Marketing research: Coffee shops and teahouses in China (Focus on Starbucks)

Starbucks’ continuing expansion in China As of July 2013, Starbucks owned 878 company-operated and license stores in China. This US-based coffee chain operator aims open another 700 stores by 2015. Starbucks success in a country with a strong tea culture can mainly be attributed to the company’s effort to remain localized. For example, Starbucks offers its Chinese customers Biluochun green tea and Mudan White Tea. During traditional Chinese festivals, Starbucks will promote special-edition products, such as moon cakes and glutinous rice dumplings. This localization strategy has been working well in China. Potential challenges that might slow growth Although China is a tea-drinking country, tea houses find it difficult to formalize a well-organized chain. In general, tea houses are regarded as places for the elderly to spend time chatting and playing cards. Starbucks’ real competition comes from Costa, a UK-based company, which is expanding rapidly in China. Costa’s strategy is quite aggressive: the company opens new stores close to Starbucks, or occupy the stores where Starbucks just ended the contract. It entered into China’s market in 2006 hoping to open 2500 stores in total in 2015. […]