More Than Coffee: Starbucks in China

China has a strong culture of drinking tea, and has been drinking tea for thousands of years. Surprisingly, Starbucks, a Seattle-based coffeehouse brand, has received big success in China. A recent AdAge article mentions that Starbucks delves deeply into local cultural to reach Chinese consumers and presents several tips for marketers entering the lower-tier cities. After building a strong presence in most first-tier markets like Beijing and Shanghai, Starbucks has decided to focus more on lower-tier cities like Fuzhou and Changsha. Additionally, Starbucks draws heavily from traditional Chinese culture and the local culture of each province. For instance, Starbucks decorated the store in Fuzhou, Fujian Province, by using local materials like native stone. Since Starbucks has already entered into China's big city market successfully, the company feels it is time for it to enter into the lower-tier cities in China.

In China, market development is a relatively smart strategy for Starbucks. One reason is that, customers in lower-tier cities want to try out better quality brands of the first-tier citizens. People want to try new things, new ways of living, and new ways of connecting with other people. For instance, Changsha, a second-tier city in Hunan Province, where I finished my undergraduate studies, opened five Starbucks overnight last year. People lined up to have a cup of coffee in Starbucks to display their high quality of life. Carrying a Starbucks cup is seen as a social status symbol, a way to demonstrate sophistication and the capability to afford a personal luxury for the up-and-coming middle class in China. Younger generations define Western coffee culture as a symbol of the modern lifestyle. With the development of online social media in China, most lower-tier people use the locate function of Weibo (China's version of Twitter) to share their experience in Starbucks with their friends.

In most lower-tier cities, there are few comfortable environments for executives to use as a de facto meeting place, not to mention the gathering of friends. Starbucks selects hub locations--busy transportations and central business districts--to project its brand image. It's quite convenient for people to access their stores. Also, it can avoid other competitors striving for the central location. Additionally, rather than using the same decoration in each store like McDonald's and KFC, each Starbucks store is built in a different style. The article illustrates that everywhere in the store, customers are surrounded by wonderful parts of Fuzhou culture. This combination between Western coffee and Chinese culture is a unique "East meets West" blend that makes Starbucks much more comfortable to Chinese consumers. It also offsets the negative impact of culture shock. Furthermore, quickly growing urbanization in China offers a big opportunity to Starbucks. The article points out that lower-tier customers' incomes are steadily increasing. At the same time, Chinese government is developing