Starbucks' Expansion in Asia

Starbucks' Expansion in Asia

Starbucks prides itself on offering to its customers premium grade coffee and first-class customer service. Furthermore, the company strives to positively contribute to the communities in which it operates. In the United States, it seems as though there is a Starbucks on every corner, and because Starbucks has a stranglehold on the North American coffee shop market, going global seemed to be the only logical step for Starbucks moving forward.

When it decided globalize, Starbucks best options were Europe and Asia. The company decided to focus on growth in Asia rather than expanding into Europe because of the number of potential consumers in the Asian market (in 2005, China alone had a population of over 1.3 billion). However, moving into Asia would be a multi-staged operation, first moving into Japan and Singapore, then later into China.

Singapore especially embraced Starbucks. Because Singaporean consumers had disposable income and were known to be quite fond of Western lifestyle trends, they were consuming coffee much like Americans - not as a means to boost energy, but as a part of a lifestyle as a whole. Coffee shops were becoming in America a place where people went to socialize.

Rolling out operations into China though would not be quite as easy as it was in Singapore. China was (and is) historically known as a tea consuming market, and coffee essentially went against that long-standing tradition. However, the sheer number of potential consumers made China too attractive to not enter.

When Starbucks moved into China, it strategically placed its stores in urban and commercial areas. This was likely due to how the Chinese people perceived coffee's usefulness. It seemed as though the Chinese, by-in-large, thought of coffee as a quick source of energy. And, since China had economic development areas with high concentrations of jobs and people, Starbucks decided to place its stores in these high-traffic areas where people that needed a jolt of caffeine in the morning could get it. Because the Chinese people did not necessarily view Starbucks coffee as an enhancement to their lifestyles, Starbucks decided to run promotions and distribute coupons rather than advertise heavily to attract customers.

Arguably though, the most important parts of Starbucks expansion into Asia were the partnerships and joint ventures that it cultivated with local companies. Working with local companies, Starbucks was able to save considerable time and cash on things such as legal issues and compliance and getting to know local consumers and how to market to them (among others).

Prior to moving into China, Starbucks' success could be widely attributed to how consumers perceived the brand. The company did a fine job in creating the perception that it really does offer premium coffee products and superior customer service (on a side