WHY STARBUCKS SUCCEEDED IN CHINA: A LESSON FOR ALL RETAILERS
Much has been written about Starbucks’ successful strategy in China. The company is opening a
store a day and aims to have 5,000 stores in the next few years. The company’s success to its long-
term commitment to the market, well-executed collaborations with Chinese partners, superior
supply chains, adopting local technologies, and offering local items on its menu.
However, these are just the visible tactics of a much more fundamental strategy. From the
beginning, Starbucks has spoken to the essence of Chinese culture, giving it the wisdom to develop
the long-term vision, local relationships, and localized product offerings for the market. Starbucks
understood when they entered the market was that it was not about the coffee initially. It was about
reviving a "tea house culture" that had existed for thousands of years. Starbucks' global success was
based on being the "third place" between home and work and brought that ethos to China but with
a modern, Western, upscale sensibility. Since those early days Starbucks has meticulously organized
its efforts in China around three key pillars of Chinese society.
Family
From the beginning of Chinese civilization, family has been the key source of security, education and
spirit for the Chinese people. The society’s Confucian values entwine children and parents in a bond
of shared responsibility that stretches throughout all stages of life. Parents should strongly engage in
their children’s lives (their upbringing, education and career) and in return, children should respect
and care for their parents as they age.
Starbucks fully understood this and made engaging parents a cornerstone of its people operations.
Since 2012, Starbucks has hosted an annual “Partner Family Forum,” where its employees (whom
the company calls “partners”) and their parents can learn together about the company and its future
in China. “Partners” talk about their professional experiences in the company and Starbucks
leadership.
The success of the program cannot be underestimated. In an interview with BCG, Schulz said about
the first Forums held in 2012:
“Think about an annual meeting of shareholders; we had an annual meeting of parents in Beijing and
Shanghai, and we had about 90% participation. We did not know who or how many would come. In
most cases, there were whole families. There were parents, grandparents, aunts, and uncles. It was
unbelievable, it was a breakthrough for the company and a milestone for local relevancy and
sensitivity.”
The company has continued to build on this. This year, it announced the launch of the “Starbucks
China Parent Care Program” which currently provides health insurance for elder parents of 10,000
employees and will likely extend to more employees. The initiative obviously encourages staff
retention by giving rare financial support to employee’s families. Much more importantly, it says to
Chinese “partners” that it respects their parents in a way that truly touches the Chinese heart.
Community
Chinese highly value their community, traditionally labeled as their “inside circles.” Be it their
homes, schools or companies, they turn to these circles for loyalty, information and approval of their
choices. With this in mind, Starbucks designed its retail spaces to facilitate these “circles” coming
together. Unlike in the United States, where Starbucks chairs are often the quiet haunts of solitary
laptop users, China’s Starbucks are laid out to welcome crowds, noise and lounging. In many cases,

the spaces are up to 40% bigger than in the U.S., and have been placed in very visible and easily-
accessible locations in office buildings (either on highly-trafficked first floors or mezzanine areas).
The sitting areas are open format and usually have no walls, the chairs seem to flow out into
adjacent spaces, such as lobbies or walkways.
The result? Walk into any Starbucks in an office building at 3PM and you will see a buzzing throng of
people exchanging office news, admiring and getting information about the latest fashions from
their colleagues, and talking with their friends about the next travel destination. It feels like you've
walked into a modern-day version of the town square. Consequently, Starbucks customers not only
enjoy the coffee (in all its Chinese variations), they feel fulfilled going to a Starbucks with their
friends or families.
Status
Chinese place a premium on gaining and upholding reputation and status, especially for their family
and community. Consequently, they want to be associated with brands and products that portray
prosperity, success and upward mobility.
Starbucks has positioned itself as the premium coffee brand in China. It charges 20% higher prices in
China compared to other parts of the world. It chooses very high-end locations for its outlets
including luxury malls and iconic office towers. And since foreign brands, particularly in food and
beverage, are viewed as premium, Starbucks often labels its products with the country from which
its products are imported.
Starbucks, and how it enables Chinese to observe their culture, is a powerful example for any global
brand on how to operate in the country. By aiming to embed itself in China’s centuries-old culture,
Starbucks inevitably plays the long game, leading to a deep commitment to the market. It has to
develop relationships with families and communities, which inevitably make it more attractive to
and successful in local partnerships. Finally, it has to be part of China’s family rituals and desire for
status by providing an environment that consumers and employees are proud of.
Put together, these efforts have made Starbucks less a foreign brand transplanted to China and
more a seed from a Western tree that has been carefully planted and patiently nurtured within.
Source: https://www.forbes.com/sites/michaelzakkour/

Questions

1. How you can apply the Hofstede’s culture dimensions in the above case scenario? What Geert
Hofstede tells us about Chinese business culture?

2. To what extent does Starbucks business plan in China differs from the United States? Discuss

3. Do you think the successful of Starbucks in China threatening the country’s culture? Why? Justify
your answer.