WSJ: “After nearly 14 years of working to persuade China to buy into its foreign coffee culture, Starbucks Corp is aiming to become more Chinese as it plans a rapid expansion in the country.
Belinda Wong, president of Starbucks China, said in an interview that Starbucks aims to roll out 800 new stores in the next three years to add to its existing fleet of 700. Over that period it will increase the number of employees to more than 30,000 from the current 12,000.
The company aims to capture a larger market by going more local and applying its cultural insights, Ms. Wong said. For instance, whereas kiosk-sized stores work well in the U.S., where office workers grab bacon-gouda sandwiches to go in the morning on the way to work, Starbucks has learned that Chinese consumers value space and couches on which to relax in the afternoons.
The coffee company is adding some stores that are nearly 3,800 square feet and can seat consumers who come with groups of friends and business partners. Starbucks also has discovered that Chinese tastes for coffee go only so far. It plans to introduce new Chinese-inspired flavors, building on existing favorites like red bean frappuccinos.
Localization is a critical factor in the success or failure of foreign companies in China. Yum Brands Inc has thrived in China by adding fried shrimp and soy milk, among many other Chinese items, to its KFC outlets and fresh seafood bacon pizza and Thai-style fried rice to its Pizza Huts.
Businesses that have failed to grasp the local culture, importing alien models, have fallen out of favor. In September, Home Depot Inc closed all seven of its remaining big-box stores in China after years of losses, having discovered that the do-it-yourself home improvement model doesn’t work well in a do-it-for-me Chinese culture. Best Buy Co closed its nine China outlets in February 2011 after discovering consumers needed washing machines, not espresso makers or stereos.”
via Starbucks Plays to Local Chinese Tastes – WSJ.com.
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