A sprint of cash incentives has briefly rearranged the leaderboard in China’s nascent consumer AI market. On the opening day of this year’s Spring Festival promotional push, Alibaba’s Qianwen app saw daily active users balloon to 58.48 million, a 727.7% jump from roughly 7.07 million the day before, cutting the gap with ByteDance’s market leader to about 22.75 million and leaving Tencent’s Yuanbao far behind.
The surge was engineered by an aggressive promotion that combined large cash red‑envelopes with an experiential hook — free milk‑tea orders triggered by a single AI prompt. Qianwen’s campaign quickly choked its servers: the company sent more than a million free drinks within hours and hit the top of Apple’s free app chart in under five hours. Yuanbao fired the first shot on Feb. 1 with a “share 1 billion yuan” cash giveaway, lifting its daily users to 23.99 million from 7.68 million the prior day, but its one‑day boost was a fraction of Qianwen’s.
The headline numbers mask a familiar and uncomfortable truth for the platforms: explosive first‑day DAU spikes driven by subsidies are not the same as durable product adoption. QuestMobile’s retention data from 2025 show that ByteDance’s Doubao is the only mainstream AI app with a 30‑day retention north of 40% (44.5%). By contrast, Qianwen’s 30‑day retention averaged just 23.5%, with other contenders clustered in the low 30s or below.
Behind the seasonal theatrics lie enormous marketing engines and deep pockets. AppGrowing estimates Tencent’s Yuanbao spent roughly 15 billion RMB on user acquisition in 2025, with about 5.76 billion RMB in the third quarter alone. Qianwen’s ad spend ramped in Q4 2025 from under 100 million RMB in earlier quarters to 1.541 billion RMB. Those sums underline that the “red‑envelope” playbook is less about grassroots momentum than paid distribution at scale.
Industry analysts and investors are split on whether the campaigns will alter the market structure. Citigroup has argued the point of the giveaways is to “force” users onto AI paths long enough for habits to form; if users engage daily for a week to ten days, post‑festival retention could materially exceed historical internet benchmarks. Skeptics counter that pure subsidy‑driven installs typically produce sub‑20% seven‑day retention and virtually vanish by 30 days unless the product itself offers superior, habitual utility.
Academics warn the battle for downloads is entering a second phase: territorial consolidation rather than mere flow grabbing. Shanghai Finance University professor Hu Yanping says the decisive axis will shift from marketing muscle to intrinsic product quality — model accuracy, conversational intelligence, and the ability to build payment and social loops that stick. In short, the advertising arms race can buy attention but not trust.
For international observers, the episode is a reminder that China’s AI consumer market is being forged under commercial and cultural dynamics distinct from the West. Costly paid acquisition, integration with local payment ecosystems and social features, and a heavy emphasis on short‑term incentives will shape which domestic players achieve scale quickly — but long‑term dominance will hinge on retention, monetization and regulatory scrutiny over promotional tactics.
The short victory lap for Qianwen signals how fast fortunes can shift in a market defined by low switching costs and high promotional intensity. The more revealing question for investors, competitors and policymakers is how many of these newly acquired users will find reasons to return once the red envelopes stop coming.