War of the Red Envelopes

In 2014, the popular Chinese messaging app WeChat 微信 launched a new feature: sending virtual hongbao’s 红包，also known as red envelopes. For the Chinese New Year Festival that year, the app organized an event where all WeChat users could shake their phones in order to receive free, digital red envelopes from the company. The number of envelopes sent out surpassed one billion and the total combined worth of the envelopes was over half a billion RMB.[Shengli Digital]

WeChat’s inventive idea put digital red envelopes on the map in China. During the peak of the event, 800 million shakes were recorded per minute. There were two types of envelopes introduced in 2014 by Tencent, the company that owns WeChat:

1. A regular red envelope that could be sent directly from one user to another.
2. A ‘group’ red envelope, with a limited number to be grabbed and a limited sum of money which can be grabbed by all users in a group if they are fast enough. The sum inside this envelope is randomized, adding the thrill of gambling to the red envelopes.

Other companies also wanted a piece of the digital red envelope cake: Weibo 微博 and AliPay 支付宝 combined their strengths a year after WeChat introduced its digital hongbao in order to promote their version of the digital red envelope. A ‘war’ then broke out between the two companies. AliPay handed out 600 million renminbi worth of red envelopes as a response to WeChat’s 120 million envelopes sent out during the televised celebration of Chinese New Year.[Find More on the war in Chen’s article for Forbes in 2015: ‘Red Envelope War: How Alibaba and Tencent Fight Over Chinese New Year’