— Howard Schultz
"No where is success a given, especially in China." That's a rough translation of Starbucks CEO Howard Schultz's August 29 column at Chinese business site Wabei.com.
Schultz is right, Starbucks success in China was not a given, and its future success is not a foregone conclusion. But just a week later, Starbucks (星巴克) was the fifth highest trending topic on Weibo, China's 400-million user microblog network. Many of the posts were photos of lines dozens of people long, queues that Coca-Cola didn't see for its massive Olympics giveaway Monday in the U.K.
The reason? Starbucks locations in southern Guangdong were giving away free cups of drip coffee to celebrate the brand's 10th anniversary in the province — creating a physical rush akin to the social frenzy in the U.S. for the java giant's LivingSocial deal this week.
Forget that ordering a cup of plain drip coffee at Starbucks is often met with confusion due to the fact that most China customers prefer Starbucks specialty lattes, fraps and ice blended strawberry thingamabobs — Grande only please!
China bears may be right; the world's second largest economy may be headed for a hard landing. But don't count on Starbucks going down too.
As has become Starbucks' wont in China, the brand did not just give away some coffee for its anniversary. Starbucks is now a lifestyle brand in China. Guangdong customers that spent 68 yuan ($10.50) during the anniversary period, would receive a limited edition commemorative Starbucks notepad. Oh, and on the way out, don't forget to pick up this year's special Starbucks-branded mooncakes, 400 yuan ($63.50) for a pack of eight.
High noon in a Shanghai Starbucks now looks like lunch hour at any American Starbucks. Office workers chat away in a line ten to twenty deep, waiting to order a latte and, maybe, just today, that scone as a treat.
Starbucks opened its first mainland location in Beijing in 1999. And while it has seen a US market it practically created boomerang to despise it as the Walmart of coffee, it faces no such brand rebellion in China. Starbucks entered 13 new cities in China in 2011, averaging one new store every four days, and aims to more or less triple by 2014 to some 1,500 locations. By 2014, it predicts China will be its second largest market.
Starbucks's success is dual pronged. First, it has remained high end, selling coffee to China's upper middle class. Starbucks coffee sells for more than in the US — a basic grande drip is 20 yuan ($3.17), or more than most Chinese workers earn in two hours. And in China, expense is often equated with luxury, but Starbucks is careful to not make its wares too expensive. As a result, it has become one of the few standout brands in China that has carved out market position as a daily luxury and an affordable premium experience.
The Starbucks China team have made the brand "just local enough," offering more teas and adding Chinese fare like the aforementioned mooncakes, as well as incorporating Chinese design elements to the decor.
Starbucks is not resting in one of its soft armchairs though. Despite Schultz's claim in his Wabei.com piece that "星巴克不做广告" ("Starbucks does not advertise"), the brand has been creatively aggressive advertising in China.
Starbucks has been an early adopter of online, micro-channel radio (星巴克微信电台) on the mainland for promotion and crafting that lifestyle brand. Also, as a few users have pointed out, Starbucks has taken to dropping ads into web giant Tencent’s Wechat.
But Starbucks popularity still emanates from its core brand. In his Wabei.com rumination on the Starbucks brand, CEO Schultz suggests a few new elements that Starbucks brand may be adapting in China. In a unique bit of positioning, Schultz — who just celebrated his own Starbucks anniversary (happy 30th, Howard!) — writes that the kind of talent he's looking for are people "不满现状" (unsatisfied with the status quo). He needn't look far — they're lining up at the door.
Top and below, pictures of the queues for Starbucks giveaway posted by Weibo users: