Photo/Xie Hongchen

Dec. 29 (NBD) -- Luckin Coffee, a fledging coffee chain brand in China that takes on Starbucks, was reported to be in the initial talks with overseas investment banks with a goal of going public in Hong Kong or New York next year, news reported.

According to an online system for verified information of enterprises, Luckin Coffee (Hong Kong) Limited has been set up, which seems to show the homemade coffee brand has been well-prepared for its Hong Kong debut.

As a latecomer in the coffee market, Luckin Coffee has long been ambitious to compete with Starbucks. 

On Tuesday, after no more than a year in business, the Chinese player announced that it achieved the goal of opening 2,000 brick-and-mortar stores within a year ahead of time, with 5.5 newly-opened stores each day on average, covering 22 cities across China.

Starbucks, the top coffee chain brand whose mainland adventure began in 1999, took 17 years to open 2,000 stores in China.

Different from Starbucks, Luckin Coffee opens stores at areas that are relatively not bustling enough than central business districts and is better at catching people's attention with the help of Internet. Also, the Chinese coffee upstart provides more affordable products and more subsidies. Furthermore, consumers are able to buy Luckin coffee on its online application with delivery services, which not only decreases the customer acquisition costs but also makes coffee more accessible and relaxing for consumers.

Due to the large and fast-growing domestic coffee market and sufficient venture capitals, Luckin Coffee has completed two funding rounds, becoming a unicorn in the industry within only a short period of time.

In July this year, Luckin Coffee announced that it had finished the series A round of financing with funds totaling 200 million U.S. dollars. In December, the domestic coffee brand declared that the series B round of financing worth 200 million U.S. dollars had been completed, after which it was valued at 2.2 billion U.S. dollars.

However, mere money is far from enough for the future development of Luckin Coffee, since the marginal effects brought by burning through money are diminishing.

Despite the huge room for development of the coffee market, expanding too rapidly will cause a waste of resources and a sharp increase of costs. Once capital chain rupture occurs, Luckin Coffee may be stuck in the problems currently faced by bike sharing companies like Ofo.

In addition, compared with low-cost products, highly cost-effective ones are now preferred by consumers. To improve the quality of products and customer experience and seek innovation in service models should be Luckin Coffee's directions for further development.

Email: wenqiao@nbd.com.cn