Fri, Nov 02, 2007 - Page 11 News List

Starbucks takes China by storm

GROWTH SPURT Starbucks opened its first China store in Beijing's China World Hotel mall in 1999 and has 300 stores there, with plans for 80 more over the next year

AP , SHANGHAI

Starbucks has come a long way in making itself a household name in China -- a nation of tea drinkers -- creating a "coffee house" niche where none existed.

With the launch yesterday of its "frappucino" bottled drinks, the company, with partner PepsiCo Inc, is reaching beyond its iconic stores in marketing the brand in Chinese stores, shops and even the Shanghai subway.

To grab the attention of trendy young Shanghainese, Starbucks and PepsiCo are marketing the bottled coffee and mocha-flavored drinks with an interactive serial movie, Sunny Day, played on flat-screens TVs in Shanghai's subways.

"It's just the beginning of the growth and development of what we have planned for Starbucks in China," Starbucks chairman Howard Schultz said. "The No. 1 market in terms of growth and development of Starbucks around the world is China."

Schultz spoke in Shanghai for the product's launch at the chic Xintiandi District.

With the Beijing Olympics less than a year away, big Western brand names are jostling for an extra edge in this booming market.

Last week, cellphone maker Nokia Corp opened a flagship store along Nanjing East Rd, the traditional heart of Chinese retailing. Automakers, electronics, apparel makers -- all are rushing to gain an edge as the country readies for the big event.

Starbucks opened its first China store in Beijing's China World Hotel mall in 1999 and has about 300 stores there. Schultz said 80 new Starbucks would open there over the next 12 months.

The company has had its share of problems in China. It closed its shop in Beijing's former imperial palace following protests by critics unhappy over the presence of a US corporate symbol in a historic site.

It fought, and eventually won, a trademark dispute with a Shanghai rival that a court ordered to change its name as it sounded too similar to Starbucks.

More recently, amid a flurry of complaints over made-in-China quality and safety problems, the company recalled about 250,000 shoddy plastic cups that posed a choking risk to children.

But overall, Starbucks' China stores have proven a popular place to hang out, rare refuges from noisy, crowded city streets.

While most of the outlets are in the biggest cities, Starbucks' first outlet in Xi'an -- home to the famed terracotta warriors -- got a "great reception," Schultz said.

"There's no shortage of demand for Starbucks coffee," he said.

With the bottled drinks, the Seattle-based company is targeting a market long dominated by local and Japanese makers of tea, juice and soft drinks, hoping to replicate the success that has made bottled coffee drinks a US$1 billion industry back home.

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