----The Secret of Starbucks’ Success in China The current event article I found tells about the successful marketing strategies that the Starbucks Corporation takes to enter into the market of China, and simultaneously the problems and difficulties it has in the process of market expanding. Follow him on Twitter @Taylor_Butch. China contains a number of distinct regionally-based markets, a factor that makes market research crucial to launching new stores and franchises in China. Young actors are revolutionizing Pakistan’s film and television industry. These employees are the most knowledgeable about all coffee aspects. His work has previously been published at Asia Times, The Jerusalem Post, International Policy Digest, Real Clear Defense, and other publications. The country exceeded 500,000 cases right as international researchers were moving closer to an effective vaccine. Is This The Recipe For Starbucks' Continued Success In China. “Over time, it’s conceivable that China could become our largest market and I am grateful to our 30,000 dedicated China [employees] and their supportive families for the significant contributions they are making to Starbucks success,” Starbucks CEO Howard Schultz said in January. But contrary to McDonald’s strategy, Starbucks in July bought out its East China joint-partnership – formed with Uni-President Enterprises Corp and President Chain Store Corp – … The reason for this closure was an Internet campaign started by Rui Chenggang, a TV anchorman, who stated on his blog that the store “tramples over Chinese culture.” The American coffee shop was then replaced by a Chinese coffee shop called The Forbidden City Café. In other words, the coffee company is perfectly happy catering to its audience who likely are majority Chinese and chooses to not overtly push Western values. How will U.S. President-elect Joe Biden manage the U.S.-China relationship? Walk into any Starbucks in an office building at 3PM and you will see a buzzing throng of people exchanging office news, admiring and getting information about the latest fashions from their colleagues, and talking with their friends about the next travel destination. These strategies, together with the positive way its employees are treated, create a solid foundation necessary for Starbucks to expand in China. Consequently, they want to be associated with brands and products that portray prosperity, success and upward mobility. Even amid the current tensions, the state of the relationship is more complex than headlines would suggest. I…. However, success for Starbucks in China is not a given, and they will face several challenges in the coming years. Click here to subscribe for full access. Co-written with Suresh Dalai, a consultant with Alvarez & Marsal and former operations and merchandising director of Levi Strauss Asia and Ermenegildo Zegna, China, Starbucks has meticulously organized its efforts in China around three key pillars of Chinese... [+] society. By aiming to embed itself in China’s centuries-old culture, Starbucks inevitably plays the long game, leading to a deep commitment to the market. We did not know who or how many would come. Parents should strongly engage in their children’s lives -- their upbringing, education and career -- and in return, children should respect and care for their parents as they age. Today, there are over 4,200 stores in 177 cities in mainland China, employing … What Starbucks did right in China is a great case study how food brands can succeed despite rising labor and real estate costs and increased competition on the mainland. Opinions expressed by Forbes Contributors are their own. In January 1999, Starbucks opened its first store in mainland China at the China World Trade Building located in Beijing. With this in mind, Starbucks designed its retail spaces to facilitate these “circles” coming together. But contrary to McDonald’s strategy, Starbucks in July bought out its East China joint-partnership – formed with Uni-President Enterprises Corp and President Chain Store Corp – to take over full control of its market operations. Starbucks’ relationship with China has not always been without slight bumps. In June 2014, Starbucks introduced the China Youth Development Program, which molds future leaders. Since those early days Starbucks has meticulously organized its efforts in China around three key pillars of Chinese society. © 2020 Forbes Media LLC. Unlike in the United States, where Starbucks chairs are often the quiet haunts of solitary laptop users, China’s Starbucks are laid out to welcome crowds, noise and lounging. As previously covered in this column what Starbucks understood when they entered the market was that it was not about the coffee initially. Since … Point 2: They got the high traffic and high visibility locations – and Chinese have taken to their “3rd location” concept. While the coffee conglomerate is working the above union to perfection, it is simultaneously