One of the most anticipated activities during Chinese New Year celebrations (well, besides eating) is to give out and receive the red packets (“Hongbao” or “Ang Bao”) – a way to show blessings and appreciation to one and another. However, as payment has gone “cashless” over the years, to receive one can be somewhat trickier than before.

The Red Packets Carnival

Each year, Tencent publishes an official report about its WeChat user activity days after the Chinese New Year holiday. This year is no different: according to the report, there were 768 million users (that was over half of China’s population) exchanging digital red packets through WeChat. This is the fourth year that WeChat developed this feature, and to highlight, one user from Chongqing received 3,429 red packets, and another one from Jiangxi gave away 2,723 red packets during the week of Chinese New Year.

The growth of these figures is impressive: four years ago when WeChat red packet first started, there were 16 million packets given during the Chinese New Year. The number grew to 1 billion in 2015, then jumped up to 8.08 billion (800% increase) in 2016, 46 billion (570% increase) in 2017. This year, however, is the first year Tencent did not specify the total number of the red packets. We believe partially was due to Tencent’s strategic change to refocus on its QQ business – therefore diluted its users from WeChat; the other reason is the attempts by its rival Alipay (by Alibaba’s Ant Financial).

WeChat was the starter of digital red packets

WeChat shapes the Red Packets, so did the Red Packet shape WeChat.

Just like how Apple’s iPod helped shape Apple’s future, WeChat Pay helped promote WeChat into China’s biggest social messaging space and made them become a major ePayment provider. Four years ago, WeChat initiated the QR code money transfer feature – which was later adopted by Alipay – to kick-start China’s third-party mobile payment system. Before mobile payment was accepted among merchants, it was a tool to make P2P transfer to each other’s eWallets. That year, when people started to use WeChat Pay to send real-valued digital red packets, WeChat became an app used in most people’s daily lives; until last year, China’s mobile payment market was believed to worth at USD $15.5 trillion.

Given the ePayments platforms have been through revolutions to bring customers convenience and instant-processing experience, it has now become harder to retain users. WeChat’s biggest competitor, Alipay, rolled out its campaign on “collecting five-fortunes (‘福Fu”),” literally encouraged Alipay users to capture five Chinese characters in real life so as to receive random red packets up to 666 RMB (another symbolic number of good fortune). This year, over 251 million users participated in the campaign in over 2,300 cities around the globe according to Alipay.

Doing all to Grab Your Attention

To fight back, we have seen some interesting moves by WeChat recently. Starting from in-Apps applications launched at the beginning of this year, WeChat introduced “mini games” within WeChat app (something that you can imagine similar to the Doodle games on Google’s home page) that successfully wrapped up the popularity among users. “Tiaoyitiao” (“jump-a-jump”), a game received favorable reviews by integration with WeChat’s social feature, e.g. to compete scores with your friends, was estimated that at its peak, 28 million users had played the game in the same hour during the Chinese New Year holiday.

Weeks ago, we witnessed the popular Tiaoyitiao game played in a room of 100

Other new forms of red packets, such as “Face-to-Face red pockets”, “voice-locked red packets”, and “puzzle-locked red packets” provided fun and interactive ways to exchange red packets. The result? Although there was not a number on exactly how many users to these games, they certainly contributed to WeChat’s accumulated 230 billion messages and nearly 3 billion posts sent and shared during the New Years Week, in addition to 17.5 billion minutes of video and voice calls by all users combined.

Building an Open Ecosystem

With new forms of these red packets becoming available on WeChat, we found some of which were not created by WeChat. Red packets of telco credits, Starbucks points, or even real gold were results of the partnership between WeChat and these brands. Mobike, a bike-hailing company invested by Tencent, also provided users the ability to send and receive Mobile points in WeChat red packets. All of these were to extend the lifespan beyond the mere 2-3 seconds of red packet money transfers.

WeChat Xiaochengxu (“Mini Program”) is another strong message into building an open ecosystem. Previously, only WeChat could allocate apps and services in the app menu; now with an open in-app system, it is believed that it will attract more creative ideas and interactive features contributed by external developers. If this is the case, WeChat creates a cheaper way to welcome third parties to experiment with their innovations rather than R&D risk and spending on its own.

“Tiaoyitiao”, a recently popular mini game introduced on WeChat

Red Packets Battle: a necessary fight

Besides the red packets being a cornerstone of WeChat’s development history, there are more reasons for mobile payment providers to compete during this period of time. The Lunar New Year is the biggest Chinese festival of the year, both the number and value of transactions easily surpass any other time in the year. Imported food and beverage purchase, for instance, surged 300% more than average and led to great markets for mobile payment providers. With ever-changing ways to live up the traditions nowadays, perhaps there is only one thing which never changed – to spend time and enjoy with beloved families and relatives at this particular time of the year.

Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.


Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].