After buying out the shares in southern China, COSTA also wants to operate wholly in China after Starbucks

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After rival Starbucks became wholly owned in China, costa also began to seek full investment in order to achieve more flexible development in the Chinese market.

On October 10th, COSTA parent company UK Whitbread Group announced that COSTA would acquire the remaining 49% of Yueda Restaurant Management Co., Ltd. (hereinafter referred to as "Yueda Ka Shijia"), a joint venture with Jiangsu Yueda Group (hereinafter referred to as "Yueda Group"), for RMB 310 million. The acquisition will give COSTA full ownership of the southern Chinese market.

Costa, the largest coffee chain in the UK, entered China in 2006. After that, COSTA formed a joint venture with Yueda Group to operate 252 COSTA stores in the southern market (including eastern, southern and central and western regions), of which 93 are located in Shanghai.

In northern China (including Beijing, Tianjin, Hebei and Northeast China), COSTA and Beijing Hualian Group each invested 50 per cent to set up Hualian Kashijia and operate 168 stores.

"the coffee shop market in China has great potential, and this acquisition will give COSTA better long-term development opportunities and will provide us with sufficient strategic and financial flexibility to unleash the greater potential of COSTA in the Chinese market," said CEOAlisonBrittain, a Whitbread group.

COSTA's sole proprietorship is similar to that of its arch-rival Starbucks.

At the beginning of its entry into China, Starbucks established joint ventures with Beijing Sanyuan Group, Taiwan Unification Group and Hong Kong Meixin Group respectively. After China allowed wholly foreign-owned enterprises to open stores in 2005, Starbucks successively bought back shares in the joint venture. In July this year, Starbucks announced that it would spend about US $1.3 billion in cash to acquire the remaining 50 per cent of the remaining 50 per cent of the joint venture in East China Market (Shanghai Unified Starbucks Coffee Co., Ltd.), thus realizing direct management of all stores in mainland China.

Starbucks has made plans to open 5000 stores in China in 2020. According to Kevin Johnson, president and CEO of Starbucks Coffee, "fully and directly managing the entire Chinese mainland market is conducive to this goal."

Generally speaking, foreign-funded enterprises turn to sole proprietorship in order to strengthen their control over the enterprise and increase brand revenue. China's growing coffee consumption market allows foreign enterprises to see the prospect of sole proprietorship. COSTA is probably the only coffee brand that has the strength to compete with Starbucks. Unlike American coffee, which represents Starbucks' rapid occupation of the fast food coffee market, COSTA emphasizes its own quality and style of coffee.

In the UK, COSTA overtook Starbucks in 2010, but in terms of global market share, COSTA is slightly inferior, especially in mainland China. When COSTA entered China in 2006, Starbucks was seven years early. Starbucks now has more than 2800 stores and COSTA has 420 stores.

According to the plan of COSTA parent company Whitbread Group, it hopes to increase COSTA's global turnover to 2.5 billion pounds by 2020. The potential of the Chinese coffee market is obviously much higher than that of the British and American countries which are already mature markets.

According to the London International Coffee Organization, compared with the global average growth rate of 2%, China's coffee consumption is growing at an astonishing rate of 15% a year. China's coffee sales were about 70 billion yuan in 2015, and with an annual growth rate of more than 15 percent, the Chinese coffee market will be 300 billion yuan by 2020.

Public data show that in Beijing, Shanghai, Guangzhou, Shenzhen and Nanjing alone, the number of coffee shops has reached nearly 10000. Even Starbucks, which has 2800 stores, still has a big chance. For COSTA, which lags far behind Starbucks, there is more room for growth.

Of course, apart from Starbucks, there are many local brands that see the potential of the Chinese coffee market. Pacific Coffee already has more than 500 stores, and many boutique coffee shops are also growing rapidly. It is not easy for COSTA, which is already one step behind, to stand out from many competitors.

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