Essay About Shanghai President Coffee And Western Expatriates

Coffee Case
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By early 2002 the company was operating 25 stores in Beijing. Although many Chinese consumers
traditionally believed coffee to be foul tasting and bitter, many were now acquiring a taste for what
they considered a luxury beverage. Heartened by the success in Beijing, Starbucks entered a joint venture
with Shanghai President Coffee, the operator of Starbucks cafés in Taiwan, to enter the Shanghai
market. Starbucks added Maxims Caterers as a partner at the same time, entering the Hong Kong
market.
It was widely believed that sales growth in Shanghai would outstrip Beijing in the near term. In
the two years that the company operated in Shanghai, it increased the number of outlets there to 21.
The company had adopted some novel ways of breaking down consumer resistance to coffee, including
educational activities focused on potential customers. Starbucks Shanghai partner trained a staff of 300
people who aggressively went out into the market to introduce the public to the intricacies of coffee.
The successful launch of a Starbucks café directly across from one of the oldest tea houses in the country
in Yu Gardens, (one of Shanghais premier historical sites) was testimony to its remarkable market entry
efforts.
Although many market experts predicted that Starbucks consumers in China would be predominantly
Western expatriates, the first two years of operations saw a consumer base of roughly 70% local
Chinese. This was somewhat surprising to some as the ambience in the Chinese cafés, the menu offerings,
and the prices were extremely similar to outlets in the United States. A cup of coffee was priced
between $2.50 and $3.50, an exorbitant amount in a country where per capita monthly income was
only $84.