Midea Group, one of the world's leading household appliance manufacturers, has teamed up with tech titan Alibaba Group Holding Ltd to launch business in the emerging new retail sector, according to sources with both companies.

Xiaomaigui, a high-tech retail store concept using so-called mini unmanned counters, backed by Midea and Alibaba, was launched in Hefei, the capital of Anhui province, on Tuesday.

Midea Group and the managing team holds 85 percent and 15 percent of the project respectively, and the team is considering attracting venture capital for the project after the first round of investment totaled 50 million yuan ($7.6 million).

Xiaomaigui, a separate brand initially developed by Midea, is a new retail terminal based on RFID, or radio frequency identification devices, according to Dai Jiang, founder of Xiaomaigui.

"The RFID will help boost efficiency of inventory and order management and increase customers' experience," Dai said.

According to Dai, Xiaomaigui is also equipped with a series of smart censors including GPS and smart meters.

"Customers only need to scan a code to open the counter door and select goods. When they close the door, payment will be automatically finished within five seconds," Dai said.

According to Dai, Xiaomaigui will be present in most first and second-tier cities within 18 months.

"We are aiming to develop into a leading industrial player in the Chinese market in the next 30 months," Dai said.

The terminal facilities are currently under mass production, with a capacity of 15,000-20,000 units per month in the second quarter of 2018, according to Dai.

Wang Jianguo, vice president of Midea, said the company will fully support Xiaomaigui's business in product supply, manufacturing of facilities and service.

"We are very optimistic about the smart new retail business in the near future, thanks to the booming mobile internet service," Wang said. Alibaba will support the business in information security, mobile payment and cloud computing, according to Ku Wei, general manager of Alibaba's internet of things business.

New retail, which stresses the consumer experience and emphasizes online and offline integration, has become one of the most targeted areas for investment from big internet players and traditional manufacturers.

Tech giant Tencent is also reportedly planning to buy a stake in domestic supermarket operator Yonghui Superstores Co, which is backed by JD, in its latest push in retailing.

A senior executive told Caixin that Super Species, a new retail unit of Yonghui Superstores, will be integrated with Tencent's social media platform WeChat upon the transaction's completion, thus its payment and promotion channels could be expanded via WeChat Pay and other functions.