Starbucks at it Again

Starbucks Plays to Local Chinese Tastes

Updated November 26, 2012, 7:13 p.m. ET

By LAURIE BURKITT

      In the Laurie Burkitt's Wall Street Journal article, the audience learns that Starbucks is planning an expansion and adaption to Chinese culture. With an addition of 800 buildings and 18,000 employees, Starbucks will merge further into China. Their strategy for adaption is to appeal to the local tastes. In order to do so the company is applying cultural insights. This entails large stores and new chinese-inspired flavors among other changes.

      "Starbucks's Ms. Wong said the Seattle-based company understands the complexities of operating in a country where consumers in smaller cities are just getting their first Starbucks and where established big-city coffee drinkers already need upgraded stores.

     The company also noted how crucial the localization will be in order to be successful. A large part of this calls the company to appeal to a family environment. This will help them garner the respect from the adults, which in turn, will allow them to employ a younger demographic. 

      The questions remain on how successful this expansion will be. Can Starbucks quench the thirst of China's population? Will they be able to retain their same tradition? All of these questions must be addressed if the company wants China to be their second biggest market next to the United States.

     I am not sure how I feel about this move. I think it will be difficult and daunting more than anything else. The divergence in preferences from the Seattle-based company and the chinese coffee industry is drastic. Due to these difference in culture and tastes, I do not see this market penetration and product adaptation as smooth transitions. 

    Eight-hundred stores is a lot. The multi-billion dollar investment that will come from that can result in a multitude of things. For starters, I think that the company may bite off more they can chew since this is not the first big expansion that they are taking (A month back I read an article about their expansion in the Nordic Region). Too many projects will be difficult to maintain. Also, it will make it harder to keep their image if they are divulging in various cultures. As a result, I do not think the stockholders will be happy. With so much money going out to a variety of projects, it will be hard for investors to believe in the company's state of business. 

Topics: product adaption, market penetration

WSJ Article