Starbucks Sells 60% Stake in China, Eyes Market Revival

Starbucks, the world’s largest coffee chain, is selling a 60% stake in its China business to investment firm Boyu Capital in a $4 billion deal, marking a major shift in its strategy in the country. The American brand will retain a 40% stake and full ownership of the Starbucks name in China.

Since entering China in 1999, Starbucks has grown the market into its second-largest outside the US, operating around 8,000 stores. Despite this, the chain has faced stiff competition from homegrown rivals like Luckin Coffee, which now boasts more outlets in China and attracts customers with lower prices and frequent promotions.

The partnership with Boyu Capital aims to inject local expertise into Starbucks’ operations while leveraging the global brand’s recognition and coffee expertise. The company plans to expand to 20,000 locations in the long term, introduce new beverages, and enhance digital platforms tailored to Chinese consumers.

In recent years, Starbucks has struggled with declining sales due to slower consumer spending, the lingering effects of the Covid-19 pandemic, and intensifying competition. The company has also cut prices in China to remain competitive, affecting profit margins.

Globally, Starbucks operates over 40,000 outlets, and under new CEO Brian Niccol, it has pursued menu revamps, increased focus on hiring baristas, and scaled back automation to revive the brand’s global and local appeal.

This deal is one of the largest involving a US consumer brand in China in recent years, reflecting the challenges and opportunities foreign companies face in the world’s second-largest economy.