saw increased competition in the hongbao wars, of course.  But WeChat still had a dominant position, carried over from its success the year before. First, they integrated 摇一摇 or the Shake function with hongbaos.  Offline vendors could sign up and give out hongbaos for users who shook their phones close to their stores, for example.

R: Right, but the most headline grabbing event that WeChat put on was getting people to shake their phones during the course of the Chinese New Year’s Gala, that’s called春晚, the official CCTV 4.5 hour extravaganza that features plenty of song and dance and comedy skits and used to be the main event around which all family members gathered on New Year’s Eve.  It’s like the Super Bowl, but bigger, much bigger.

Y: Yeah, just to give you guys an idea of how big it is, the official cited number of viewers was 1.17Bn for this year, ten times that of the Super Bowl, and the highest cost for a 30-second ad ever recorded for the Gala is over $10mm, twice as much as that of the Super Bowl.  

R: WeChat bought the rights for about $8mm to be the hongbao sponsors for that year and gave out hongbaos at set times during the gala, which viewers could receive if they just shook their phones.  At 8PM, that New Year’s Eve, if you shook your phone, you had a chance at the half a billion in RMB or roughly 75mm in USD cash hongbaos that were given out, the highest one, by the way, was over $700. In addition, another nearly half a billion dollars worth of coupons from various vendors were given out as well.

[17:14] Y: Anyway, people shook their phones 11 billion times, and a billion hongbaos in total, not just from the shaking, were given out that night, which I’m sure broke some kind of world record somewhere.

R: That record didn’t stand for long though, because on 2015’s Chinese Valentine’s Day, which is not the Valentine’s Day that has just past, because this one typically falls in late Summer and is August 7th this year, over 1.4bn red packets were given.  That’s right, red packets are more desirable than flowers on Valentine’s Day, because like, cash is so much more practical than roses, right? And more environmental!

Y: But that record didn’t stand long either because barely two months after that, for Mid-Autumn Festival, over 2.2Bn hongbaos exchanged hands.

R: The whole country is addicted to WeChat hongbaos by this point, so that when 2016 Chinese New Year’s comes around, over 420mm Chinese people participated in hongbao gifting and receiving just on New Year’s Eve alone, and over 8Bn hongbaos were gifted and received, that’s 8 times the total of the previous year.

[18:28] Y: But by 2017, WeChat was laying off the heavy investment into hongbaos because well, by this time, WeChat Pay’s monthly active users had exceeded 600mm.  The first to go was the Shake function that was pioneered in 2015.  

R: Allen Zhang, creator of Wechat, has said that the mission of WeChat’s Shake Hongbao function had been completed.  And besides, consistent with his product vision, WeChat is designed to make your everyday life easier, not to be some holiday promotional tool. So effectively … thanks for playing guys, but we’ve gotten what we needed out of you and we’re done here!

Y: That didn’t deter people from gifting hongbaos over WeChat though. Near the height of hongbao giving, which is near midnight on New Year’s Eve, a peak of 760,000 hongbaos gifted and received per second. And actually I’m sure the actual peak volume would have been higher than that, if all the transactions could go through, because basically every year, WeChat servers go bonkers trying to meet this crazy demand.

R: The problem is so difficult that multiple technologists have written about it.  And if you think about it, it makes a lot of sense. Not only do you need to deal with millions of users performing tens or hundreds of millions of interactions every minute, these interactions probably involve dozens of other platforms, like, for example, the IT systems of all the major banks.  

[19:59] Y: And all this needs to happen within seconds.  And because it’s money we are talking about, there can’t be any room for error and there also needs to be a high degree of security.

R: Put that way, it’s truly impressive that the downtime is as little as it is every year. Yes Chinese companies already have a lot of practice with huge volumes because of events like Singles Day, but believe it or not, that’s still small compared to New Year’s Eve.  That’s not everyone is a shopaholic, but everyone celebrates Chinese New Year’s!

Y: It’s such a big deal that the Central Bank of China gave guidance this year to all of the financial institutions and payment platforms involved and told them that they needed to devote serious resources to make sure the show goes on without a hitch.

R: Tencent always gets slammed every year for all sorts of technical difficulties during hongbao giving season, but let’s face it, it’s more of an entertainment and media company.  Which is why when this year Baidu spent a ton of money to get the exclusive rights to 春晚, people speculated that this “deeper tech” company may do better.  Yes, despite their, sometimes major flaws, Baidu is considered the company with the best tech in China, at least of the BAT.  No comment on whether or not I agree with that.

[21:20] Y: Did Baidu succeed though? It’s hard to say. Some reports seem to show that Baidu indeed did not disappoint, and the several hundred-person special task force they put together to weather the storm did not work overtime in vain. Other users claimed that Baidu used tricks to cover up the outages.

R: Either way, Baidu had a beautiful press release full of impressive numbers to report this New Year’s Day.

