Corporate China | Alibaba, Sina cast envious eyes on Tencent's 'Hongbao'

Most of the comments were admiring and even in a slight state of awe at the big success of WeChat's hongbao product, which lets users send gift money to their friends and relatives over the popular instant messaging platform. But at least one post from Alibaba smelled of sour grapes, and a Sina (Nasdaq: SINA) executive also took a backhanded swipe at the rival to his company's own Weibo microblogging service.

I'll start with my own view that this new function by Tencent looks like a brilliant move, combining many of its strengths to create a product that was almost guaranteed to be popular among WeChat's hundreds of millions of users. What's more, the hongbao product was actually one with money-earning potential, since it involved the sending of money to friends and relatives in an electronic form of the cash-filled red envelopes typically given out this time of year.

WeChat's red envelope function allows users to bind their bank cards to their WeChat accounts, and then designate sums of money to put in a virtual red envelopes that can be sent electronically to other users. It looks like Tencent didn't actually make any money from the envelopes themselves, but instead benefited by getting 5 million of its users to bind their bank cards to their accounts. That's an extremely important step as Tencent tries to build up lucrative e-commerce business on WeChat. By comparison, the mobile arm of Alibaba's Alipay mobile service, known as Alipay Wallet, currently has about 10 million registered users. According to Tencent, users sent some 20 million red envelopes over the first 2 days of the Lunar New Year.