Alibaba has escalated competition in China’s fast-heating artificial intelligence market, pledging 3 billion yuan ($431 million) to drive user adoption of its Qwen AI app during the Lunar New Year holiday, a period long regarded as the country’s most intense digital marketing battleground.
The spending commitment, announced on Monday, dwarfs similar efforts by rivals Tencent and Baidu and is set to begin on February 6. Alibaba said the campaign will roll out incentives tied to dining, drinks, entertainment, and leisure, with what it described as “large red envelopes distributed continuously,” signaling a broad-based push to embed its AI product into everyday consumer activity during the festive period.
The move comes just weeks after Tencent and Baidu disclosed their own Lunar New Year campaigns. Tencent said it would spend 1 billion yuan promoting its Yuanbao chatbot app, while Baidu committed 500 million yuan to attract users to its AI services. Alibaba’s pledge is three times Tencent’s and six times Baidu’s, underscoring how aggressively China’s tech giants are now competing for early dominance in consumer-facing AI.
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Lunar New Year has historically been a decisive moment for user acquisition in China’s digital economy. Hundreds of millions of people travel home, spend extended time with family and friends, and increase online consumption, making the holiday a prime window for apps seeking mass adoption. Tech firms have repeatedly used the period to lock in users who often remain loyal long after the festivities end.
The most striking precedent dates back to 2015, when Tencent turned its WeChat messaging app into a viral distribution channel for digital red envelopes, a modern twist on a traditional Lunar New Year gift. That campaign helped WeChat Pay rapidly close the gap with, and eventually challenge, Alipay’s dominance in mobile payments, reshaping China’s financial technology landscape. Industry observers now see echoes of that moment in the current AI race.
This year’s public holiday, which begins on February 15 and runs for nine days, is longer than in most previous years, giving companies a wider window to engage users. Alibaba’s strategy appears designed to take full advantage of that extended break, although the company did not clarify whether its incentives would be distributed as cash red envelopes or as discount coupons redeemable across its sprawling ecosystem, including Taobao and other consumer platforms.
Tencent, by contrast, has provided more detail about its approach. Its Yuanbao campaign, which starts on Sunday, requires users to upgrade to the latest version of the app to claim digital red envelopes. These rewards can be withdrawn directly into WeChat wallets, and users are encouraged to share links with others, earning additional cash incentives in the process. The mechanics closely mirror earlier viral payment campaigns that proved effective in driving rapid adoption.
The surge in promotional spending reflects how quickly competition in China’s AI sector has intensified. The launch of DeepSeek’s R1 model in January last year rattled global AI markets and acted as a catalyst for faster adoption and sharper rivalry at home. Since then, Chinese firms have accelerated product releases, model upgrades, and consumer outreach in a bid to avoid being left behind in what is increasingly seen as a winner-takes-most market.
Alibaba’s heavy investment in Qwen during such a critical period suggests it views consumer mindshare as just as important as technical capability. While Chinese tech companies have made significant progress in developing large language models, the battle is now shifting toward distribution, daily use cases, and ecosystem integration, areas where cash incentives can quickly tilt the balance.
The race is not limited to the three biggest players. Several other Chinese AI firms have been rolling out upgrades ahead of the holiday. DeepSeek, whose earlier model sharpened competitive pressures across the industry, is expected to release its next-generation V4 model in mid-February, according to a report by The Information. The new version is said to feature stronger coding capabilities, raising the stakes further for incumbents trying to retain developer and enterprise interest alongside consumer users.
The Lunar New Year campaigns highlight a familiar pattern in China’s tech sector – when a strategic technology reaches an inflection point, competition quickly spills into massive marketing spend, platform incentives, and ecosystem plays. Alibaba’s 3 billion yuan bet signals that the company sees the current AI moment as one of those defining junctures, where early user capture could shape market leadership for years to come.