Alibaba-owned e-commerce marketplace Taobao will send out RMB 2 billion (around $289.3 million) in cash via red packets during the Spring Festival holiday, according to Chinese media reports, half of which will be handed out during the annual televised Spring Festival Gala put on by state broadcaster China Central Television (CCTV).
Why it matters: In cooperating with one of the most viewed shows in China for its red packet promotion, parent company Alibaba is trying to fend off competition from e-commerce rival Pinduoduo, which now has 536 million total users, second only to Alibaba’s 693 million in China.
- Partnership with CCTV will help Alibaba to promote its new RMB 10 billion subsidy program offered through Juhuasuan, a flash sales platform available through the Taobao app.
- The new initiative was launched in December to counter Pinduoduo’s own RMB 10 billion subsidy program, which the company has touted as helping the Shanghai-based social e-commerce maintain robust user growth over the past year.
Details: Taobao announced on Jan. 11 that it is CCTV’s exclusive e-commerce partner for the Spring Festival Gala, a show which has run every year for the past three decades. This is the second year of cooperation between Alibaba and CCTV.
- As part of the RMB 1 billion gala promotion, Taobao will pay for all items in the shopping charts for 50,000 people watching the Spring Festival Gala, a jump from last year when it paid for items in 1,000 shopping carts.
- The gala will be held on the eve of the festival, which falls on Jan. 24.
Context: Chinese tech giants clamor to sponsor the CCTV event, which was viewed by 1.17 billion people last year, with red packets a common gimmick used to promote e-commerce, internet payments, or social networks.
- Using red envelopes as a tactic to gain followers began in 2015 when Tencent’s WeChat, Alibaba’s Alipay, and Sina Weibo all used the marketing strategy. WeChat won the battle that year, thanks to its partnership with the Spring Festival Gala when it sent out RMB 500 million worth of cash and e-coupons to a public that was then largely unfamiliar with platform.
- The red packet promotion during the gala spurred a spike in users who connected their bank accounts to the app.
- Short video platform Kuaishou is also planning to reward viewers with cash totaling RMB 1 billion as another gala sponsor this year.
- Spring Festival has become an increasingly important event for Chinese consumption and triggered a rise in Taobao “Family Accounts” since December.