massaging relationships with local Chinese government officials. Positioning and demand creation Starbucks has literally created demand for coffee in China. It charges 20% higher prices in China compared to other parts of the world. (Photo by Stephen Brashear/Getty Images), EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation BrandVoice, Meet The Woman Behind Starbucks' Rapid Growth In China, Five Things Starbucks Did To Get China Right, In China, Starbucks doesn’t sell coffee to make its millions -- it rents couches, Starbucks Wants To Crack Asia's Tea Market. About I have completed projects for more than 200 multinational and small and medium sized enterprises in China. This last initiative is projected to help more than 25,000 earn a degree by 2025 at a cost to the coffee company of at least $250 million. Starbucks in China Starbucks entered China back in January 1999. How has this mega-company succeeded in a country which traditionally favors drinking tea? It was unbelievable . There were parents, grandparents, aunts, and uncles. Six Starbucks partners (employees) proudly wearing the Starbucks green apron shared the limelight at the award ceremony, receiving the award on behalf of Starbucks 55,000 partners in China. I am Vice President, China/Asia and Global Retail and E-Commerce Practice at the global consulting firm Tompkins International and author of "China's Super Consumers." This is not the first time the coffee chain has heavily invested in its employees. Another dispute involved Starbucks setting higher prices for their Chinese products. Starbucks' global success was based on being the "third place" between home and work and brought that ethos to China -- but with a modern, Western, upscale sensibility. The coffee giant recognizes how important Beijing is to the brand. The case of Lancôme and the politicization of China's vast market. Starbucks, and how it enables Chinese to observe their culture, is a powerful example for any global brand on how to operate in the country. Key areas of concentration are consumer products, retail, luxury, healthcare and automotive. it was a breakthrough for the company and a milestone for local relevancy and sensitivity.”, Read more: Five Things Starbucks Did To Get China Right. With more than 500 new locations built in 2015 alone, China has become the coffee giant’s top market outside of the United States. Just $5 a month. As Quartz's Gwynn Guilford put it: In China, Starbucks doesn’t sell coffee to make its millions -- it rents couches. For example, in 2013, Chinese products reportedly cost a third more than their American version. A centerpiece, this mural includes intricately designed silhouette scenes inside a handful of cups designed by local artists representing China’s cultural heritage.”. From its inception, Starbucks has encouraged Chinese customers to socially interact with it and their friends using the hashtag “#starbucks#.”. China’s new focus on testing packaging comes amid a media push to claim that frozen food imports brought the virus to Wuhan in the first place. The proud moment was streamed […] I provide companies with go to market, global e-commerce, expansion, consumer engagement, operations and supply chain strategies and implementation in China and Asia. The premium pricing strategy of the company aimed at improving its brand positioning in the Chinese market, where consumer perception was that higher-price products offered higher quality. Read more: Starbucks Wants To Crack Asia's Tea Market. Besides China, Starbucks is paying for employee housing in the U.K., and in 2014, it partnered with Arizona State University to provide “full tuition coverage” to full and part-time Starbucks employees so they could enroll in one of nearly 50 online degrees. The success of the program cannot be underestimated. China’s recent improvements in IP protection can’t overcome the fact that its legal system will never offer a level playing field. Starbucks incentivizes its more than 30,000 employees well in China. It chooses very high-end locations for its outlets including luxury malls and iconic office towers. Recovery from the pandemic and its economic effects has become an arena for strategic competition in Southeast Asia. Starbucks too plans to increase its number of outlets in China to 5,000 by 2021. Chinese highly value their community, traditionally labeled as their “inside circles.” Be it their homes, schools or companies, they turn to these circles for loyalty, information and approval of their choices. The company has continued to build on this. Get briefed on the story of the week, and developing stories to watch across the Asia-Pacific. Much more importantly, it says to Chinese “partners” that it respects their parents in a way that truly touches the Chinese heart. Restarting the Chinese economy will require an increase in consumer spending and confidence. Read more: Is This The Recipe For Starbucks' Continued Success In China?