How Long Will Starbucks Last in China?

News Analysis Starbucks offers an “American lifestyle experience” for $4 a cup. But buying American brew—one of the only ways the Chinese can vote—is threatening the Chinese Communist Party (CCP). People’s Daily is the official newspaper of the CCP. If Xi Jinping wants an opinion published, it would appear there. So when People’s Daily publishes something, China and the rest of the world pay attention. On Feb. 15, People’s Daily found a flimsy excuse to attack Starbucks. Apparently, according to a social media user on China’s Weibo, a hapless Starbucks employee in Chongqing city asked some police officers eating outside the store to move along. Some Chinese netizens were outraged. People’s Daily caught a whiff of viral controversy, or perhaps the excuse for which it was waiting. Their columnists normally stick to loftier topics, but they stooped down to address the issue in a commentary by calling Starbucks “arrogant,” thus signaling to the entire country that the company is out of official favor. Starbucks called the incident, which supposedly occurred on Valentine’s Day, a “misunderstanding.” The company has massively expanded in China, its second-largest market after the United States. Apparently, Chinese citizens are willing to pay about $4 a cup for an “American lifestyle experience.” That’s a lot for a country whose GDP per capita is about $10,500—less than a sixth of what Americans make. A cup of tea from a regular Chinese shop, on the other hand, can be about fifty cents. Given the price differential, Starbucks has done surprisingly well over the past two decades. The Seattle-based company opened its first store in China in 1999, and currently has approximately 5,400 of them. It tried to buy local goodwill by opening a Chinese “Coffee Innovation Park” in 2020, whose first phase cost $170 million. The park, in Kunshan near Shanghai, is “innovating” by being the greenest-ever bean roasting facility. It uses 30 percent less energy to do so. Visitors wait for their coffee at the Starbucks Reserve Roastery outlet in Shanghai, China, on Dec. 6, 2017. (AFP via Getty Images) However, Starbucks’ growth in China is now slowing, and is expected to flatten in the first quarter of 2022. That was before the company got targeted with the official ire of People’s Daily. Starbucks now competes with less expensive Chinese entrants in the “premium coffee” market, some of which are underwritten by investors linked to Chinese companies, like Bytedance and Meituan, worth over $100 billion each. Surely, officials in Beijing would prefer to see local coffee shops backed by national champions succeed against American capitalism. The success of Starbucks must be a thorn in their sides—why would “patriotic” Chinese buy overpriced American coffee, other than to acquire the frowned upon “American lifestyle,” however fleeting? That is apparently making Starbucks the target of ambitious Party apparatchiks. In December, a Beijing News undercover investigation found food safety violations at two stores in Wuxi, near Shanghai. According to the report, the stores used pastries supposed to be binned and expired matcha liquid. Matcha is a brightly colored green tea. Starbucks confirmed the violations, shut the two stores, apologized, and conducted staff training and its own inspections throughout all its thousands of stores in China. Wuxi’s Market Supervision Administration also conducted inspections of all 82 Starbucks in its territory. It found 15 issues, including incomplete disinfection records and employees who did not wear work caps as required. The news received tens of millions of views on Weibo. According to Reuters, one user said: “If Starbucks is like this, the other shops really worry me. They suffer the scrutiny because it is a foreign brand.” But Starbucks apparently also gains in popularity from its foreign, and more specifically American, status. Political resistance to the regime cannot be ended altogether through the quashing of freedom of speech in favor of democracy, for example. For many, their purchases are an outlet for their dreams and aspirations of living in a modern and open society, whether that be support for Western holidays like Christmas and Halloween, or a daily decision to buy coffee from Starbucks rather than local fare that is just as good but cheaper. Pushback against Beijing can be that subtle, or come from unexpected places, like the former editor of Global Times, Hu Xijin. After the latest People’s Daily attack on Starbucks, even Hu, previously known as one of China’s fiercest nationalists, advised moderation. According to Reuters, Hu “urged his Weibo users to see the Starbucks Chongqing incident as an accident and not more, adding that Starbucks’s status as a foreign brand should not subject it to more criticism.” Hu said: “China is a country that is open to the world. To label a mistake as arrogance is not conducive to the bigger environment of opening-up.” Hu, who recent

How Long Will Starbucks Last in China?

News Analysis

Starbucks offers an “American lifestyle experience” for $4 a cup. But buying American brew—one of the only ways the Chinese can vote—is threatening the Chinese Communist Party (CCP).

People’s Daily is the official newspaper of the CCP. If Xi Jinping wants an opinion published, it would appear there. So when People’s Daily publishes something, China and the rest of the world pay attention.

On Feb. 15, People’s Daily found a flimsy excuse to attack Starbucks. Apparently, according to a social media user on China’s Weibo, a hapless Starbucks employee in Chongqing city asked some police officers eating outside the store to move along.

Some Chinese netizens were outraged.

People’s Daily caught a whiff of viral controversy, or perhaps the excuse for which it was waiting. Their columnists normally stick to loftier topics, but they stooped down to address the issue in a commentary by calling Starbucks “arrogant,” thus signaling to the entire country that the company is out of official favor.

Starbucks called the incident, which supposedly occurred on Valentine’s Day, a “misunderstanding.”

The company has massively expanded in China, its second-largest market after the United States. Apparently, Chinese citizens are willing to pay about $4 a cup for an “American lifestyle experience.” That’s a lot for a country whose GDP per capita is about $10,500—less than a sixth of what Americans make.

A cup of tea from a regular Chinese shop, on the other hand, can be about fifty cents. Given the price differential, Starbucks has done surprisingly well over the past two decades.

The Seattle-based company opened its first store in China in 1999, and currently has approximately 5,400 of them. It tried to buy local goodwill by opening a Chinese “Coffee Innovation Park” in 2020, whose first phase cost $170 million. The park, in Kunshan near Shanghai, is “innovating” by being the greenest-ever bean roasting facility. It uses 30 percent less energy to do so.

Epoch Times Photo
Visitors wait for their coffee at the Starbucks Reserve Roastery outlet in Shanghai, China, on Dec. 6, 2017. (AFP via Getty Images)

However, Starbucks’ growth in China is now slowing, and is expected to flatten in the first quarter of 2022. That was before the company got targeted with the official ire of People’s Daily. Starbucks now competes with less expensive Chinese entrants in the “premium coffee” market, some of which are underwritten by investors linked to Chinese companies, like Bytedance and Meituan, worth over $100 billion each.

Surely, officials in Beijing would prefer to see local coffee shops backed by national champions succeed against American capitalism. The success of Starbucks must be a thorn in their sides—why would “patriotic” Chinese buy overpriced American coffee, other than to acquire the frowned upon “American lifestyle,” however fleeting?

That is apparently making Starbucks the target of ambitious Party apparatchiks. In December, a Beijing News undercover investigation found food safety violations at two stores in Wuxi, near Shanghai. According to the report, the stores used pastries supposed to be binned and expired matcha liquid. Matcha is a brightly colored green tea.

Starbucks confirmed the violations, shut the two stores, apologized, and conducted staff training and its own inspections throughout all its thousands of stores in China.

Wuxi’s Market Supervision Administration also conducted inspections of all 82 Starbucks in its territory. It found 15 issues, including incomplete disinfection records and employees who did not wear work caps as required.

The news received tens of millions of views on Weibo. According to Reuters, one user said: “If Starbucks is like this, the other shops really worry me. They suffer the scrutiny because it is a foreign brand.”

But Starbucks apparently also gains in popularity from its foreign, and more specifically American, status.

Political resistance to the regime cannot be ended altogether through the quashing of freedom of speech in favor of democracy, for example. For many, their purchases are an outlet for their dreams and aspirations of living in a modern and open society, whether that be support for Western holidays like Christmas and Halloween, or a daily decision to buy coffee from Starbucks rather than local fare that is just as good but cheaper.

Pushback against Beijing can be that subtle, or come from unexpected places, like the former editor of Global Times, Hu Xijin. After the latest People’s Daily attack on Starbucks, even Hu, previously known as one of China’s fiercest nationalists, advised moderation.

According to Reuters, Hu “urged his Weibo users to see the Starbucks Chongqing incident as an accident and not more, adding that Starbucks’s status as a foreign brand should not subject it to more criticism.”

Hu said: “China is a country that is open to the world. To label a mistake as arrogance is not conducive to the bigger environment of opening-up.”

Hu, who recently retired from his position as editor-in-chief of Global Times, is sticking his neck out in favor of an “open” China, and remarkably so. He directly criticized the word choice of People’s Daily, the most powerful newspaper in China.

Epoch Times Photo
The Kerry Center Starbucks flagship store in Beijing, China, in this undated photo. (Courtesy of Starbucks)

Hu mirrors a perception of Starbucks long shared by many Chinese citizens. According to a 2012 study by Jennifer Smith McGuire and Dan Hu, “we can see how our [Chinese] respondents selectively singularize specific Starbucks brand attributes as ‘points of attachment’ … for engaging with one or both of these ‘problems’ of [collective or individual] identity.”

The two academics quote five Chinese citizens (initials in parentheses) who describe their perception of Starbucks.

“The ‘fashion,’ lifestyle and Western associations of the brand offer a tool for the projection of a particular sense of self, as an individual—someone ‘quite modern’ (LL) with ‘individual characters and tastes’ (CW). But at the same time, an individualized sense of self is bound up with the reproduction of collective identities, via class—to be seen as ‘a modern young professional’ (YS); via tradition—to enact cultural values of thrift and judiciousness in the marketplace by selecting a brand with a ‘good reputation’ that is ‘trusted due to its global fame’ (YaY); and via nationality—to actively partake as a consumer-citizen of a China ‘connect[ed] to the outside world’ (JW).”

As illustrated by this Chinese perception of Starbucks, and the most recent attack on the company by the regime’s most important mouthpiece, there are two main conclusions to draw.

First, Western companies in China face major risks from Beijing, which is increasingly and more fundamentally anti-Western in its orientation.

Second, the regime is starting to see significant numbers of Chinese consumers who choose Western products as a threat to stability. That someone like Hu is willing to defy the People’s Daily over his cup of Joe, is a signal that many in China oppose Beijing’s excesses.

A morning brew in China, therefore, has not only cultural but political consequences. Starbucks could be bringing the smell of freedom to China, one fragrant brew at a time. It’s unlikely to change the regime anytime soon, but its commercial success should tell us something about Chinese public opinion. As Beijing opposes the revelation of such opinion, especially when it is pro-Western, Starbucks better watch its back.

The days of American Joe in China could be numbered.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


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Anders Corr has a bachelor's/master's in political science from Yale University (2001) and a doctorate in government from Harvard University (2008). He is a principal at Corr Analytics Inc., publisher of the Journal of Political Risk, and has conducted extensive research in North America, Europe, and Asia. His latest books are “The Concentration of Power: Institutionalization, Hierarchy, and Hegemony” (2021) and “Great Powers, Grand Strategies: the New Game in the South China Sea" (2018).