Starbucks plans to announce an accelerated push into the Chinese market soon, company executives said Friday, the latest in a series of aggressive efforts by international food and beverage companies to expand in China. What is surprising about all these efforts, by companies like McDonalds and KFC, as well as Starbucks, is that so far they have made only a few concessions to Chinese tastes, instead of cultivating in China an appetite for Western products like Big Macs and large lattes. Like many other foreign companies, most notably General Motors, chains like Starbucks have also had problems in China with copying of their stores and logos.

Martin Coles, president of Starbucks Coffee International, and Christine Day, president of Starbucks Asia-Pacific group, convened a press conference in Hong Kong on Friday but later said they were not yet ready to announce details of their plans to China. "When you work with partners, it always takes longer than you think," Day said, adding that she expected an announcement in "a couple of weeks." Starbucks already has 120 stores in mainland China, a market it entered in 1999, and another 194 in Hong Kong, Macao and Taiwan. The company now has 9,000 stores, 2,600 of them outside the United States. The focus of growth is clearly outside the United States, with China assuming particular priority, Coles said. The company's long-term goal, which he refused to set in time, is to have 30,000 stores, half of them outside the United States and a very large proportion in China. "Longer term, it has the potential to be second only to the US in number of stores," Coles said.

The expansion of a coffee shop chain is particularly eye-catching in China, a land of tea drinkers. Starbucks typically offers just three or four types of tea in its stores in China, in addition to its usual range of coffees of all sizes and flavors. But while Starbucks is considering whether to offer more types of tea, it is mostly trying to cultivate a love of coffee in China. The company's market research has found that Chinese customers tend to initially come just to find a cheap place to meet and then start buying coffee as they become regular customers. Joey Chan, a 35-year-old employee who visited a Hong Kong Starbucks store for lunch on Friday, he said the stores had become part of the local culture and did not look like an American import. "Hong Kong people love to chat, and you can stay here as long as you want without worrying about the waiters asking you to leave," she said. Day said Starbucks had already brought a couple of Asian drinks to its American stores, most notably the green tea frappuccino, and was considering "four or five" more Asian drinks to add to Starbucks menus around the world.

While Starbucks has been growing rapidly in China, it has run into intellectual property violations that have affected many foreign companies. A single coffee shop in Shanghai went ahead of Starbucks with that city's business registration authorities and registered the pinyin spelling of the company's name, "xing ba ke." Day said the company had sued and expected a court verdict soon, adding that the store had already removed a sign resembling the Starbucks logo.

Questions

1. For Starbucks, how is the Chinese market different from the US market?

2. What are the pros and cons of Starbucks choosing China as a priority in its growth plan?

3. Based on the cultural differences between the Chinese and US markets, what recommendations would you give Starbucks to more effectively target the Chinese market?

Answer rating: 100% (QA)

1 The Chinese market differs from the US market for Starbucks in several ways Chinese consumers traditionally prefer tea over coffee so Starbucks had ... View the full answer