Tencent’s had a busy week moving into coffee and cars
Tencent is giving Alibaba a run for its money in coffee and online — and robotic — deliveries
From coffee to electric cars to an online platform for just about everything, it’s been a busy week for Chinese internet giant Tencent and its associates.
Tencent upped the ante on rival Alibaba in their race to corner the market for China’s coffee drinkers. It signed a strategic partnership agreement with local chain Luckin Coffee on Thursday, according to official WeChat accounts for the companies.
The tie-up will explore robotic delivery of orders as well as payments using facial recognition. Tencent’s WeChat payment system will also be used at Luckin stores and orders online, according to the statements, which did not disclose the deal terms.
The partnership comes on the heels of Starbucks joining forces last month with Alibaba’s Ele.me food delivery unit to begin delivery of its drinks and baked goods in China. The global coffee brand is putting down big bets in China, wagering that it will triple revenue there over the next five years.
Luckin, a Beijing-based coffee start-u" that opened for business this year, says it has expanded to 1,000 stores in urban areas. Tencent has more than one horse in the race. It also partners with Starbucks on mobile payments and social gifting on the coffee giant’s WeChat app.
China’s Meituan-Dianping, an online food delivery-to-ticketing services platform backed by Tencent, confirmed it had filed for an up to $4.4bn Hong Kong initial public offering (IPO) and said it will focus on its domestic business instead of overseas expansion in the near future.
It set an indicative price range of HK$60 to HK$72 per share for its IPO, confirming a Reuters report and valuing itself at up to $55bn. That could make it the world’s biggest internet-focused float since Alibaba’s $25bn New York listing in 2014.
Beijing-based Meituan, which offers services ranging from movie ticketing and food delivery to hotel and travel bookings as well as ride-hailing, will make its market debut on September 20. It was valued at about $30bn in a fundraising round late last year.
Investor excitement for China’s electric-car business gets a reality check next week. NIO will become the first major electric-car maker to have a US IPO since Tesla in 2010, and its stock is set to start trading on September 12.
The Tencent-backed company seeks a valuation of $6.4bn to $8.5bn — even though it has delivered fewer than 2,000 vehicles.
Shanghai-based NIO wants to grab the pole position in the race to be China’s homegrown answer to Tesla, competing with dozens of domestic car makers to capitalise on rising demand in the world’s largest market.
Yet that battle also attracts the same type of intense scrutiny that Elon Musk’s Tesla faces, as many of the fledgling companies need to convince investors they have the manufacturing capacity to deliver on their promises.
"The bull case for NIO is that it has the potential to be China’s electric-vehicle champion," said Robin Zhu, an analyst at Sanford C Bernstein in Hong Kong. "The bear case is that the business burns cash at an alarming rate and hasn’t demonstrated transformative demand levels."
Bloomberg and Reuters