With so much brand loyalty in the U.S., the Starbucks Corporation is hoping that they will find similar loyalty with the Chinese customer. Even though the Chinese economy is slipping, they are still placing their bets by adding 500 stores per year in China for the next five years. They already have 2,000 stores, and will focus these next 2,500 in 100 Chinese cities.
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“We have confidence in the future of the Chinese economy, despite all the rhetoric, noise and issues,” said Mr. Schultz, who is visiting China this week. “People are looking for reasons not to believe. I’m on the ground and I see firsthand. I am bullish.”
Sales of other popular American brands, like Pizza Hut, KFC, and Hershey have been falling, but there has been growth for coffee chains.
According to the Wall Street Journal, Starbucks posted the best fourth-quarter earnings globally last year, but they are still trailing a bit behind what the company wanted. Still, revenue has doubled in the last year to $652.2 million.
Eventually Mr. Schultz said that he expected that China will become the largest market for Starbucks, though he didn't say when. Before this expansion, the company operated more than 23,000 stores across the world, with 7,000 in the Americas and U.S. with 14,800.
Coffee has exploded in China within the last few years - customers will pay about $5 for a cup and will order 4.5 billion cups a year. Part of what makes Starbucks so sure they will have success is the fact that they cater more toward upper class customers.
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Starbucks will also begin this year to invest millions to give about 10,000 baristas and store supervisors a stipend that covers at least 50% of their housing costs in China. The housing allowance is adjusted for cost of living and will vary by city, a Starbucks spokesman said.