China Musings #5: The Starbucks Success Story


In a country in which so much feels foreign, Starbucks has surprisingly turned out to be one of the few places I feel … home. The look and feel is familiar, the menu is well-tested, and the music could be from my own Spotify – it’s my oasis amidst an ocean of uncertainty.

After hearing about the opening of the world’s largest Starbucks store in Shanghai, I put it high on my to-do list (see the pic below). It is a 29,000 square-foot temple staffed by 400 employees – it comes with its own bakery, roastery, augmented reality program, 100+ drink options (including nitrogen-infused tea) and to no surprise, crazy-long lines. This one store alone makes 15x the revenue of the average US store.

Now Starbucks’s story in China is truly one-of-a kind. While other brands had to often retreat (Google pulling its servers, Coke closing its bottling unit, McDonalds selling its business and licensing its brand), Starbucks is one of the few American companies that got China right – by understanding the importance of building long-term relationships, working with the government, and investing heavily.

To give you an idea, every 15 hours Starbucks is opening a new store in China. It has already 3,000 stores in 130+ cities and is planning to open another (!) 5,000 stores over the next four years – creating 10,000 jobs every year. In Shanghai alone there are 600 Starbucks stores, which is 2x of what New York has.

What is so remarkable is the long-term mindset that Starbucks applied to China. The journey started some 20 years ago and had the seemingly insurmountable task of bringing coffee culture to a country famous for its tea.

Over the years, Starbucks has invested heavily, paid significantly higher wages than competitors, offering housing allowances, health care benefits, extending its employee ownership benefits to Chinese workers, and offering critical illness injuries to the parents of their employees. Starbucks is further discussing with the Chinese government the prospect of turning coffee from the Yunnan province into a global coffee brand.

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