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Alibaba Invests in China’s Food Delivery Market, Takes on Tencent

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Tencent and Alibaba increase investments in Chinese food delivery market

Alibaba (BABA), which is the biggest e-commerce player in China, lags behind Tencent (TCEHY) when it comes to the food-delivery market. Alibaba recently announced that it and its affiliate Ant Financial will invest $483 million (3 billion renminbi) in Chinese food service company Koubei. Tencent also has investments in food-delivery service Ele.me, restaurant review site Dianping.com, and e-commerce player JD.com (JD).

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Both Tencent and Alibaba are looking to tap the food delivery market, as the food and non-alcoholic beverages market is the biggest in China. According to Alibaba’s F-1 filings citing market intelligence firm Euromonitor International, the food and nonalcoholic Beverages segment sees the most consumption in China (MCHI), as the chart below shows. It constitutes 26% of overall consumption in China with housing, clothing and footwear, transportation, and health industries coming after it.

Walmart invested in China’s online grocery store Yihaodian

Looking at this potential, Walmart (WMT) took more than a 50% stake in Yihaodian, which is a specialized online grocery store in China. According to a Wall Street Journal report, “Yihaodian recently increased the number of products sold on its site, built up its supply chain and streamlined its mobile site in a push to boost sales.”

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