Starbucks' success in China » Portal Insights

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Much has already been written about the successful strategy of Starbucks in China. The company is opening one store a day and aims to have 5000 stores in the country in the coming years.

My dear friend of Forbes, Helen Wang rightly attributes the company's success to its long-term commitment to the market, well-executed collaborations with Chinese partners, superior distribution networks, adoption of local technologies, and offering traditional menu items.

However, these are just visible tactics of an even more fundamental strategy. From the start, Starbucks has spoken to the essence of Chinese culture, having the wisdom to develop long-term vision, regional relationships and regionally localized products for the market.

All global companies can learn from this: attention and execution around Chinese culture is the root of the success of any brand outside of China.

As stated earlier in this article, what Starbucks understood when they entered the market was that it wasn't about coffee, initially. It was about reviving a “teahouse culture” that had existed for thousands of years. The company's global success was based on being a third place between home and work, and took this ethos to China, but with a modern, Western sensibility, on another scale.

From the early days, the Starbucks began organizing its efforts around three essential pillars in Chinese culture.

Family

Since the beginning of Chinese civilization, family has been the key to security, education, and the spirit of Chinese people. Confucian society values ​​intertwining children and adults in a bond of shared responsibility that extends through all stages of life.

Parents must continually engage in their children's lives: their upbringing, education and career. In return, your children must respect and care for their relatives as they grow older.

A Starbucks understood this perfectly and made engaged relatives one of the pillars of its people operations. Since 2012, the company has hosted an annual “Partner Family Forum”, where its employees, who the company calls “partners”, and their relatives, can together learn about the company and its future in China.

The “partners” talk about their professional experiences in the company and leadership in the Starbuckseven the CEO Howard Schultz He's already spoken to his relatives.

The success of the program cannot be underestimated. In an interview with BCG, Schultz talked about the first forums in 2012:

“Think of an annual shareholder meeting; we had an annual meeting with parents and families in Beijing and Shanghai, and we had approximately 90% participation. We didn't know who or when would come. In many cases, entire families went. There were parents, grandparents, aunts and uncles. It's unbelievable, it was a milestone for the company in terms of local relevance and sensitivity.”

The company continues to grow in this. This year, the launch of a “Parent Care Program Starbucks China” which aims to provide health insurance for elderly relatives of more than 10,000 employees, and will surely be extended to more employees.

The initiative obviously encourages staff retention by providing rare financial support to employees' families. Much more important, it is telling Chinese partners that they respect their parents in a way that truly touches the Chinese heart.

Community

The Chinese value their community, traditionally called their “inner circles”. Whether it's their homes, schools or businesses, they turn to these circles for loyalty, information and approval of their choices.

With that in mind, the Starbucks designed spaces in its retail stores that facilitate the creation of these circles. Unlike the United States, where store chairs are commonly occupied by solitary laptop users, Starbucks in China embrace noisy resting crowds.

In many cases, the spaces are up to 40% larger than in the US, and have been arranged in locations with easy access and high visibility in offices (either high-traffic first floors, or mezzanine areas). Seating areas are open and often have no walls – chairs appear to flow into adjacent areas, such as lobbies or hallways.

The result? Enter any Starbucks in an office at three in the afternoon and you will see a huge number of people talking about news, business, exchanging fashion tips with a co-worker or talking about the next travel destination. You appear to have entered a modern version of a city square.

Consequently, not only do consumers enjoy coffee (in all its Chinese variations), they feel fulfilled by going to a Starbucks with your friends or family.

Status

The Chinese place a premium on gaining and maintaining reputation and status, specifically for their family and community. Consequently, they want to be associated with brands and products that portray prosperity, success and social (upward) mobility.

A Starbucks has positioned itself as the premium coffee brand in China. The company charges 20% more in the country compared to the rest of the world. Choose highly valued locations, such as luxury shopping malls and iconic business towers.

And, as foreign brands, especially food and drink brands, are seen as premium, the Starbucks commonly labels its products with the country from which they were imported.

A Starbucksand the way it allows Chinese people to observe their own culture, is a powerful example for any global brand that wants to enter there.

By seeking to blend into the centuries-old traditions of Chinese culture, the company plays a slower game, leading to a deeper commitment to the market. It is necessary to develop relationships with family and communities, which will inevitably make it more attractive and productive with local partners.

Finally, it has to be part of the Chinese rituals of family and desire for status, offering a space that generates pride in consumers and employees.

Together, these efforts made the Starbucks a less foreign company in China, and more seen as a seed from a Western tree that has been carefully planted and cared for elsewhere.

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