Howard Schultz, Starbucks CEO, recently announced that China is set to become the company’s largest market outside of the U.S. Starbucks has more than 500 locations in China catering to the specific market by introducing products that appeal to local tastes.
Starbucks has successfully made its mark in China, in part, because of its ability and willingness to adapt to its location. While Americans tend to prefer sweetened, frothy, large ice drinks to go, Starbucks realized that those choices might not fare as well in China. Instead, they opted for serving green tea-flavored coffee drinks and expanded their dine-in service. Adapting its business model specifically for the local community allows Starbucks to enjoy success that other American companies in China aren’t seeing. The coffee company knew from the beginning that what worked in the U.S. won’t necessarily work in China, and they didn’t try to fight that.
Though many of the Chinese locations are significantly smaller than their U.S. counterparts, Starbucks makes up for the relative revenue loss in China by making products more expensive. In China, according to CNBC, carrying a Starbucks is a status symbol, demonstrating one’s ability to afford such luxuries.
Another key component to Starbucks’ success in China is their service – similarly to that in the U.S., Starbucks employees are often perceived as happy and helpful, in no small part due to Starbucks’ management and training. CNBC notes that some individuals in China admitted that they prefer the competitor’s coffee, but continue to go to Starbucks because of the service.