Starbucks Expansion Into China

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Starbucks expansion into China

Abstract In the following research we will look whether Starbucks will be able to launch an aggressive expansion throughout Mainland China, a country known for its tea drinking history dating back to 5,000 years. Starbucks is known for its ability to locate the business outlets in perfect spots as well as market their products in beneficial ways. This report will try to analyze the three main questions:
1) Should Starbucks continue its expansion in China?
2) Will the Chinese be willing to change their tradition of drinking tea, after 5,000 years, to coffee?
3) Will Starbucks current marketing plan work in China without advertising?

Company Overview The history of Starbucks dates
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Considering China's large urban population, rising economy and increase in coffee consumption, Starbucks estimates that China will be the second largest market in terms of amount of stores outside of US. At present, Starbucks regards Asia Pacific as its main target market, which now has over 1,600 stores and could ultimately have some 7,000 stores in the region, Wu said. For the long term, the company plans to expand to 15,000 locations beyond the United States, he added. The Chinese, though, are remaking the "Starbucks Experience."

Current Market Position and Financial Data Starbucks opened 241 new stores and total net revenues exceeded $3.44 billion during last quarter of 2011 a 16% increase from the same quarter of 2010. The company delivered major gains in its consumer products business, which makes via instant coffee, Starbucks ice cream and other items for sale in grocery stores and other retailers, its revenue from this segment increased by 72 percent. It earned $382.1 million, or 50 cents per share, for the quarter that ended Jan. 1, 2012. That’s up from $346.6 million, or 45 cents per share, in the same quarter the previous year. Maxim's Caterers Ltd of Hong Kong is Starbucks' joint venture partner in Hong Kong, Macau and southern China. In 2006 the company increased its stake in the joint venture, Coffee Concepts (Southern China) Ltd, to 51% from
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