China’s biggest technology companies are reviving an old tactic with a new objective: splashing cash during the Lunar New Year to seed user bases for fledgling AI products. Tencent’s newly launched Yuanbao app has promised a headline-grabbing 1 billion yuan in red envelopes, while Baidu’s Wenxin plans a 500 million yuan giveaway and ByteDance has positioned its Volcanic Engine as the exclusive AI cloud partner for the 2026 CCTV Spring Festival Gala.
The move recalls Tencent’s 2015 “Pearl Harbor” campaign, when WeChat used a simple “Shake” mechanic and 500 million yuan in red envelopes to turbocharge mobile payments adoption and bind hundreds of millions of bank cards. But the stakes are different in 2026: companies are not only buying attention but trying to change behaviour around products that are more complex and habit-dependent than a payment flow.
Last year’s breakout hit DeepSeek demonstrated the power of pure product virality: it acquired more than 100 million users within seven days and saw daily active users surge past 22 million within three weeks, briefly topping 30 million. That technical-led ascent—driven by immediate, compelling model capabilities—has made giants nervous. They are now racing to replicate that momentum with scale advertising, subsidies and festival tie‑ins rather than relying solely on model performance.
The three big players have different endgames. Tencent is treating Yuanbao as an “AI version of WeChat”: the giveaway is a blunt instrument to drive downloads and then convert existing social relationships into AI-driven group interactions. Baidu is leaning on search and its app scale, using Wenxin’s red envelopes and light entertainment features like AI-written couplets and fortune-telling to nudge users into routine search-plus-AI behaviour. ByteDance, by contrast, is not matching consumer cash giveaways; instead it is using the Spring Gala to showcase Volcanic Engine’s ability to handle national-scale, bursty AI workloads—a technology pitch to enterprise and cloud customers.
These strategies reflect the companies’ comparative strengths. Tencent controls the most valuable social graph and is betting it can marry social stickiness to AI. Baidu owns the search reflex and seeks to make the Wenxin assistant the default entry point for queries. ByteDance’s strength is content and infrastructure scale; its play is to be the backbone that powers others’ AI moments and to win profitable B2B cloud contracts.
But there are substantial risks. Holiday giveaways can attract “opportunistic” users who sign up purely for cash and then leave, producing a cliff in retention once the envelopes stop. AI features generally have higher onboarding costs than scanning a QR code or clicking “Shake.” Users now judge AI by usefulness rather than novelty, so cheap incentives may not overcome the friction of switching ecosystems or learning new interaction patterns.
Furthermore, years of subsidy wars have blunted the marginal value of cash incentives. Ten billion yuan in promises across the market—if that number is understood correctly as collective marketing—will not necessarily generate the same conversion lift as smaller campaigns did a decade ago. The market has been conditioned: users increasingly treat giveaways as short-term entertainment rather than a reason to rewire daily habits.
The broader implication is that China’s AI contest has entered a hybrid phase where engineering and capital play complementary roles. Consumer-facing, model-led successes like DeepSeek demonstrate the ceiling of product-first approaches. The giants’ heavy spending is a defensive strategy to protect platform positions while they integrate AI into their vast ecosystems. Which approach prevails may depend less on the size of New Year红包s and more on which firm can translate initial curiosity into sustainable, embedded utility.
For international observers and enterprise customers, the contest is a marker of two trends: rapid maturation of Chinese consumer AI and increasing pressure on cloud and infrastructure providers to support bursty, national-scale events. ByteDance’s Spring Gala role signals that China’s AI battleground will also be a proving ground for enterprise-grade inference and orchestration.
If the Lunar New Year blitz produces only ephemeral spikes, the industry will learn that habit formation—not headline giveaways—is the harder and more valuable prize. If, instead, one of these campaigns creates a durable shift in daily AI use, the winner will have secured a scale advantage that is costly and slow to replicate.