6000 Stores After 31 Years of Expansion... Selling 'Lifestyle' Not Coffee
China's Coffee Market Grown to 36 Trillion Won Scale
[Asia Economy Senior Reporter Jo Young-shin] Starbucks China opened a new store at Libaoguang Square in Huaihai Road, Shanghai on the 27th of last month. It is the 6,000th store on the Chinese mainland and the 1,000th store in Shanghai. Shanghai is the world's first city to have 1,000 Starbucks stores.
Starbucks entered China on January 11, 1999. When the first store opened in Beijing, there were doubts about whether Starbucks could sustain its business in China. The prevailing sentiment was, "Coffee in China, the land of tea, what is this about?"
Starbucks announced in 2018 that by the fiscal year 2022 (September fiscal year), the number of stores in China would reach 6,000.
In this regard, Chinese media such as Xinhua News Agency reported significantly on Starbucks achieving its goal of 6,000 stores on the Chinese mainland despite the COVID-19 pandemic, which began in early 2020 and has continued for three years. Chinese media emphasized the significance of Starbucks’ steady investment in China amid the US-China conflicts and the pandemic situation.
Regarding the popularity of Starbucks, Chinese media explained that the younger generation in China (born in the 1980s and 1990s) regards Western-style coffee culture as a symbol of modern lifestyle. The younger generation visits Starbucks stores not just to drink coffee but to experience a Western way of life. Chinese media stressed that while the domestic coffee brand Luckin sells coffee as a product, Starbucks sells a lifestyle. Thanks to this, although the number of Luckin Coffee stores (7,195) exceeds that of Starbucks, Starbucks leads in sales revenue in China, according to Chinese media. Starbucks’ market share in China is estimated to exceed 36%.
Chinese media also gave high marks to Starbucks’ continuous investment in China. Starbucks China announced its '2025 China Vision Strategy,' aiming to increase the number of stores on the Chinese mainland to 9,000 by 2025. This means opening an additional 3,000 stores within three years. Starbucks China explained that the number of employees will increase by 35,000 to more than 95,000.
Starbucks China also plans to invest 1.1 billion yuan (approximately 222 billion KRW) to complete the 'Coffee Creative Park' by next summer. Separately, it will invest 1.46 billion yuan (approximately 294.5 billion KRW) to establish a 'Digital Technology Innovation Center.' Chinese media added that once this center is completed, Starbucks’ localization in China will be complete.
Chinese media reported that Starbucks has donated 105 million yuan (21.2 billion KRW) to public welfare projects since 2018 and will provide an additional 80 million yuan in support of public welfare by 2025, fulfilling its social responsibilities in China.
Other factors contributing to Starbucks’ success in China include a high-quality strategy using top-grade coffee beans, store display strategies incorporating traditional Chinese culture, store selection strategies based on big data, and thorough localization strategies such as expanding employee welfare benefits.
Chinese media also expressed expectations for the growth potential of Luckin Coffee. The price of an Americano at Starbucks is 30 to 33 yuan, whereas Luckin Coffee’s price is 13 to 15 yuan. Given its price competitiveness, Chinese media pointed out the need for new marketing strategies that can communicate with the younger generation.
Chinese media estimated that the steadily growing Chinese coffee market will reach 180.6 billion yuan (36.4324 trillion KRW) next year.
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