In addition, the young generation was enchantment by brands and products from the West. In 2018, Starbucks (NASDAQ: SBUX) set ambitious plans for growth in China, its second-largest market. According to market research provider Euromonitor International, Starbucks has seen its market share in China grow from 60.5 percent in 2012 to 74.6 percent in 2016, topping the coffee shop industry. Many big cities like Shanghai, Hong Kong, and Beijing designed their own mugs and mini cups. The same way the company taught customers about different flavors and types of coffee. Starbucks entered the Chinese market in 1999. Created on the campus of Beijing Daxue in 2009, Daxue Consulting has strong roots on Chinese market but also an international vision and team. Cups of Starbucks are broadly classified into two categories, tumblers, and mugs. Our team has worked with over 300 international brands in the last 5 years, including industries such as F&B, education, luxury, cosmetics, digital and high-tech, but also industrial projects in B2B sectors. The customers were willing to pay a higher price for the brand name. According to analysts, compared to other countries in which Starbucks operated this task was more difficult in China because of the age old tradition of tea drinking in the country, where coffee was seen as nothing less than a kind of Western invasion. @daxueconsulting The expansion in new Starbucks stores will be partly driven in mainland China -- the company’s fastest growing market -- where it expects to open … to attract more people. The company is expected to rapidly expand its mobile and loyalty ecosystem in China. Starbucks, like any other multinational company, had to go through the dilemma of choosing whether to follow Chinese traditional tea or take a big risk of following Starbucks’ culture of promoting premium coffee. Luckin missed one of the 3 key points to succeed in China. In 1999, Starbucks formed a joint venture with the Taiwan based Uni-President Group and opened stores in Shanghai. The stores were also larger in area than the ones in the US, as the idea was to make the customers feel at home, relax and spend more time there. In China, Starbucks Rewards program members grew to 10 million, up 45% over the prior year. Starbucks -- which celebrated its 20th anniversary in China this month -- is on its way to having 6,000 sites there by 2023. The fifth level of China screening was focused on competitive forces. Starbucks uses the highest quality coffee beans from ideal coffee producing climates. With an increase in profits in the Chinese market, the company realized that it could gain more control over its partners in China. This success is partly because Starbucks caters to the Chinese market effectively. Therefore, according to the market needs they had to square bigger stores. Another aspect was Chinese shopping behaviour which was different from the US market. However, Nescafe is not a coffee house like Starbucks. It targeted nearly doubling its store count in … They tried to build their reputation in terms of, product quality, customer service, employee relationship, etc. Their knowledge, organized way of business left a good impression on customers’ mind. The company targeted young consumers in China and it predicted that the changing lifestyle of young people in the country would increase their demand for coffee. But from the second year onward, Starbucks combined the mid-autumn festival theme with its coffee culture, creating a new kind of mooncake called the coffee mooncake. There are some advantages for Starbucks with joint venture to enter Chinese market. They were inspired by the owner of the Peet’s Coffee and Tea, which was near the University of San Francisco. In the first year of its existence, the mooncake did not sell very well. The company currently have locations in 90 Chinese cities and employ over 25,000 people in China. Starbucks Corp. SBUX, -2.27% is building on its line of cold beverages, which the global coffee company says has already driven $1 billion in sales over the … First of all, Starbucks choose a good local partner to form a joint venture which can help it better understand the local laws and negotiate better with the authorities. China is highly bureaucratic country with difficult processes of getting permissions and sanctions to start and run business. 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We especially auction traditional methodologies as well as technology-driven tools. Company’s managers were aware that Chinese Gross Domestic Product (GDP) continuously grew approximately 9 % on an average and a GDP per capita was US$3.800. It can also be classified by themes, which are charm-logo cups, city cups, thematic mugs, etc. Within few months of opening the coffee stores, the company started observing that coffee culture is different for Chinese people than US, where people are very busy in their daily lives and they just grab their coffee and leave, but in China coffee stores were more like a place for social gathering where they can sit and talk for hours with their friends and families. Case Study on Marketing Strategy: Starbucks Entry to China, Case Study: Success of Starbucks Mobile Payment Application, Push and Pull Factors in International Business, Country of Origin Effect in International Marketing, Steps in Conducting a Foreign Market Analysis, Case Study of Starbucks: Creating a New Coffee Culture, When Your Company Should Seek Help From The Outside, Case Study: Corporate Social Responsibility of Starbucks. This also led to success for the company. With a reputation as a coffee brand, Starbucks faced a serious crisis. Even though Luckin coffee is a Chinese brand and offers several services like discounts, delivery, and had a specific target market, compared to Starbucks, it failed. To introduce the Starbucks brand the company begun to distribute coffee for free to guests in several Beijing’s hotels in 1994. Moreover, Starbucks could also maintain a high standard on the control of production, and achieve a ideal revenue in Chinese market. 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