Starbucks Faces New Challenges in China’s Coffee Market
The coffee culture in China has been evolving rapidly, and Starbucks is at the forefront of this evolution. As one of the largest coffee chains in the world, Starbucks has made considerable strides in capturing a share of China’s growing coffee market. However, recent developments have presented new challenges for Starbucks to overcome as it attempts to maintain its dominance in this competitive space. From local competitors to changing consumer preferences, let’s take a closer look at what obstacles are currently facing Starbucks and how they plan on tackling them head-on.
Starbucks faces competition from local coffee chains in China
Starbucks is facing competition from local coffee chains in China. The company has been losing market share to these chains in recent years, and it may have to do something to reverse the trend. In particular, Starbucks may have to compete on price. The local chains are able to offer lower prices because they don’t have a large overhead costs like Starbucks does. Additionally, the local chains are able to source their coffee beans from smaller roasters, which gives them a better quality product.
The challenge for Starbucks will be to maintain its levels of customer service and its unique brand identity while at the same time lowering prices. If it can do this, it may be able to maintain its position in the Chinese coffee market.
The company’s attempt to expand its menu to include more Chinese flavors
Starbucks has been expanding its menu to include more Chinese flavors in an effort to appeal to the country’s growing coffee market. The company has invested $100 million in China over the past two years and plans to open 1,000 stores by 2020. However, the expansion is facing some challenges.
One issue is that many of Starbucks’ existing customers are not interested in trying Chinese flavors. Another issue is that the Chinese government doesn’t allow foreign companies to operate cafes within mainland China. This means that Starbucks must partner with local chains if it wants to open stores there.
Still, Starbucks believes that its expansion into China will be a success because of the country’s large population and growing coffee market. The company is also hoping to tap into China’s luxury coffee market, which is projected to grow from $5 billion this year to $10 billion by 2021.
Starbucks faces protests from employees in China
On May 14, 2018, Starbucks announced plans to close more than 250 stores in China due to a decline in coffee sales. The company cited the Chinese market’s “rapidly changing landscape” as the cause of the closures. Earlier this year, Starbucks had announced plans to open 1,000 stores in China by 2020. This decision has led to protests from employees in China.
Employees at Starbucks’ Chinese stores have complained about low pay and long hours. In an October 2017 letter obtained by The Seattle Times, Starbucks employees said they made between US$1 and US$2 per hour before taxes and were required to work 60 hours per week. These protests have been met with resistance from management. An article in The New York Times quoted a Starbucks spokeswoman as saying that “the vast majority of our partners are passionate about serving our customers and love their jobs.”
Starbucks has faced similar challenges in other countries where it has opened stores. In December 2017, the company closed its Australian store after facing protests from employees who claimed they were not being paid properly and did not have adequate break time. And earlier this year, employees at a Dutch branch went on strike over issues including wages and working conditions. Despite these protests, some analysts are optimistic about Starbucks’ prospects in China given its strong brand recognition and growing customer base.
Since Starbucks opened its first store in China 25 years ago, the coffee giant has been a mainstay in the country’s coffee culture. However, recent developments suggest that Starbucks may be facing new challenges in China’s coffee market. In particular, allegations of illegal deforestation and fish farming have caused public concern about the company’s environmental practices, which could lead to decreased demand for Starbucks’ products. If these allegations are substantiated, it could have significant implications for Starbucks’ operations in China and elsewhere around the world.