Starbucks Incorporates Local Tastes With China Expansion

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Western retailers have been completely bombarding China with products and sales pitches in recent years. Having more than 1.3 billion consumers living within its borders can make a country’s citizens targets of such things. 

Starbucks is about to go overdrive in its efforts to get the Chinese populace as dependent on their brand as plenty of Americans are, but the sell may not be so coffee-driven, but leverage the brand’s tea drinks and food menu. The chain currently has 700 stores in China but that number will more than double in size to 1,500 in the next three years, according to the Wall Street Journal. That growth will also mean the chain’s employees in China will go from 12,000 today to 30,000 in three years. It also offers regional websites for Eastern China and Northern China.

Coffee sales went up 20% in 2011 over the previous year and brought in $995 million, WSJ notes, but China is still a tea-drinking nation. So Starbucks established a research-and-development unit in the country in order to figure out what it could do to attract a larger audience than those looking for a cup of joe. As a result, Starbucks China is not only celebrating Western customs such as Christmas, but serving up localized beverage and food items including a red bean frappaccino, green tea tiramisu, a Hainan chicken and rice wrap, a shredded ginger pork panini, and a Thai-style prawn wrap. And the Starbucks kiosks that work so well in the States don’t have the same effect in the Chinese market where consumers desire more space.[more]

Corporate citizenship is another critical calling card for Starbucks in China, where chairman and CEO Howard Schulz established a US$5 million education fund in 2006. 

Another company that has succeeded to playing to local tastes in China is Yum Brands, WSJ notes, as its KFC serves up friend shrimp and soy milk and its Pizza Huts there have added seafood bacon pizza and Thai-style fried rice. But other companies haven’t had that much success. “In September, Home Depot Inc. closed all seven of its remaining big-box stores in China after years of losses, having discovered that the do-it-yourself home improvement model doesn’t work well in a do-it-for-me Chinese culture,” the Journal reports. “Best Buy Co. closed its nine China outlets in February 2011 after discovering consumers needed washing machines, not espresso makers or stereos.”

But Starbucks is an old hand at localizing/glocalizing. Now that it’s launching in India, it’s offering such products as a chicken tikka panini sandwich, a croissant with cardamom and the milk-based sweet mawa. Also, in order to not offend vegetarian customers there, the non-veg food items will be sold at another counter and prepared in a completely different oven.

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