Shop Digital Version Subscribe to the Print Edition TWOC TV

Red Envelope War Heats Up

Tencent gets vicious in the cutthroat competition for virtual Hongbao


The red envelope, or hongbao, last year made its leap into the virtual age. But now the competition is heating up.

In an effort to encourage users to bind credit cards to apps, internet giants like Alibaba and Tencent in January of last year instituted a “red envelope feature” on their mobile programs, allowing users to send cash-filled hongbao to friends and family online.

But the shift from paper to digital hasn’t been without its fair share of intrigue. In the first battle of what appears will be a long war between media companies, Tencent, via its messaging service WeChat, has now blocked Alibaba’s mobile payment service Alipay from using WeChat as a channel to send red envelopes. Instead, WeChat users are encouraged to use the chat app’s own built-in hongbao feature – which now utilizes WeChat’s own payment system –  a move many analysts say is justified in the apparently cutthroat world of virtual hongbao.

“The red envelope service is the latest must-have service during the festival. The mobile payment market is booming in China. Every company is trying whatever they can to attract potential users,”said Li Ye, an analyst with the Beijing-based Internet consultancy Analysys International, the Asia News Network reports.

Wechat instituted the red envelope feature last year and reported that in the 10 days around the 2014 New Year, more than 8 million users took part in the mobile envelope exchange, sending and receiving over 40 million hongbao. And as its blocking of Alibaba’s payment service shows, Wechat is not willing to share the bounty.

Interestingly, the red envelope originated as a means to ward off evil spirits – elders believed that coins threaded with red string would protect the younger generations from sickness and death. But with the popularity of the printing press, paper soon replaced string, and hongbao was believed to ward off age, rather than any malignant spirit.

Now that the virtual red envelope is fast replacing paper, the jury’s still out on how the hongbao industry will change, too.




Follow us

Subscribe to our newsletter