This is People's Daily Tonight. 

New retail player shakes up coffee market in China

A rising Chinese coffee brand has been in the headlines, and experts find it more worrying to speculate the branding through lawsuits and finger pointing. 

Beijing-based startup Luckin Coffee issued an open letter on May 15, accusing Starbucks, the international coffee giant, of unfair competition and monopoly in the Chinese market. The letter indicated that Luckin Coffee will also sue Starbucks. Experts don't agree with such a branding campaign, as Luckin Coffee might face risks by blaming its competitor, saying that by the end of the day the crucial part for brand growth will be all about products and client base. 

Major risks

Luckin Coffee faces the challenges of attracting customers. The brand claims to have served five million cups of coffee to more than 1.3 million customers in 13 Chinese cities since early 2018. The reality is Starbucks has been there for almost 20 years with a solid client base, most of whom were born in the 1980s or 1990s, live in first-tier cities and with relatively higher customer loyalty. 

To wage war against Starbucks is also risky for its own brand development. Luckin Coffee is still trying to develop its brand, and finger pointing will merely create a negative impression for its brand. To make matters worse, Luckin Coffee’s excuse has nothing to do with its products. 

As a start-up company, Luckin Coffee is supposed to focus on market development, differentiated beverage and customer loyalty, said Cao Lei, director of the Hangzhou-based China e-Business Research Center. 

Survival imperatives 

High quality and cost-effectiveness are two factors in Luckin Coffee’s favor. In the process of its rapid expansion, its third party partners might need some quality control, said Chen Liteng, an assistant analyst with a Chinese e-commerce research center. 

Starbucks might be strong and dominant in China, however, some customers find it time consuming to walk to one of its outlets and fall in line for a cup of coffee. This could be the opportunity for Luckin Coffee to catch up with its new retail concept, Chen pointed out. 

It's also important to unleash the power of social media. 

Luckin Coffee is smart to manage the data-centered operation in its new retail concept, which has cut management costs to almost nothing, Chen said. 

Cao believes that Luckin Coffee still need to work on applying big data to the coffee industry and use big data as its main tool to create specific user scenarios for its brand.

And that's People's Daily Tonight. Thanks for joining us.

(Produced by Han Xiaomeng and Liang Peiyu; story written by Dong Feng)