THOUGHT LEADERSHIP

 

Why Starbucks Reigns in China

Aug 11, 2013

        


Costa and Starbucks, two coffeehouse chains that operate worldwide. The former, a prominent UK brand – the largest café in the said country, to be exact – and ranks second in the industry worldwide. Meanwhile, the latter is known to originate from Seattle,Washington – the coffee consumption capital of the US. Without batting an eyelash, Starbucks is number one globally.


Both brands have substantial operations in China, but it seems that Starbucks has gained more popularity among its Chinese customers. Often it is possible to find several Starbucks stores located within close proximities of each other and it  seems that all will succeed without cannibalizing each other’s business. But why is that so? Why can’t other coffee chains, such as Costa, be just as successful in this country?


Historical and Cultural Influences

Starbucks first entered the China market in 1999. Back then, nobody had their own preference on coffee; hence those that tried Starbucks simply accepted its American coffee taste. The strong positive reception it had received in the years that followed encouraged the company to continue its aggressive expansion in the country. And after witnessing the success of Starbucks, Costa followed in 2007 and opened its first store in the city of Shanghai.


Nowadays, it is easy to notice how the current Chinese youth are easily influenced by American culture, and less likely by the Brits. The songs, the stars, the movies and the books were just some of the mediums which helped the current generation connect more with the US. However, when asked to think of British or other Western influences, it appears to be a little more difficult than trying to associate with the US. After all, the majority of English being taught in China is of the American accent.


Starbucks is one of these American (pop) cultures that successfully penetrated the conservative civilization of China. It has revolutionized how the country views coffee and educated the market effectively enough to create demand for its products. The experience one gets upon entering a store is genuinely and consistently American – from the lighting, sound, aroma and even the small utensils that they use. Their stylish store designs and atmospheres have helped to establish its brand image as modern and chic, one that the younger generation adores to be associated with. More so, the company maintains consistency across all outlets globally. The standard customer service experience in Seattle is maintained, if not localized, in Shanghai, Beijing and its other international locations.


Starbucks also receives publicity through the world of fashion. Every now and then, in magazines or online fashion blogs, it is common to spot local or international celebrities holding the iconic white coffee cup together with their Prada, Chanel or Hermès. These street snaps form a concept in consumers’ mind that Starbucks can be associated with fashion and high-society lifestyles. Furthermore, these stars are often notable American icons – the kings and queens of Hollywood, which makes that cup of coffee that little bit more stylish and attractive.


  

      

From left to right, top to bottom: Blake Lively, Robert Downey Junior, Vanessa Hudgens, Russell Brand, Britney Spears, Taylor Swift and Eva Mendes.


Clever and Innovative Strategies

Since first entering China more than ten years ago, Starbucks has opened more than 570 stores in 48 cities and aims to have 1500 by the end of 2014. As the sight of Starbucks becomes more and more frequent, it is easy for consumers to feel visually exhausted at the sight of another new opening, hence why the company has employed more designers to attempt to give each store something unique while still maintaining its original theme. After all, first impressions are important. It is now possible to find some stores built within traditional Chinese architecture with that particular theme running throughout- a rare sight to find with other coffee brands.


Besides redesigning their stores, their menus have also been adapted to Chinese consumers. The Frappuccino has been reinvented, introducing red bean and green tea flavors alongside the basics to tailor itself to local tastes. Starbucks is also keen to actively use social media platforms to further advertise as they expand their campaign. The company’s official Sina Weibo page currently holds approximately 770,000 fans, a much bigger fan base than Costa, with around 40,000. It interacts daily with its followers, promoting new events and competitions, as well as continuously introducing new products, be it new store openings, seasonal beverages or collectibles. This constant update is essential for stimulating and exciting consumers’ mind and it is an element that Costa is lacking in.


As Starbucks looks to expand further, it has also begun sourcing coffee beans from areas within China, something that other global coffee chains haven’t done. "It makes the product seem less completely foreign while still having a foreign caché to it," says Jeffery Wasserstrom, author of China in the 21st Century: What Everyone Needs To Know.


What Starbucks has managed to do is define itself as a unique brand in China’s diverse market. The overall standards of coffee have been set so high in the hearts of Chinese consumers that any new coffee company who attempts to advance in this market cannot escape being compared to this coffee giant, not only in taste, but the experience as a whole. Starbucks has achieved what other companies have not, and if Costa ever wants to rise above its competitor in this market, it should definitely learn a few from their successful strategies.


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