ByteDance joins the annual Spring Festival marketing blowout with Douyin’s RMB 1.2 billion cash giveaways. Alipay is readying its part in this year’s red envelope war. Edtech startup Huohua Siwei received $150 million in its Series E3, while Warburg Pincus-backed online tutoring platform Zhangmen aims to raise $300 million in a US IPO. Luckin Coffee tries to motivate employees with an incentive plan.
China’s e-commerce and retail market offers a fire hose of products, choices, business models, rapidly changing content, and more. Here’s what you need to know about China’s online retail market for the week of Jan. 21 – 27.
ByteDance joins Spring Festival party
- Douyin, the Chinese version of TikTok, announced plans to distribute RMB 1.2 billion in cash giveaways during the annual CCTV Spring Festival gala to be held on Feb. 11. The Bytedance-owned short video platform replaced Pinduoduo as the the sole sponsor of China’s annual blockbuster of TV advertising events. The company rolled out a digital payment feature earlier this month, recalling WeChat Pay’s 2014 move in gaining its initial user base, an incident referred to by Alibaba founder Jack Ma as the “Pearl Harbor attack.” (Xinmin.cn, in Chinese)
- Alipay will launch its Five Fu (meaning good fortune) card-collecting campaign on Feb. 1 for its fifth year to distribute cash prices in exchange for user attention during the Spring Festival holiday. Tencent’s WeChat was the first to digitalize the centuries-old Chinese tradition of giving red envelopes with the rollout of the feature in 2014. The massive popularity of its digital red envelope feature allowed the app to convert hundreds of millions of social media users to payment users for WeChat Pay, then a budding Alipay rival. Alipay rolled out the the Five Fu campaign, a similar digital red packet feature, in 2016 and more than 600 million users have taken part since. Alipay users have continued to participate in the gamified campaign despite the significantly lower value of the red envelopes—less than RMB 2 (around $0.31) in total per person compared with RMB 271.66 in 2016. (PingWest, in Chinese)
Edtech firms cash in
- Huohua Siwei, a K-12 online math and science education platform, received $150 million in a third batch of its Series E which valued the company at $1.5 billion. (TechNode)
- Online tutoring platform Zhangmen, backed by Warburg Pincus, hired Morgan Stanley and Credit Suisse Group AG as underwriters for its US public offering that could raise more than $300 million. (Securities Daily, in Chinese)
Luckin tries to boost staff morale
Embattled Luckin Coffee announced on Monday an equity incentive plan for 2021 in order to “retain, attract and motivate” employees and directors as the company’s management navigates internal turmoil. The plan, with a 10-year term, has a maximum number of 223 million Class A ordinary shares, represented by around 28 million American Depositary Shares, to issue as part of the plan. Shares of the company, still trading on the OTC market after its July delisting, jumped 25% on Tuesday to close at $12.97 apiece, gaining more than 50% since the beginning of this year, though still well below a historic peak of $50 reached in January 2019 when it listed on the Nasdaq. (SEC)
Jack Ma’s reappreance
Alibaba’s billionaire founder Jack Ma made his first public appearance after staying out of the public eye for nearly three months since regulators began a crackdown on his tech empire. (TechNode)