Starbucks China Strategy: 1,500 Stores by 2015

When global coffee giant Starbucks set its sights on China, few could have predicted just how deeply the brand would embed itself in the country’s urban fabric. From its first store in 1999 to plans for 1,500 locations by 2015, the journey hasn’t been without challenges—regulatory shifts, rising costs, and evolving consumer tastes. But through it all, Starbucks has remained committed to one core principle: delivering a consistent customer experience, no matter the market structure.

Yes, Starbucks plans to have at least 1,500 stores operating in mainland China by 2015. As of the interview, there were already 450 stores in operation, with a goal to reach that milestone through steady expansion into new cities and regions beyond the usual coastal hubs.

Flexible Business Models Across Markets

Starbucks’ approach to entering and growing in new markets has never been one-size-fits-all. While the company is fully owned in some countries like the UK, it operates through joint ventures or licensing agreements elsewhere—such as in Taiwan, Hong Kong, the Philippines, Singapore, and Malaysia. In China, the model has evolved over time. Initially, all stores were joint ventures due to regulatory restrictions, but since 2004, the company has increasingly moved toward direct ownership. Even so, Wang Jinlong, Starbucks’ President for Greater China, insists that ownership structure is secondary to the customer experience.

“What’s important is that we can provide the same level of service that customers appreciate,” Wang said. He emphasized that Starbucks’ successful joint ventures in places like Taiwan and Hong Kong were due to strong local partnerships that understood regional tastes and culture. “Excellent seeds come from different genes,” he noted, highlighting how collaboration, not control, has driven growth.

Expansion Beyond First-Tier Cities

Starbucks’ early Chinese footprint was heavily concentrated in major coastal cities such as Beijing and Shanghai—Beijing alone had nearly 80 stores, and Shanghai over 130. But the future lies further inland. “We will expand more into central and western China,” Wang said, pointing to the country’s ongoing development and the opportunity to bring the Starbucks experience to new markets. Currently operating in 35 cities, the company aims to enter many more over the coming years.

When asked about specific gaps, Wang jokingly remarked that Sanya, a popular tourist destination, still lacked a Starbucks—prompting him to consider a visit. The broader strategy is clear: grow not just in number, but in geographic and demographic reach.

Countering Rising Costs with Investment and Innovation

Operating costs—including labor, real estate, and commodities—have been on the rise globally, and China is no exception. Yet Wang remains optimistic. He pointed to Starbucks’ strong financial performance post-2008 financial crisis as evidence of resilience. “In fact, our most recent quarter was the best in 40 years in terms of consumer satisfaction, service quality, product excellence, and financial results,” he said.

Wang confirmed that Starbucks funds its China expansion entirely through its own capital, with no reliance on external financing. In most of China, stores are company-owned, except in eastern China, where the company partners with Uni-President Enterprises. This financial stability, he argued, puts Starbucks in a strong position to invest in new technology, products, and store concepts across the country.

Pricing That Reflects Value, Not Just Cost

In 2011, Starbucks adjusted its prices in China, but not across the board. “We didn’t just raise prices—we also lowered the cost of some items our customers love,” Wang explained. The goal, he said, is to deliver value, not simply reflect rising input costs. “Price is one element, but it also reflects the overall service, product quality, and our contribution to the community,” he added. The company takes into account global commodity trends, local economic conditions, and consumer expectations when setting prices.

Beyond Coffee: Tea, Food, and New Channels

Starbucks’ ambitions aren’t limited to coffee. With a global non-coffee product line that includes tea and ice cream—and the 2009 launch of VIA instant coffee—diversification is a key part of the strategy. VIA, which launched in China in April 2011, quickly racked up $200 million in global sales. “We’re not just a coffee company; we’re becoming a multi-channel, multi-platform consumer products company,” Wang said.

The rebranding in 2011, which removed “COFFEE” from the logo, signaled this shift. Starbucks is expanding into supermarkets and other retail channels, and investing in digital and social platforms to create what Wang calls the “fourth place”—a digital extension of the in-store “third place” experience. In China, the company has a strong presence on social media platforms like Weibo and Kaixin.

Tea is another major focus. With China’s 5,000-year-old tea culture, Starbucks sees huge potential. “We want to promote Chinese tea and tea culture globally through the Starbucks brand,” Wang said. To that end, the company opened its second global R&D center in Shanghai, dedicated to developing tea-related products and deepening its understanding of Chinese tea traditions.

Starbucks’ Vision for China as a Second Home Market

Since rejoining Starbucks in 2005, Wang has helped shape the company’s strategy in Greater China. Having previously led international expansion efforts—including opening the Japan, Taiwan, and China markets—he brings a unique perspective. “China is Starbucks’ second home market,” he said. “We have more than 800 stores in the Greater China region and plan to grow significantly.”

Wang believes that operating in China has changed his view of global business. “The intensity, the speed, and the scale of the market here are unlike anything I’ve seen,” he said. He stressed the importance of blending Eastern and Western values to drive innovation. “The best ideas come from combining the best of both worlds,” he noted. For Starbucks, understanding and respecting local culture while maintaining global brand standards is the key to long-term success.

Frequently Asked Questions

How many Starbucks stores are there in China?

As of the interview, Starbucks had over 450 stores in mainland China and around 800 across the Greater China region including Taiwan, Hong Kong, and Macau. The goal is to reach at least 1,500 stores in mainland China by 2015.

What is Starbucks’ strategy for expanding in China?

Starbucks plans to expand into more cities beyond the current 35, particularly targeting central and western China. The focus is on providing the Starbucks experience to new consumers while maintaining consistent service and quality across all locations.

How does Starbucks handle different market structures globally?

Starbucks adapts its business model for each market—operating wholly owned stores in some countries, joint ventures in others, and licensing agreements in places like the Philippines and Malaysia. In China, the approach has evolved from joint ventures to primarily direct ownership.

What is Starbucks doing to address rising costs in China?

Starbucks has managed rising costs through strong financial performance, investment in technology and product innovation, and continued expansion. The company funds its China growth entirely with its own capital and remains confident in the market’s long-term potential.

Is Starbucks planning to offer more than just coffee in China?

Yes. Starbucks has diversified its offerings to include products like VIA instant coffee, tea, and ice cream. It also launched a major R&D center in Shanghai focused on tea products and is expanding into new sales channels such as supermarkets and digital platforms.

Why did Starbucks remove “Coffee” from its logo in 2011?

The rebranding reflected Starbucks’ shift toward becoming a multi-channel, multi-product consumer company. It was part of a broader strategy to expand beyond coffee into areas like tea, food, and digital experiences.

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