Global Starbucks Succeeds In Tea Oriented China By Adopting Local Strategies

Though we recently discussed the decline and exit of Nestea (a Coca Cola & Nestle Joint Venture) in China, Starbucks continues to sell the average cup of coffee above for 5 USD in China with high volume. With about 1100 stores the American coffee chain has achieved its last year’s target and has become the market leader in the coffee industry in China with another 400 stores opening by the end of 2015. This year it will shift its focus from central locations to expanding into local communities. According to the chain, employees will start promoting the brand by building connections with local communities, by being part of local projects and organizing volunteering activities.

“It’s a market where we continue to see traction around the Starbucks experience, and there are a number of things that are helping demographically and environmentally for Starbucks in China,” Mr. Maw said during a June 11 presentation at the William Blair Growth Stock Conference.

The growing middle class in China and the enthusiasm for the coffee culture are one of the main factors for Starbucks success. But that’s not it. The American firm is doing a great job to tailor its offerings to the local needs. Take for instance the recent Starbucks frozen dumpling offerings that has caught much attention in China, which is proof that the coffee chain is listening to its customers. Dumplings are traditional Chinese snacks.

Besides it’s drinks and sweets, Starbucks adjusting it’s employee policies. The coffee giant is redefining what it means to be family-friendly. As families play a tremendous role in life and career choices in China, Starbucks is including the family members in the career conversations by organizing a Partner Family Forum. This indeed proofs that a company with its own strong flavor of corporate culture is tweaking it to fit China’s work life customs, which incorporate the family.

Though all the news above is good, we do need to mention that there is one product line that’s not selling well: Tea. The coffee chain hasn’t succeeded until today to attract Chinese tea lovers to it’s stores. Starbucks, offerings are awkward to the Chinese who are confused about what Starbucks tea stands for. To succeed, the chain has to focus on creating a tea line that looks more foreign, or it will face a similar fate as Nestea.