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Five Things Starbucks Did to Get China Right

If there is one company that should have failed in$$ China, it would be Starbucks. China has thousands of years of history drinking tea and a strong culture associated with it$.$ No one could have guessed that Chinese would ever drink coffee instead of tea.

$$Yet$,$ Starbucks has successfully opened more than $570$ stores in $48$ cities since it first entered China twelve years ago. Building on this$$ momentum, it plans to open$1,500$ stores by $2015.$ What did the$$ Seattle$-$based coffee company do right in$$ China? Here are five lessons from$$ Starbucks$$s success.

Think Different

When Starbucks entered China in$1999,$ many were skeptical that Starbucks had a chance. Given the fact that Chinese people have traditionally favored$$ tea, it seemed impossible that Starbucks would be able to break into this market.

$$However$,$ Starbucks did not let this skepticism stop it$.$ A careful market study revealed that as the Chinese middle class$$ emerged, there existed an opportunity for Starbucks to introduce a Western coffee$$ experience, where people could meet with their friends while drinking their favorite beverages.

Starbucks literally created that demand. Now you can find a Starbucks almost on every major street of the coastal cities in China. Even my$90-$year old father in China began to tell me how he drank coffee after$$ meals, rather than$$ tea, to help his digestion. Starbucks has revolutionized how Chinese view and drink coffee.

Position Smart

Once Starbucks decided to enter$$ China, it implemented a smart market entry strategy. It did not use any advertising and promotions that could be perceived by the Chinese as a threat to their$$ tea$-$drinking culture.$$ Instead, it focused on selecting$$ high$-$visibility and$$ high$-$traffic locations to project its brand image.

The next thing Starbucks did was to capitalize on the$$ tea$-$drinking culture of Chinese consumers by introducing beverages using popular local ingredients such as green tea. This strategy has effectively turned potential obstacles into$$ Starbucks$$ favor. Chinese consumers quickly developed a taste for$$ Starbucks$$ coffee, which was essential to$$ Starbucks$$ success in China.

One of$$ Starbucks$$ key marketing strategies is to provide customers with an exceptional experience. The chic$$ interior, comfortable lounge$$ chairs, and upbeat music are not only differentiators that set Starbucks apart from the$$ competition, but also have strong appeal to younger generations who fantasize about Western coffee culture as a symbol of modern lifestyle. Many go to Starbucks not just for a cup of$$ Frappuccino, but also for the$$Starbucks Experience$$ that makes them feel cool and trendy.

$$Thus$,$ Starbucks has established itself as an aspiration brand and is able to charge premium prices.

Brand Global

Starbucks understands the value of its global brand and has taken steps to maintain brand integrity. One of$$ Starbucks$$ best practices is to send their best baristas from established markets to new markets and train new employees. These baristas act as brand ambassadors to help establish the Starbucks culture in new locations and ensure that service at each local store meets their global standards.

Western brands in general have a reputation for quality products and services. They have a competitive advantage over Chinese companies in establishing themselves as premium brands.$$ However, as Shaun$$ Rein, founder and managing director of China Market Research$$ Group, pointed$$ out, too many Western brands push for market share by cutting$$ prices, which is a losing strategy because they can never$$out$-$cut$$ local Chinese competitors.

Global brand does not mean$$global products,$$ or$$global platform$$ as eBay mistakenly tried. Starbucks has highly localized menu of beverages that is particularly tailored to Chinese consumers. It has done an extensive consumer taste profile analysis to create a unique$$East meets$$ West$$ blend. It even gives each store the flexibility to choose from a wide variety of its beverage portfolio that fits the customers at its particular location.

It is critical for global brands to adapt their businesses to local markets in order to succeed in$$ China, and Starbucks has done just that.

Partner Local

China is not one homogeneous market. There are many Chinas. The culture from northern China is very different from that of the east. Consumer spending power inland is not on par with that in coastal cities. To address this complexity of the Chinese$$ market, Starbucks partnered with three regional partners as part of its expansion plans.

In the$$ north, Starbucks entered a$$ joint$-$venture with Beijing Mei Da coffee company. In the$$ east, Starbucks partnered with the$$ Taiwan$-$based Uni$-$President. In the$$ south, Starbucks worked with Hong$$ Kong$-$based Maxim$$s Caterers. Each partner brings different strengths and local expertise that helped Starbucks gain insights into the tastes and preferences of l