Photo/Shetuwang

Sept. 7 (NBD) -- The battle between Tencent and Alibaba is seemingly heating up. 

Tencent Thursday announced a strategic partnership with Luckin Coffee. This is counted as a response to the cooperation between Alibaba and Starbucks that was reached one month ago. 

Prior to this, Tencent and Alibaba have competed head-to-head with each other in multiple industries, including retail, mobility, and finance. Tencent's tie-up with Luckin will expand the battleground to the coffee market. 

Lei Maofeng, deputy general manager of Tencent's payment platform WeChat Pay, said Luckin has a deep understanding of the retail industry and leads the industry in digital operation, and WeChat has great Internet products and technical competence. The companies' tie-up with Luckin is helpful to develop smart retail solutions for China's coffee industry.  

Under terms of the agreement, Tencent and Luckin will make the most out of social traffic and offline scenarios to conduct differentiated operation and increase user loyalty. They will also explore the use of technologies like facial recognition payment and artificial intelligence in offline scenarios to deliver fresh consumption experience. Moreover, they will leverage advanced technologies to offer custom-made services such as personalized menu. 

Once a major consumer of tea, China has seen an expanding coffee consumption market. The market is growing at an astonishing rate of 15 percent annually, much faster than the international average growth rate of 2 percent. It is expected to be worth about one trillion yuan (146.6 billion U.S. dollars) by 2025, according to an industry report. 

The promising market has even attracted a number of foreign companies. 

In August this year, Coca-Cola thrust into the coffee market through the acquisition of Britain's biggest coffee chain Costa at 5.5 billion U.S. dollars. Also in the month, Japan's top coffee chain Doutor Coffee built a presence in China with the opening of its first shop in Shanghai. 

Kenya's Java House, the largest chain of coffee and dining shops in East Africa, has entered into a distribution agreement with CJ Smart Cargo's subsidiary Green Chain to bring Kenya's tea and coffee to China.

Email: lansuying@nbd.com.cn