Business Intelligence on Retailing, Franchising, and Consumerism in China

Starbucks To Establish Raw Material Purchase Base In China

The multinational coffee retailer Starbucks is looking at sourcing coffee beans from China's Yunnan Province and the company is reportedly planning to build a coffee raw material purchase base in China.

As a result of the economic crisis, Starbucks sales in the United States and Western European countries have declined over the past few months. According to the latest report released by Starbucks, the company's net profits decreased by 97% in the fourth fiscal quarter and the average revenue of individual stores in the United States has decreased by 8% year-on-year. In addition, the company has cut its global expansion plan for 2009 from 900 new stores to 700.

However, revenue from Starbucks international business increased by 13%, which is one of the reasons that promote the company is intending to expand in the Chinese market.

Starbucks China said that it currently has over 630 coffee shops across China, of which more than 300 were located on the Chinese mainland. Starbucks has entered the first-tier cities in East China, South China, and North China and the country has become the second largest marketplace, after North America, for Starbucks.

To promote Starbucks' rapid development in China and to accelerate its localization process, the company intends to build a raw materials purchasing base in China. At present, Starbucks China is investigating the quality of coffee produced in Yunnan. If Starbucks decides on cooperation with Yunnan, the company will purchase high-quality coffee from the province as and assist the local coffee farmers to produce high-quality coffee.

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