The Chinese food-delivery market is likely to see a direct fight between Chinese e-commerce giant Alibaba and tech giant Tencent. The former is reportedly setting aside hundreds of millions of dollars which it intends to put to use this summer to gain the leading positin in the market which has been dominated by Tencent-backed rival Meituan Dianping.

The Hangzhou based firm Alibaba had acquired the foo delivery online platform Ele.me in April for a reported price of $9.5 billion. now the e-retailing giant wants to make use of that firm to get a strong hold in the food delivery market of china with planned investments of over 3 billion yuan or $450 million within the4 next three months. Alibaba wants to use Ele.me to dislodge Meituan as the leader of the market, the CEO of Ele.me – Wang Lei, told the media.

The path to becoming the number one food delivery firm of China has also been worked out with the areas of investment marked clearly. Ele.me – which literally means “Are you hungry?” in Chinese, will adopt the strategy of handing out of more subsidies on meal, will expend money to enhance payments for its logistics personnel and invest to include more segments such as express delivery, says Wang. The online food delivery market of China is estimated to be worth a total of  205 billion yuan ($30 billion).

“This is a huge market that is only at early stage development,” Wang says. “We have a really clear strategy, and that is capture a more than 50% market share in the short to medium term.”

Wang says that in that respect, a ‘summer war’– as he calls it, it to be launched by Alibaba” on Meituan. Currently, rival Meituan has control over 46.1 per cent of the online food takeout market of China as of last year. in comparison, the market share of Ele.me in the same period was 39.5 per cent, according to data available from the consultancy firm Trustdata.

An application for issuing an initial public offering in Hong Kong was filed by Beijing-based Meituan in June this year. the company has sought a valuation of $60 billion. this IPO is part of the company’s plan of raising more capital for financing of more expansion strategies.

In an e-mailed statement to the media over the issue, a Meituan spokesman said that the company “has a track record of competing effectively against its competitors.” The company also said “the competitive landscape of on-demand delivery in China is led by Meituan Dianping, which saw its market share increase from 31.7% in 2015 to 59.1% in the three months ended March 31, 2018.”

(Adapted from Forbes.com)

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