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Starbucks has agreed to sell a 60% stake in its China operations to investment firm Boyu Capital in a deal valuing the business at $13 billion. The move signals the global coffee giant's response to mounting pressure from local competitors like Luckin Coffee.
Under the agreement announced Monday, Starbucks will retain a 40% stake in its Chinese retail business and continue to own the Starbucks brand in the country. The partnership represents one of the largest deals involving a global consumer company's Chinese operations in recent years.
The collaboration "combines Starbucks' globally recognized brand, coffee expertise, and partner-centered culture with Boyu's depth of understanding of Chinese consumers," the company stated. Starbucks described the partnership as a "significant milestone" for its long-term growth plans in China.
The Chinese business will maintain its headquarters in Shanghai and continue operating its existing 8,000 stores, with ambitious plans to expand to 20,000 locations across the country.
Starbucks, which entered China in 1999, has faced increasing headwinds in recent years. The COVID-19 pandemic, slower consumer spending, and intense competition from domestic brands have all contributed to falling sales.
Luckin Coffee, in particular, has emerged as a formidable competitor, now operating more stores in China than Starbucks and building a loyal customer base through lower prices and frequent discounts.
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Starbucks' struggle in China mirrors challenges faced by other Western brands. KFC and Pizza Hut's operations were spun off by Yum! Brands in 2016, while companies like Gap and Uber have also encountered difficulties in the Chinese market.
The China deal comes as Starbucks CEO Brian Niccol, who took leadership last year, works to revitalize the global business. His initiatives have included menu innovations and a focus on hiring more baristas while scaling back automation efforts.
Starbucks expects the transaction with Boyu Capital to be finalized next year, alongside plans to introduce new drinks and digital platforms tailored to Chinese consumers.
The partnership represents a calculated bet that local expertise can help Starbucks regain its footing in the world's second-largest economy, where it remains determined to achieve significant growth despite recent challenges.
Source:
Editor: Crystal H
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