A free cup of tea can be a magnet for people. Over the Lunar New Year weekend, consumers in China lined up to take advantage of freebies promoted through the Qwen chatbot, which is owned by Alibaba.
The influx of new users temporarily overloaded the app’s systems, proving the popularity of artificial intelligence services and the potential pitfalls of marketing campaigns based on deep discounts. Although the campaign was successful, it also posed a question that has been asked before: Can freebies convert interest into sustained loyalty?
Alibaba kicked off a holiday marketing campaign worth over $400 million, rewarding customers with free drinks and shopping vouchers if they used the Qwen chatbot. The reaction was swift. In the first nine hours alone, customers ordered about 10 million cups of milk tea.
Demand rose so fast that the company asked users to pause while engineers worked to keep the service running smoothly. The moment drew attention online and highlighted how quickly AI platforms can attract users when linked to everyday purchases.
Alibaba, Tencent, and ByteDance Battle for Festive Market Dominance
Qwen represents Alibaba’s push into task-focused AI. Instead of acting only as a conversational assistant, the chatbot completes actions on behalf of the user. A simple command such as “help me buy” allows the system to place orders, process payments, and finalize transactions without requiring customers to move between apps.
This approach reflects a wider industry goal: turning AI into an operating layer that performs digital tasks directly.
Other tech giants are also targeting the same group of people during the festive season. Tencent is giving out digital red envelopes containing one billion yuan in total through its Yuanbao chatbot. This is in line with the tradition of giving red envelopes during the Lunar New Year celebrations.
ByteDance, on the other hand, has teamed up with the Spring Festival Gala, which is the most-watched television program in China, to market its Doubao AI assistant and Volcano Engine cloud and model services.
This intense competition follows a pattern common in China’s internet industry. Major platforms often spend large sums to win market share, even when profits remain uncertain.
AI’s Struggle to Break the Subsidy Cycle
Food delivery and e-commerce companies have relied on subsidies for years to attract customers. In 2025, aggressive discounting campaigns involving Meituan and JD.com pushed prices down across the sector and eventually drew attention from regulators concerned about unsustainable competition.
AI companies now face a similar cycle, but with higher costs. Advanced models require powerful chips, large data centers, and constant computing resources. These expenses continue whether or not users pay for the service.
However, persuading consumers to subscribe is still a challenge in China, where most online services rely on scale instead of subscription. Industry insiders have already cautioned that subscription services, which are popular in Western countries, may find it hard to gain popularity in China.
This means that developers are still looking for ways to make money. Some companies are considering advertising or sponsored search results as potential ways to generate revenue.
Can AI Move From Headlines to Profits?
Even OpenAI, the company behind the chatbot, has announced plans to test sponsored content within its chatbot products. This is an indication that monetisation issues are not limited to China.
The increase in AI promotions indicates that technology companies are both confident and worried. While technology companies are confident that AI agents can become the next big entrance point for online activities, such as shopping, payments, and online services, through a single interface, they have yet to demonstrate how to monetise widespread adoption.
While holiday giveaways may produce headlines and millions of downloads, they are unlikely to produce lasting loyalty on their own. Users who come for the discount may stay only if the AI assistant continues to provide value by saving time, simplifying tasks, and improving daily life.
The current AI battle in China is merely a reflection of the industry truth. It is easy to get attention. The harder part is to create a sustainable business that lasts after the free tea is gone.
