Starbucks China Case Study

After achieving success in the U.S., the first overseas store was opened by Starbucks was in Tokyo, Japan in 1996. This was followed by England, Malaysia, New Zealand, Taiwan and Thailand in 1998 and China, Kuwait, Lebanon and South Korea by 1999. It expanded to more than 60 countries in next ten years with consistent objective of bringing non-coffee drinkers in to its fold by simply offering ‘Starbucks’ experience. Total 9000 out of 23000 outlets were currently out of the U.S. The revenue in the Americas grew at 11% and Europe, Middle East and Africa registered just 2% improvement. Amazingly China and Asia Pacific clocked 27% growth in 2015-16 compared with the previous year.

Schultz strategically took Starbucks to cultures which were traditionally

Understanding of intellectual property rights was critical and attempts were made to reflect utmost respect to Chinese culture in all aspects. Starbucks took protection through intellectual property right laws to prevent its business model from being copied. Local tea-based beverages were introduced to bridge the gap between love for tea and the coffee as new beverage. Conventional media of communications like advertisement and sales promotions were shunned in favour of brand and product positioning through highly-visible stores. These high-traffic locations could give subtle messages about Starbucks coffee to largely tea-drinking society. More direct communication would have construed as frontal attack on local tea-culture in the society. Deeper understanding was developed through extensive market research on how capitalism worked within China. China was not a homogenous market, therefore Starbucks decided to have regional partnerships with different parties. However, Starbucks learnt that its competitive advantage in China was because of excellent product, service and brand attributes. Therefore, maintaining brand integrity was utmost important while pursuing the internationalisation efforts with sufficient flexibility in new markets (Gigi, D.

Schultz planned Starbucks outlets in high visibility locations and introduced coffee and other beverages in those areas where traditional Chinese outlets had been selling only local tea-based ingredients. In any foreign market entry, it was very essential to understand intellectual property rights law of that country. Starbucks registered its entire major trademark. Chinese market being complex, the Starbucks entered into a series of local partnerships to help to customize per taste and preferences of customers. Regional partnerships were followed to expand in China as the tastes and preferences were different in diverse markets. Joint venture partner was Beijing Mei Da Coffee company in Northern China, Taiwan based Uni-President in Eastern China while Maxim’s Caterers from Hong Kong joined in Southern