Alibaba Group Holdings Ltd. is said to be the biggest stakeholder in Meituan but is not content with the online platform’s recent move. The company decided to opt for a merger in October with Dianping which is backed by Tencent. So after this move, Dianping invested another $1 billion in the merged commodity.
So now Alibaba Group is deciding regarding the streamlining of the proceeds they have observed from the sales of its stakes to Ele.me – an app that delivers food being a direct competitor to Meituan-Dianping.
The reason why BABA wishes to invest in Ele.me is simple since it wishes to take Tefncent along with other growing Interhnet based companies like Baidu down.
If the company is successful in rapidly proliferating the mobile Ecommerce service, the company has now decided to offer consolidation since by devising strategy that revolves around big discounts has actually failed to bolster businesses. Consumers are not loyal to the brand since they start to withdraw once the offering ends.
This has actually given birth to the turf battle that is gradually making its way tyo similar industries. Certain vendors in an informal manner have been approached by the sales team of Meituan-Dianpingso that they ditch Alipay the payment system, by Alibaba. They are now encouraging the consumers to opt for the alternative platform designed by Tencent.
Meituan-Dianping on its own has also asked vendors to sign an exclusive pact with Alipay instead of the recent Koubei venture that the company had launched a few months back.
According to the Financial Times, “Further clashes are being set up by changes to the companies’ business models. For example, Meituan, which accounts for four out of every 10 movie tickets sold in China, is now considering a move into film distribution, where it would compete with Alibaba’s Ali Pictures.” This has actually resulted in the executives at Alibaba to approach the investors and acknowledge them that consider Mr.Wang Xing, the founder of Meituan as “ungrateful”.
On the other hand, the local battles might just result in yielding the bargains for the upcoming investors considering the competition in this business. This actually encompasses Digital Sky Technologies. Tiger Global, andthe US investment fund. This is a great time for them to secure better terms with the Internet giants in China
However all those investors that have already invested in Meituan- Danping need to be worried now since a lot is at stake considering the present rivalry.
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