Starbucks pulls off China's face-changing stunt

A Starbucks flagship store at Kerry Center, Beijing.CHINA DAILY

Besides manufacturing in China, local leadership talents and innovation have powered Starbucks' rapid expansion in the country over the past 17 years.

John Culver, group president of Starbucks Coffee China and Asia Pacific, channel development and emerging brands, said: "One of the things we do to become successful is, we allow the local leadership team and the management team to determine what's best for our business, and take decisions accordingly."

Over the last four years, that approach has led the company to focus on how to strike a balance between being a local company and a global brand. It built an emotional connect with its local staff and stakeholders through regular meetings.

That is expected to hold Starbucks in good stead as it seeks to exploit the growth opportunity presented by the expected doubling of Chinese middle class to 600 million by 2022, said Culver, who has been working in Asia for nine years. "We attract more customers to our stores in China today than we had in the past."

He said when Starbucks cafes opened in China 17 years ago, tourists and expatriates were the main customers. "Now, the stores are crowded with local Chinese consumers. We are growing in a focused and disciplined way, to make sure the brand is enhanced. Our partners will continue to deliver a great cafe experience to customers, going forward."

Elizabeth Friend, senior food service analyst of Euromonitor International, said last year and the first quarter of this year have been eventful for global cafe chains. For, demand for specialist coffee grew consistently, leading to rapid innovation and growing competition among the players.

While regions worldwide will see strong growth, Asia Pacific will likely record the largest sales rise, with over $3.7 billion in new value growth from this year to 2020.

As much as $2.2 billion of this growth will come from China alone, where Starbucks is leading the charge for a rapidly growing, Western-style tradition of drinking premium takeaway coffee and socializing in coffee shops, she said.

Friend said coffee players are seized of the growth potential in China, although there has not yet been any significant shift from tea to coffee beverages in this market.

"The key to marketing messages is to try and convince consumers that you are here to add to the diversity of drinks, rather than asking the Chinese to replace tea with coffee," she said.

At this stage, it is important to identify which products might best meet consumers' tastes and develop the suitable channels to distribute them, she said.