Starbucks Growth in China

Starbucks has been very clear when it comes to its global expansion with respect to China. This

quote from Starbucks Corporate Chairman Howard Schultz says it all; “The No.1

priority for our company in terms of new growth is China”.

Starbucks growth strategy in China is multifaceted. The company is aggressively protecting its trademarks and intellectual property rights, which is a major problem for foreign companies entering the Chinese market, while at the same time attempting to show the similarities of coffee house and tea house cultures. Due to the overwhelming popularity of tea, when Starbucks first entered the Chinese market coffee was not a popular drink. Starbucks, however, never planned to change its overall product offering to appeal to the Chinese, instead they decided to cultivate a love of coffee in China.

Starbucks' was successful in doing this by educating consumers on the ins and outs of coffee house culture. The company kept its cream and sugar counters stocked with brochures titled "Coffee Brewing Wisdom" and others that answer questions like "What is espresso?"

The purpose was to ease the customers in to a place with an environment they were familiar with, and create repeat customers who will bring friends along on their next visit.

Due to Government restrictions Starbucks had to first enter China through a joint venture with Chinese companies. Due to strict regulations companies like Starbucks could not operate wholly owned stores in China. This ended in when “Beijing lifted those restrictions on foreign ownership in the retail sector at the end of 2004, as a condition for its entry into the World Trade Organization”. Since then, Starbucks has been purchasing stock to make sure they have a controlling interest in their stores.

Starbucks is forcefully protecting its brand, educating the Chinese on the compatibility of coffee house culture with tea house culture, and consolidating its ownership of its current stores while building...