Starbucks has expanded its stores by 70% in the past five years, hitting China's local coffee brands.

Full of confidence in the Chinese market

China's annual economic growth (GDP) fell to 6.9% in 2015 from 7.3% in the previous year, the lowest level in 25 years. It is an indisputable fact that China's economic growth is slowing.

However, Starbucks CEO Howard Schultz has announced more than once that the company will surpass the United States to become the world's largest market in the future, and is full of confidence in the Chinese market.

Why does Starbucks attach so much importance to the Chinese market, and what is the basis for this layout of the Chinese market?

Starbucks official said in an interview with reporters at the Rule of Law weekend: "at the Starbucks global shareholders' meeting held a few days ago, Howard Schultz made it clear that 'China's middle class will grow to 600 million in the next decade'. Starbucks believes that the Chinese market still has great market potential."

Hu Lu, vice president of Yunnan Coffee Industry Association, also analyzed to reporters at Rule of Law weekend: "in the United States, Starbucks has become saturated after decades of development, while in China, there is a lot of potential for coffee consumption."

According to Hu Lu, at present, the average growth rate of world coffee consumption is about 1.5%, but China's coffee consumption can reach about 20%. All countries in the world are optimistic about the growth of China's coffee market, so they have poured into China one after another.

Throughout the expansion of Starbucks in China in recent years, it is constantly sinking into China's third-and fourth-tier cities, benefiting from more than a decade of hard work, it has also achieved great success in the above-mentioned Chinese market. Hu Lu further said.

Zhu Danpeng, an expert on food and beverage brands at the China Food Business Research Institute, also said that against the background of Starbucks' global market saturation, the entire Chinese market leads the world in terms of revenue and profit contribution to Starbucks. From this point of view, Starbucks must be full of confidence in the strategy of the whole of China.

The latest financial results disclosed by Starbucks also show that profit margins in China and the Asia-Pacific region are currently 32%, those in the Americas region are 21.1%, and those in Europe, the Middle East and Africa are only 1.9%.

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