Post #3– Starbucks’s expansion to China?

With near-saturated US market and increasingly fierce competitions, the coffee giant, Starbucks, turns its eyeball to other countries in the world, and it finds another promising market –China.

Some people argue that Chinese consumers prefer tea over coffee; thus Starbucks’s expansion may be a failure as result of gap between Eastern and Western drinks preferences. However, I see China is a promising market for Starbucks, and my opinion comes from my experience in China.

The first thing I’d like to point out is the favorable social and demographic trend.  Coffee is increasingly appreciated by the younger Chinese generations, though tea is still the first choice for Chinese X-generations and before. This is an opportunity, for the younger generations are the potential life-long customers for Starbucks. And since they love coffee just like their counterparts in North America do, it is highly likely that their offspring will be influenced by their preference and thus turns into the second generation of Starbucks supporters or advocators.

Another opportunity is that there are few coffee houses in China, at least much fewer than that in Canada. Although tea is considered as an strong indirect competitor for Starbucks, there is seldom any tea house in China’s districts, because Chinese tea is home-made by tradition. This suggests a passenger can only go to coffee houses if he or she wants to sit down and enjoy a cup of drink, for there are no other appropriate alternatives ( bars are usually closed during the day in China).

Walking into a Starbucks shop in China, I can tell that the customers are usually the middle or up-middle classes. Those customers have sound financial footings, they are willing to pay more for the nice service and comfort environment brought by the Starbucks shops. A cup of Starbucks coffee may cost around 20-30RMB (about $3-$5), and the price is not cheap for normal Chinese wagers ( 30RMB to a Chinese is just like $30 to a Canadian, I guess you would drink less coffee if a cup costs you $30 ). In some sense, being a regular customer of Starbucks is symbol of a social status, as it indicates one has sound personal wealth and free time to rest in a coffee house.

Overall, my view is that Starbucks will make big profits in its expansion to China. If you ever go to a Starbucks coffee shop in China, you will find Chinese consumers like it!

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About Bozheng Yu (Aaron)

Hi =D Welcome to my blog! Hope you like it and feel free to leave your thoughts!
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One Response to Post #3– Starbucks’s expansion to China?

  1. Pingback: » Starbucks in China – successful Kalin's COMM296

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