You see, after spending a record near $300mm this year of the Pig, Baidu recorded 20.8Bn interactions through their hongbao program.  

Y: As the press release explained, that’s as if every one of the 7 billion human beings on this planet had 3 interactions each.  Baidu’s app for news also roughly doubled in DAU Daily Active Users from 160mm to 300mm, which left both Bytedance’s Toutiao and Tencent in the dust.

R: But while Baidu really pushed its whole suite of products, the most obvious beneficiary is its newly spun out 度小满 or Baidu Finance, which we covered way back in Episode 4.

[22:34] Y: Did it work? It’s hard to say. Sure, over 8 million users completed and presumably many millions more participated in Baidu’s 10-card lucky challenge, but will they stick around in Baidu’s apps, especially the payment one, or was this just a one-time thing to get some free money?

R: And as we will explain later with Alipay, WeChat blocked social sharing, as it often does with competitors’ products, so it was a sort of complicated process to share, although at this point many Chinese users have been trained by Alipay’s workaround and could probably figure it out, but still, it’s not a smooth user experience because just like Alibaba, Baidu is sorely lacking in any social products, and pretty much anything social is gonna go through WeChat.

Y: And if you’re wondering about the short video platforms that have blown up in China over the last few years … don’t worry, they were definitely around and weren’t keen to be left behind. While Bytedance’s Douyin became the Gala’s exclusive social media platform partner, replacing Weibo, rival Kuaishou paid to have the live broadcasting rights.  

R: Douyin, Kuaishou and Tencent’s Weishi each spent nearly $75mm for the week, and that’s just on hongbaos.  The purpose was to drive downloads and DAU, of course, but we can see from mobile analytics data that while Douyin and Kuaishou grew a little and roughly maintained their appstore rankings, the others such as Weishi, other Bytedance video products, and poor Baidu’s 好看 video app pretty much had sharp declines immediately after the holiday.  So I would say it’s unclear that the money was well spent.  Actually, it probably wasn’t.

[22:47] Y: Alibaba, meanwhile, continued with their 集五福 or Collect 5 Fortunes challenge for their hongbao strategy.  As we’ve said again and again on Techbuzz, Alibaba has been trying to crack the social networking nut for a long time now.  

R: Although they came up with it in 2015, it wasn’t until 2016 that it really took off, and that’s when they began paying record amounts for exclusive rights to the Gala as the red packet partner — $40-45mm each year from 2016-2018.  

Y: You had to add a certain number of friends to your Alipay account, say ten, to receive three randomized cards of the character Fortune written in one of 5 different ways. You could then trade the cards, and there were other ways to get more cards, but basically, having all 5 entitled you to split the massive $30mm cash pot that Alipay had allocated as reward.  That year, those who completed the challenge received over $40.

R: So remember we talked about WeChat blocking social shares, we’re going to explain that here. You see, if you remember what we have always been saying here on Techbuzz, Alibaba and Wechat hate each other and block each other every time they get. So no surprise when WeChat blocked invite links to Alipay’s 5 Fortunes campaign.

[25:50] Y: Alipay wasn’t going to give up so easily, obviously, and so created a unique invite code, a sort of password, 口令, that you could send to your friend and let them know to copy and paste into their Alipay to complete the action. WeChat couldn’t block text strings right?

R: But oh they did, because the message was prefaced by the words “Alipay password,” or 吱口令,which meant that WeChat would silence any message containing this string.  You think you sent the message, but it actually never arrives on your friend’s screen.

Y: Alipay figured out that the block was just a simple comparison, and inserted commas in between the Chinese characters, and unlocking the block.  Anyway, this war goes on and on, but you get our point that any of the Chinese internet companies would go to great and maybe silly lengths to keep out their competitors.

R: The next year, Alipay shifted the focus from trying to increase social ties inside of their app to offline payments.  This is a pretty rational fear because while Alipay, you know, it started so early and had the force of Taobao behind it, absolutely dominated digital payments, but offline payments, at least a few years back, weren’t as digital as they are today and was a sort of blue ocean.

[27:14] Y: And with WeChat being the app that everyone has open all of the time, unlike Alipay, which people use only for payment, it seemed possible or even likely that unless Alipay did something, it was going to lose the offline payment battle.

R: So the digital collection of the 5 Fortunes had a twist, which was that it became an AR, or augmented reality exercise. You scan the character 福 or Fortune at an offline store, and it then became one of the 5 you needed to collect.  But the amount was no longer evenly distributed and instead became randomized, just like for WeChat. Because a lot more people, nearly 170mm, were able to complete the game, many users only received a few RMB and were deeply disappointed.

Y: By the way, not WeChat, but Tencent’s QQ then “copied” the AR experience and launched their own hongbao game.  It also got a good amount of engagement but didn’t create the huge long-term strategic impact that WeChat’s did. I don’t think any of these apps have come close to generating that, and they may never do so.

