Do you know where the largest number of Starbucks stores in any city on the planet is? Shanghai! With nearly 600 Starbucks stores, China's business capital even surpasses Starbucks' home ground, the US cities. The lucrative growth potential in China market has now led to a spectacular deal and the US coffeehouse chain's biggest ever acquisition.
Starbucks will take 100 percent ownership of its stores across China, the world’s most populous country, after buying out its partner in China joint venture in a deal worth USD1.3 billion. The deal is indicative of China’s market potential for multinational companies, while it also offers clues into Chinese consumers increasingly globalized, and westernized, consumption habits.
Starbucks has a total of 2,800 stores across China, the coffeehouse giant’s fastest growing market outside of the US. The deal covers 1,300 Starbucks stores in Shanghai as well as eastern provinces of Jiangsu and Zheijiang. Starbucks already fully owns the other 1,500 branches in different parts of China.
Starbucks runs stores in 130 cities across China. It aims to increase the number of its stores to 5,000 from 2,800 by 2021. The latest deal comes at a time when its sales and growth in its biggest market, the US, have stalled. Whereas, China’s burgeoning middle classes are fond of showing up in Starbucks stores as it is seen by some as “cool” factor. That is so despite Starbucks prices in China are markedly higher than those in the US and the UK.
This has been a source of customer complaints at times although Starbucks tried to justify it by referring to costs. But it has failed to convince China’s coffee enthusiasts. Now all eyes will be on the coffee giant to see whether its full ownership of its stores across China will bring about any fall in the overinflated prices of its product line.Keywords: China, BUSSINESS, Starbucks