A decade after Starbucks’ then-CEO, Howard Schultz, said China had the potential to become the U.S. coffee chain’s biggest market, the company is dramatically changing its approach there, selling a majority stake in its China business to an outside partner analysts say is better equipped to help the brand thrive.
A confluence of several factors has made it much harder for Seattle-based Starbucks to pursue its China strategy as initially planned: a loss of business momentum during the COVID pandemic, during which stores were closed for months on end; the emergence of fierce homegrown rivals, especially Luckin Coffee; and weakness in its home market. So now, Starbucks, whose first café in China opened in 1999, is selling a 60% stake in its retail operations there to Hong Kong–based investment firm Boyu Capital in a deal worth about $4 billion.
