Alibaba, the biggest ecommerce player in the world’s biggest ecommerce market, will face heated competition from a long-term alliance timed strategically and deliberately to steal its thunder on a day with which it has become synonymous – Singles’ Day.

Tencent and have entered into a long-term innovative partnership whereby JD’s third party merchants will be able to use Tencent’s mobile marketing tools to promote Singles’ Day offers to consumers on the wildly popular social and mobile properties, QQ and WeChat. Collectively, these networks have well over 1 billion users worldwide. The announcement suggested that data will be made available to merchants to target their offers “more precisely” while improving their marketing ROI.

It’s a move that underscores what has already been identified in a recent report on the China market. That is, the Chinese shopper is becoming more sophisticated and willing to try new ways of shopping, whether it’s chat commerce or shopping directly on brand sites.

The brand exposure gained from the flood of Singles’ Day shoppers on Tmall on November 11 is an undeniable value-add. So too is the revenue generated, especially if a seller can move a lot of distressed inventory. Last year on that one day, Alibaba processed over $9 billion in sales, a staggering figure that dwarfs that of Cyber Monday and Black Friday in the US.

But Singles’ Day also exacerbates many of the challenges foreign brands encounter as they try to grow sales on a global scale; the biggest of these is margin impact.

As one retail executive we interviewed for our Executive Report on Asia commerce put it, There is a lot of pressure from Tmall to participate. Most choose to participate [and] plan a promotion to make something out of the minuscule margin. Yet many don’t participate because it is an event that erodes the brand.”

The advance planning necessary to generate online sales on Tmall on November 11 requires a lot of resources, and the marketing costs are quite high. Whether or not to discount is not the question – that’s a given – the question is how deeply. Other profit-eating losses stem from the high number of returns that Singles’ Day generates.

Singles’ Day symbolizes how some retailers see Tmall as a double-edged sword where the high cost of sales cuts deeply into margins. Promotions, pricing confusion and inconsistent merchandising can negatively impact a brand’s image and muddle the message that a brand wants to convey.

Other recent events – has filed a complaint against Alibaba alleging that the latter pressured retailers to pull out of JD’s Singles’ Day activities – demonstrate how high the stakes have become on this massive sales day.

Last week, as part of our Demandware Predicts series, Senior Commerce Strategist Daniel Reckling predicted that Alibaba will struggle in 2016. For all their size, he reasons, they have ceased to innovate and have yet to successfully enter new markets. At the same time, as the and Tencent partnership shows, Alibaba is facing challenges on its home turf.

Some brands are just saying no to Tmall and its Singles’ Day promotions. And now they have an alternative in and Tencent, where the terms of participation may work in their favor. They can now control the offers made directly to consumers on Tencent’s properties.

Alibaba will likely lose market share on a holiday sales event it pioneered. That said, will they eventually relent on the aggressive discounting they require of their merchants?