Corporate China

Red envelope wars in China, Xiaomi eyes US

PUBLISHED : Tuesday, 17 February, 2015, 9:26am
UPDATED : Tuesday, 17 March, 2015, 4:37pm


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A recent round of virtual "red envelope wars" was making waves in the microblogging realm in this final week before the Lunar New Year, in one of the many recent battles that have seen Internet titans Alibaba (NYSE: BABA) and Tencent (0700.HK) lock horns. This particular rivalry has gained wide attention in the Chinese headlines these last few weeks, though it's worth noting that many others are staging similar copycat promotions following the huge success of Tencent's original virtual hongbao promotion last year.

Meantime, the hyperactive Xiaomi moved offshore in its own bid to make sure it continues to garner attention, with a flurry of microblogging buzz related to its new move into the ultra competitive US market. Last but not least, several high-tech leaders extended their well wishes to Internet elder Lee Kai-fu, following his return to his Innovation Works high-tech incubator in Beijing more than a year after returning to his native Taiwan for treatment of cancer.

There's no major common theme to this week's microblogging round-up, other than the year-end feel to much of it. The virtual red envelope wars have been making headlines for the last couple of weeks, and center on the traditional practice of giving out cash-filled envelopes to young people during the Lunar New Year. Similarly, Xiaomi probably chose to announce its US initiative now because any such moves in China would have gone largely unnoticed in the pre-New Year rush.

Lee Kai-fu is also probably hoping his return to China will be equally low-key, following talk that his hasty departure in 2013 may have been partly linked to Beijing's growing displeasure about his outspoken views on Chinese politics. Such discussion has disappeared from Lee's microblog since then, though he has started to comment again on more high tech-related issues in the run-up to his return.

Let's begin our weekly microblogging round-up with the war over red envelopes, or hongbao, which splashed into the headlines two weeks ago when Tencent expelled an Alibaba promotion from its popular WeChat messaging service.  

Alibaba chief Jack Ma doesn't directly mention the clash in one of his occasional posts since he recently resumed microblogging. But he makes indirect reference in a post where he proclaims he'll be giving out Alipay hongbao over Alibaba's own Laiwang service, a direct rival to WeChat that has yet to gain much traction since its launch more than a year ago.  

Elsewhere on the topic, Lenovo (0992.HK) CEO Yang Yuanqing also reveals that he'll be giving out his own hongbao, though he declines to say if his red envelopes will come from Alibaba, Tencent or perhaps will be his company's own product. It does seem like quite a few companies in China are doing virtual hongbao promotions this year, following the success of Tencent's original promotion last year that attracted more than 5 million customers

Meantime, several executives were sending out their well wishes to Lee Kai-fu, after media reported the former Google (Nasdaq: GOOG) and Microsoft (Nasdaq: MSFT) executive has returned to Beijing to resume his role at his Innovation Works. Lee rose to fame in his previous roles at the big US tech firms, but left Google shortly before its high-profile spat with Beijing that ultimately saw it shutter its China-based search service.

After that Lee started Innovation Works to nurture a new generation of Internet companies. He became a strong voice for China's private tech sector on his microblog, which was followed by millions, but also became more political in some of his views. That led some to speculate that perhaps his abrupt departure in mid 2013 to return to Taiwan was also partly due to pressure from Beijing, though obviously his cancer treatment was the main reason.

Those welcoming Lee back to Beijing included Zhang Yaqin, former head of Microsoft's China R&D lab and now a top executive at Baidu (Nasdaq: BIDU). Others welcoming Lee included Zhou Hongyi, the outspoken CEO of software specialist Qihoo 360 (NYSE: QIHU), who promised to pay a visit to Innovation Works and explore its efforts in cellphones, where Qihoo recently made a major acquisition.  

Finally there was Xiaomi, which was making waves in the US with its announcement that it would start selling products in the lucrative but fiercely competitive market. The move marks Xiaomi's first into a developed market, and the company's caution was at the forefront as it revealed it would initially limit its efforts to secondary products like wearable devices rather than its core smartphones.

Xiaomi's international sales chief Hugo Barra, who joined the company more than a year ago after leaving a high-profile position at Google, led the team of Xiaomi executives that traveled to the US for the launch. Barra commented that the team was hoping to raise Xiaomi's profile among US consumers, since the company is currently unknown in the market.  

Others in the entourage included Xiaomi co-founder Lin Bin, who revealed the company will launch its site in the months ahead to target US users. Chen Tong, another Xiaomi vice president who joined the company last year from leading web portal Sina (Nasdaq: SINA), acknowledged the US campaign will be an uphill climb that will take time. The mix of enthusiasm and caution looks prudent for the high-flying Xiaomi, which will face unprecedented competition and could quite possibly fail in its first major foray into a highly contested western market.