The news came in yesterday that Starbucks was buying out its local partner in China, thus taking control of around 60 shops in Beijing and Tianjin. The story can be read on BusinessWeek Online in their article "Starbucks Caffeinates Its China Growth Plan".
Below is a quote from the article that highlights the crucial difference that exists between running Starbucks in Western countries and running it in China:
"It's not just a drink in China. It's a destination. It's a place to be seen and a place to show how modern one is," adds Technomic Asia's Kedl. And with China's economy growing in double digits, there are likely to be lots more young urban and modern Chinese ready to sip java in a sleek new Starbucks.
People in China do not go to Starbucks because they like coffee. They do not go there because it is comfortable. Starbucks, just like trendy bars (but maybe appealing to a different crowd), is a place to be seen. Married women go there with their friends to chat and show off their apparel. Families spend the afternoon there reading newspapers proudly showing they can afford two kids despite the one child policy.
So of course, with wealth increasing that fast in China, more and more people will want to show off their newly acquired fortune. But at the same time the process will help create many more alternatives to sipping a coffee in a Starbucks to show off one's wealth. A main threat for Starbucks could be businesses that are more relevant to the culture of China elites. And then Starbucks had better hope that Chinese do actually like coffee... because its early lead could backfire and push it down the value chain.
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Interesting commentary Nicolas. I watched an episode of BizWeek Asia on CNN which discussed the popularity of coffee in China and Starbucks' growth and evolution in everyday lives of the local people... I just meant to say nice blog and you're obviously very observant. cheers.
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