Google does very little business there. McDonald’s has agreed to sell its business and license its name there. Coca-Cola, after investing
heavily, sold its bottling unit there. Where is “there”?
shanghai news, of course.
At a time when many US companies have been beating a path away from China, worried about censorship as well as political and economic
volatility, one company has been quietly going the other direction:
Starbucks.Amid last week’s busy news cycle – filled with company
earnings reports and chaos in Washington – Starbucks made a momentous
deal that was largely overshadowed. It bought out its longtime partner
in its Chinese operation (making it the sole owner) and detailed its
huge expansion plans for China.
Consider this mind-boggling statistic that I culled from the company’s statement last week about its Chinese ambitions: Starbucks is
opening more than 500 stores a year there – which amounts to more than
one new store a day. Starbucks is creating some 10,000 jobs in China
annually. In Shanghai alone, there are already 600 stores.To put that in
perspective, New York City has about half as many stores as Shanghai.
“When people ask me how much can you really grow in China, I don’t really know what the answer is, but I do believe it’s going be larger
than the US,” Howard Schultz, Starbucks’ chairman, says.
Schultz was headed to China that afternoon, preparing for a series of meetings in Shanghai. That’s where the company is planning to open a
30,000sq-ft coffee emporium in December, one that Schultz believes “will
have a larger consumer impact than the opening of Shanghai Disney”.The
story of Starbucks in China is a nearly 20-year journey that may be a
case study for US companies that have struggled to do business there.
Starbucks has found a way into the culture of China – as well as the good graces of the Chinese government – by investing heavily there,
paying significantly higher wages than competitors, and extending its
employee ownership benefits to Chinese workers. The company has also
been offering housing allowances and healthcare benefits and, unusually,
offering critical illness insurance for the parents of employees and
inviting those parents to an annual meeting of the company’s Chinese
staff. Today, Starbucks China is run by a female executive, Belinda
Wong.
All these efforts have built up an extraordinary level of trust. But they took time and money – too much money, some shareholders complained
in the early days of the endeavour.
