Alibaba AI investment is set to rise sharply as the company announced a 3 billion yuan ($431 million) spending plan to attract users to its Qwen AI app during the Lunar New Year holiday.

On Monday, Alibaba said the initiative will begin on February 6. It aims to strengthen user engagement through large-scale incentives. These include offers for dining, drinks, entertainment, and leisure. In addition, the company plans to distribute continuous “red envelopes” as part of the campaign.

Moreover, the new pledge is three times higher than the spending announced earlier by rivals Tencent and Baidu. Last month, Tencent said it would invest 1 billion yuan, while Baidu committed 500 million yuan for similar promotions for their AI chatbots.

Meanwhile, Chinese tech companies have long used the Lunar New Year period as a key marketing battlefield. During this time, hundreds of millions of people travel home and spend time with family. As a result, firms see it as a major opportunity to acquire new users.

In comparison, a notable example dates back to 2015. At that time, Tencent used WeChat to distribute digital red envelopes. This move helped WeChat Pay gain ground against Alipay, which then dominated the mobile payments market.

Furthermore, this year’s public holiday begins on February 15 and lasts nine days. This is longer than in most previous years. Consequently, companies are intensifying their efforts to capture user attention.

At the same time, competition in China’s AI sector has accelerated since the launch of DeepSeek’s R1 model in January last year. The development unsettled global AI markets and encouraged faster adoption and stronger rivalry among domestic players.

In parallel, Tencent’s campaign focuses on its Yuanbao chatbot app and starts on Sunday. Users must upgrade to the latest version to claim digital red envelopes. These rewards can be withdrawn to WeChat wallets. Users can also share links to earn cash rewards.

However, Alibaba has not clarified whether its incentives will be issued as cash red envelopes or as discount coupons. These may be redeemable on platforms such as Taobao and other e-commerce services.

In addition, several Chinese AI firms are releasing upgrades ahead of the holiday season. DeepSeek is expected to launch its next-generation V4 model in mid-February. The model is reported to feature strong coding capabilities.

Overall, the aggressive holiday campaigns highlight the growing importance of user engagement in China’s AI market. With rivals expanding their incentives and product upgrades, Alibaba AI investment remains central to its strategy to strengthen Qwen’s position and compete in an increasingly crowded sector.

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