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Essay: How Starbucks Successfully Expanded into the Chinese Market

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  • Published: 1 February 2018*
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  • Words: 949 (approx)
  • Number of pages: 4 (approx)

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The idea of Starbucks opening in China was one that ultimately came with a significant amount of challenges, but at the same time potential opportunities for success. The Chinese market is often difficult for certain brands or companies to be successful if they are not knowledgeable about the preferences of Chinese consumers. Starbucks decision of expanding their stores into China meant having to experience a different history and culture that they were not used to. Within the long history of China is the established tradition of tea drinking and the significant meaning of it within their culture.  Starbucks Coffee Company utilized specific strategies to attain success with expanding their coffee chains within China, a tea drinking dominated culture.

With China’s large population it makes a very attractive market that consists of opportunities for different companies to succeed. It is also a very emerging market as the middle class within China is of constant growth and many companies do take the opportunities that this specific market offers. Any company that wishes to be successful within this market will develop new strategies or a new market that is attractive to a specific audience, “To be successful in China, companies may need to reinvent themselves, as Starbucks has” (Doland, 2015, pg. 6-10). The company was aware that they needed to implement new strategies unique to China. As Starbucks slowly began to introduce their company into the Chinese marker they started with simple advertising techniques that put their brand out there and created attention to it. The company then began to casually introduce different kinds of beverages that they felt that this market would enjoy, “by developing popular non-coffee drinks such as Strawberry Soy Frappuccino and the Refresha line of fruity beverages” (Beattie, 2012, pg. 20). Most of the products they chose were made from local ingredients which helped introduce these drinks as it did not shock them as Starbucks tried to make the drinks as similar as possible to tea and other drinks that are common. As the drinks that were chosen did not shock the Chinese culture because they were not exposed to more of the traditional western beverages that Starbucks offers. The layout and design of each of the Starbucks Coffee Company chain stores had a unique design that enhance the coffee experience and attracted many Chinese consumers. These factors that the Starbucks company employed a certain level of brand awareness present to the Chinese consumers. The president of Starbucks China, Belinda Wong said, ‘"We've been very blessed. Starbucks has very high brand awareness to a lot of people in China, so when we go to a new city or existing city, a lot of customers know about the brand already,"’ (Beattie, 2012, pg. 20). After these factors were implemented and store locations were opened there were Chinese consumers that were already potential customers because they were aware of the Starbucks Coffee Company brand.

As Starbucks Coffee Company was opening their chain locations they quickly realized the extreme diversity that is present within the diversity of the Chinese market. The diversity of this market is made up of differences within purchasing patterns, available income, and consumption within their culture. In order for Starbucks to be able to make an impact within the Chinese market the company decided to join with three other Chinese partners that allowed Starbucks to be able to expand their business within more regions of China. Combining with other partners while entering the Chinese market was a smart strategy that Starbucks used. With the help of other partners Starbucks was able to expand to the Northern, Eastern, and Southern parts of China with delivery products and services of high quality which in the end benefitted Starbucks and their success. A major benefit of Starbucks joining with other partners was that they helped Starbucks Coffee Company gain important insights on the tastes and preferences of Chinese consumers. It also helped Starbucks learn about the different cultures in the different regions of China that they expanded to.  This company has a brand that is known to be very established and delivers high quality products along with services that they ensure the same quality was present in their locations within China.

With Starbucks Coffee Company expansion to China it was more than just competing with Chinese tea, and achieving success; it was a long-term investment that also involves a long-term commitment. As it was apparent that bringing a coffee company into a tea dominated culture in China it would be a challenge. The Starbucks Coffee Company was aware that it would take some time to find employees and provide training for them, but also earn loyalty from customers and educate Chinese consumers about the brand.

The Starbucks Coffee Company faced many challenges when trying to grow their brand within a country that has a preference for drinking tea. From The Economist, “Starbucks' penetration is perhaps most remarkable of all, given that China is a country of devoted tea drinkers who do not take readily to the taste of coffee” (2001, pg. 62). As a company Starbucks had to face the challenge of creating a unique marketing campaign specific for Chinese consumers that revolutionized the way Chinese consumers viewed and consumed coffee. Rather than using western store layouts and products that have had an immense amount of success; the Starbucks Coffee Company created unique store layouts and products that were focused towards Chinese consumers and hoped to be appealing to them. This company changed their business and marketing styles to respect and align with the Chinese culture in order to help aid in their success. With their specialized and Chinese centered approaches and strategies Starbucks Coffee Company was able to succeed in a tea dominated country.

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