(Yicai Global) Aug. 1 -- Starbucks has just posted its first profit margin decline in China in nine years despite steady and substantial revenue growth that the global coffeehouse chain attributed to shareholding changes in its East China outlets.

Earnings soared 46 percent to USD1.23 billion in the China/Asia Pacific market -- always seen as the Seattle-based company's cash cow -- in the third quarter ended June 30, National Business Daily reported. But operating profit fell 7.6 percentage points to register a 19 percent gain. Same stores sales in Greater China fell 2 percent, compared with a 7 percent gain a year earlier.

Starbucks arrived in China, its biggest and fastest-growing overseas market, 20 years ago. It didn't face much competition then or since. But this year it has come up against an online challenger, homegrown Luckin Coffee, which didn't shy away from asserting its intention of going head-to-head with Starbucks after a high-profile launch last November.

Beijing-based Luckin is proving to be a formidable antagonist. China's first coffee chain unicorn accused its US competitor in a public letter in May of signing contracts containing exclusive clauses with property management companies, charging it with monopolistic practices. It has even sued Starbucks for these alleged antitrust acts in a case still pending.

Starbucks isn't taking the challenge lying down. The company already planned to almost double its presence in China to 6,000 stores by the end of fiscal 2022, while increasing the number of cities it covers to 230 from 140. It is now mulling a deal with e-commerce giant Alibaba Group Holding to use its online food delivery affiliate Ele.me to transport coffees in a bid to buoy sales in China, Bloomberg and other media reported, citing an informed source.

The Alibaba deal is not limited to deliveries, but the source did not specify the exact scope. The tie-up would not affect Starbucks' collaboration with tech titan Tencent Holdings in the mobile payment and online gift businesses, the source added.

Ele.me will start to provide delivery services for Starbucks in the fall under an agreement slated for release later this week, the source said. Starbucks has not specifically confirmed the deal, but did say last week that introduction of a delivery service partner was in the cards for its Chinese operations.

Shares of Starbucks [NASDAQ:SBUX] rose 0.9 percent to close at USD52.39 today.

Editor: Ben Armour