Starbucks Corp has unveiled a bold plan to more than triple revenue in China over the next five years, CEO Kevin Johnson said in an interview in Shanghai on Tuesday.
The coffee giant laid out plans to compete with KFC in the race to become China’s fastest-growing foreign food chain by opening a new store every 15 hours through 2022. It plans to have 6,000 stores in China then, compared with a previous target of 5,000 by 2021.
“China has a long runway of opportunity for Starbucks,” Johnson said as the chain kicked off a two-day investor conference in Shanghai, the first to be held outside of the US. “We can’t control what happens in the geopolitical situation. We are not immune to it, but we take a long-term view.”
Photo: Reuters
The vote of confidence came as 120 US companies and business groups line up to oppose a plan by the administration of US President Donald Trump to slap tariffs on US$50 billion of Chinese imports.
A hearing on the levies — where companies including Best Buy Co and General Electric Co, as well as lobby groups such as the National Retail Federation, plan to testify — began on Tuesday.
Starbucks is increasingly reliant on China, where it has no close rivals, to prop up underwhelming sales growth in the US and elsewhere.
A US$7.2 billion deal with Nestle SA earlier this month gives the coffee giant the cash to pursue its goal of accelerating expansion in China, which is set to become Starbucks’ largest market within a decade.
The Seattle-based company also expects to more than double its operating profit in the country by fiscal year 2022.
About 15 percent of Starbucks’ revenue came from the Chinese and Asia-Pacific markets — about US$3.2 billion — in fiscal 2017, company data compiled by Bloomberg showed.
It has 3,300 outlets in China, compared with about 12,000 in the US, including licensed stores.
The push in the Chinese market comes as its stores in the US face fierce competition from up-and-coming regional coffee houses and steep discounting from fast-food rivals. Consumers are also shopping more at home, shunning brick-and-mortar retail for e-commerce.
In China, where cafe culture is less mature, but e-commerce more developed, Starbucks cafes have cornered the market on plush, but casual meeting spots.
While same-store sales in the US have been weaker than expected, strong performance in new stores means the firm is still on track “to deliver US growth within the targeted range that we’ve given of high single-digits,” Johnson said.
The coffee giant is also to announce in a few months a new program for mobile ordering and delivery in China, Starbucks China CEO Belinda Wong (王靜瑛) said.
Currently, 60 percent of transactions in its China stores are through mobile payments.
The growth is helping the coffee chain create 10,000 jobs per year in China, where the company is keen to set itself apart by offering generous employee benefits, including health insurance for the parents of employees in a country where children often care for aging family members.
“We have built a business here in China over 20 years,” Johnson said. “We have built that business in China, for China.”
Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador. He credits Salvadoran President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life. “Before I was unemployed... And now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company. Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin
TECH RACE: The Chinese firm showed off its new Mate XT hours after the latest iPhone launch, but its price tag and limited supply could be drawbacks China’s Huawei Technologies Co (華為) yesterday unveiled the world’s first tri-foldable phone, as it seeks to expand its lead in the world’s biggest smartphone market and steal the spotlight from Apple Inc hours after it debuted a new iPhone. The Chinese tech giant showed off its new Mate XT, which users can fold three ways like an accordion screen door, during a launch ceremony in Shenzhen. The Mate XT comes in red and black and has a 10.2-inch display screen. At 3.6mm thick, it is the world’s slimmest foldable smartphone, Huawei said. The company’s Web site showed that it has garnered more than
Demand for artificial intelligence (AI) chips should spur growth for the semiconductor industry over the next few years, the CEO of a major supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said, dismissing concerns that investors had misjudged the pace and extent of spending on AI. While the global chip market has grown about 8 percent annually over the past 20 years, AI semiconductors should grow at a much higher rate going forward, Scientech Corp (辛耘) chief executive officer Hsu Ming-chi (許明琪) told Bloomberg Television. “This booming of the AI industry has just begun,” Hsu said. “For the most prominent
PARTNERSHIPS: TSMC said it has been working with multiple memorychip makers for more than two years to provide a full spectrum of solutions to address AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it has been collaborating with multiple memorychip makers in high-bandwidth memory (HBM) used in artificial intelligence (AI) applications for more than two years, refuting South Korean media report's about an unprecedented partnership with Samsung Electronics Co. As Samsung is competing with TSMC for a bigger foundry business, any cooperation between the two technology heavyweights would catch the eyes of investors and experts in the semiconductor industry. “We have been working with memory partners, including Micron, Samsung Memory and SK Hynix, on HBM solutions for more than two years, aiming to advance 3D integrated circuit
RSS