Alibaba Raises Stakes in China’s Chatbot War Ahead of Lunar New Year

China-based Alibaba plans to spend 3 billion yuan (about $432 million) during the Lunar New Year holiday to promote its Qwen artificial intelligence app, Reuters reported Monday (Feb. 2).

The move escalates a marketing and incentives battle among China’s largest technology firms as consumer-facing AI chatbots compete for users, the report said.

In January, Alibaba added agentic and payments capabilities to Qwen that let consumers complete in-chat purchases.

The spending pledge, which Alibaba said will begin Feb. 6, is designed to attract users through incentives tied to dining, drinks, entertainment and leisure, including what the company described as large red envelope-style rewards distributed throughout the holiday period, according to the Reuters report.

The commitment is roughly triple the sums announced by domestic rivals Tencent and Baidu, underscoring how aggressively China’s tech giants are using the festive season to drive adoption of new AI products, the report said.

Lunar New Year as a Digital Battleground

China’s Lunar New Year has long functioned as a proving ground for digital services, with hundreds of millions of people traveling, socializing and spending more time on their phones, according to the report. The period famously reshaped the mobile payments market a decade ago, when red envelope campaigns helped accelerate the use of digital wallets across the country.

This year’s public holiday begins Feb. 15 and runs for nine days, longer than in many prior years, giving companies an extended window to lock in user habits, the report said.

Alibaba did not specify whether its incentives would be paid out as cash or as coupons redeemable across platforms such as its Taobao eCommerce marketplace, per the report.

Rivals are taking similar approaches. Tencent said it would spend 1 billion yuan promoting its Yuanbao chatbot, with rewards that can be withdrawn to users’ WeChat wallets, while Baidu has earmarked 500 million yuan for its own AI promotions, the report said.

AI Competition Accelerates

The marketing push comes as competition in China’s AI sector intensifies following the launch of advanced domestic models that have shaken up the market. The debut of DeepSeek’s R1 model last year accelerated adoption and raised expectations for performance among Chinese developers, according to the report.

Several AI firms have timed product upgrades to coincide with the holiday rush. DeepSeek is expected to release its next-generation V4 model in mid-February, featuring stronger coding capabilities, Reuters reported Jan. 9.

PYMNTS Intelligence data showed that consumers tend to stick with the first AI chatbot they try, locking in usage patterns early. That dynamic helps explain why companies are moving beyond technical benchmarks and leaning on familiar growth playbooks from payments and eCommerce, using incentives and social sharing to drive downloads and habitual use.

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