R: The verdict for 2019 is out, though, and at least between Alipay and WeChat, it seems that consumers were happier with Alipay’s promised $220mm payout, because most people seemed to have landed a red packet around 30 RMB, that’s about $5.  

[28:43] Y: I don’t know how many people completed collecting their 5 Fortunes, but according to Alibaba, 450mm people participated.  That’s 1 in 3 Chinese citizens! Many WeChat red packets, on the other hand, ended up being just a few cents in cash. Only a very, very lucky 2019 folks got 10,000 RMB or almost $1500.

R: But again, maybe Tencent doesn’t really care, because having really milked the first few years of the hongbao war and gotten to over 900 million active users every month with WeChat Pay, it seems that their focus this year, aside from the selfie stickers, was towards the enterprise front, consistent with what Pony Ma has been saying for much of 2018, Tencent moving away from consumer internet into industrial.

Basically, let me translate that for you, enterprises can now give out hongbaos with customized digital envelopes, you know, with their logos. Whoopedee-doo!

Y: We’re being sarcastic. Most of the hongbao games for this year are either very derivative, or too complicated and requiring too much effort for the reward.  As many folks have noted, the Hongbao Games are starting to draw a yawn.

R: Yup, despite the massive over half a billion dollars in cash that BAT and the short video apps, other players have pledged to the effort, it’s just become exhausting to keep up with.

[30:16] Y: And with that, I think it makes sense to go ahead and close this episode, because frankly, I’m getting tired thinking about all the time and effort necessary for hongbao hunting, not to mention how tired your arms get from all the shaking.  

R: I agree! That means it’s time for … what did we learn today?

Y: Well, we learned that 2014 was the first year of the Battle of the Red Packets, when WeChat fundamentally changed the rules of the game by allowing you to send digital red packets to the chat groups you’re in within WeChat and basically gamified the experience, coining the term 抢红包 or grabbing red packets.

R: While hongbao or red packet giving by internet companies has existed for years and years, it was more of a coupon-like experience, that is, until WeChat made it into a social experience and a national obsession, and won millions of new users this way, for WeChat Pay.  And the reason they did this is because in order to cash out your red packets, you need to link your bank account, and voila, just like that, a massive payment ecosystem was born.

[31:25] Y: WeChat hongbaos took off though and had a life of their own outside of Lunar New Year’s, so by the time 2016 rolled around, WeChat Pay was already at a really good user base and the corresponding strategy was to de-prioritize the red packet campaign, which at this point, consisted of internet companies just pouring millions or even hundreds of millions dollars of cash to win new users and downloads.

R: So from 2016-2018, Alibaba took the reins and became the main hongbao sponsor for the Spring Festival Gala, the Super Bowl TV event of China.  To accomplish their ends, which was to increase social connections in the app as well as link online and offline payments, they launched the Collect 5 Fortunes game and used augmented reality to make users interact with offline places in order to get a piece of their massive hongbao giveaway.

Y: This year though, Baidu went all out on the Gala and hongbao strategy, and tried to push their whole suite of apps to acquire new users, especially their new-ish finance one. The short video apps Douyin and Kuaishou also showed up in a big way.  It remains to be seen how effective this was, but just based on some initial data, the surge for most of the players, seems to have been one-time and retention remains a problem. Analysts are already saying that this whole Battle has unfortunately become a defensive measure rather than an offensive one.

[32:56] R: While WeChat hongbaos really changed the game, all the other campaigns have been much less impactful in comparison.  The one-sentence explanation would be that hongbaos are based on social reciprocity and hierarchy, and of the big internet companies, Tencent absolutely owns this space. Will we see something different and truly revolutionary next year? Or just more of the same, card collecting and contact list spamming? What do you think?

Y: And how about you, Techbuzzers? Did you go hongbao hunting, or are you already tired out from the annual Battle of the Red Packets? What was your favorite campaign and most importantly, how much did you collect? And don’t forget, if you write us a review, send it to us and we’ll be happy to send you a small token WeChat hongbao in appreciation!

[33:56] Y: OK, that’s all for this week folks! Thanks for listening. As a reminder, episodes will now be available every Friday instead of Wednesdays. We really enjoyed putting this together, and we are always open to any comments or suggestions. You can find us on twitter at thepandaily, at techbuzzchina, and my personal Twitter account is GINYGINY.R: And my Twitter is spelled RUIMA. TechBuzz China by Pandaily is powered by the Sinica Podcast Network. Pandaily.com is an English language site that tells you “everything about China’s innovation.” Our producers are Shaw Wan and Kaiser Kuo. Our intern is Wang Menglu, who heroically uploaded all of our transcripts this past week.  I know many of you were looking for that. Thanks again, Menglu! And we’ll see you guys, next week!