The impact of western culture adoration on

the coffee consumption of Taiwan: A case

study of Starbucks
Allan Y. Su,Wen-Bin Chiou &Ming-Hsu Chang

The aim of this thesis was gain a more comprehensive understanding concerning the Chinese consumers
understanding of coffee and Starbucks in China as a luxury good. Considering China’s recent history, as well
as the introduction of a capitalist, consumer economy, examining the Chinese consumers’ consumption pattern
of this foreign, arguably luxury, good, is reflective of Chinese consumer ideals. A literature review analyzing the
relationship between Chinese consumer ideals and the introduction of global consumerism, in addition to a set
of interviews and surveys were conducted in attempts to understand the current Chinese consumption patterns
of Starbucks coffee. After conducting the interviews and surveys it was concluded that Chinese consumers
consume Starbucks coffee for the following reasons: they view coffee as an authentic Western product that
reflects the characteristics of their ideal identity, that the consumption of coffee serves as a means to represent
themselves as members of a higher class, and that Chinese consumers use this space as a “third place” – one
that exists between the home place and workplace.

Keywords: Starbucks coffee, consumer preferences, consumer value, western culture adoration

Item Type: Thesis (Undergraduate)

Creators: Hersh, Garrett

Student's Degree Program(s): B.A. International Studies

Thesis Advisor: Elise Lake

Thesis Advisor's Department: Sociology

Institution: University of Mississippi

Subjects: H Social Sciences > HM Sociology

Depositing User: Garrett Garrett Hersh

 Date Deposited: 19 May 2016 16:27

Last Modified: 19 May 2016 16:27

URI: http://thesis.honors.olemiss.edu/id/eprint/621

International Expansion Strategies

According to (brew masters) Starbucks decided to enter the Asia Pacific rim markets first. Growing
consumerism in the Asia Pacific countries and eagerness among the younger generation to imitate
western lifestyles made these countries attractive markets for Starbucks.

Starbucks decided to enter international markets by using a three pronged strategy - joint ventures,
licensing and wholly owned subsidiaries (Refer Exhibit I for the modes of entry in international markets).
Prior to entering a foreign market, Starbucks focused on studying the market conditions for its products in
the country. It then decided on the local partner for its business. Initially Starbucks test marketed with a
few stores that were opened in trendy places, and the company's experienced managers from Seattle
handled the operations. After successful test marketing, local baristas (brew masters) were given training
for 13 weeks in Seattle. Starbucks did not compromise on its basic principles

Problems in International Markets

In the early 2000s, Starbucks faced many problems in its international operations (Refer Exhibit II for
risks in international markets). The volatile political environment in the Middle East created serious
problems for Starbucks.

In July 2002, Arab students gave a call for a boycott of American goods and services, due to the alleged
close relationship between the US and Israel. The boycott targeted US companies including Starbucks,
Burger King, Coca Cola and Estée Lauder. Starbucks topped the list of companies to be boycotted due to
Schultz's alleged closeness to the Jewish community. The problem was aggravated when it was reported
that, in one of his lectures to students at the University of Washington, Schultz had said, "one of my
missions is to sensitize you; you should not be immune to what is happening in the world. I travel a great
deal and one of the things that I see is the rise of anti-Semitism in Europe, especially France and
England."
Not a simple coffee shop: local, global and
glocal dimensions of the consumption of
Starbucks in China
Jennifer Smith Maguire &Dan Hu

This article examines the ways in which Chinese consumers engage with foreign brands, looking
specifically at their perceptions and experiences of Starbucks. Rather than assuming an inherent
conflict between global and local meanings, or collectivist and individualist values, we examine
the accomplished meaning of foreign brands: how Chinese consumers make sense of Starbucks,
and what their engagements with the brand can tell us about the interplay between the local,
global and glocal in the consumption of Western goods. Based on interviews with urban, middle-
class consumers, the article explores four major themes in respondents' narratives about
Starbucks. First, we discuss the strategies and cues respondents use to understand and
authenticate Starbucks as a foreign brand; second, we focus on the local socio-cultural context
for engagements with the brand as a symbol of status; third, we discuss the respondents'
associations of Starbucks' global status with quality and trustworthiness; and, finally, we
consider how respondents use Starbucks as a glocal bridge, to experience a Western way of life.
We suggest that these findings highlight the role of foreign brands – and consumer goods more
generally – in the problems of individual and collective identity formation.

Keywords: China, consumption, foreign brands, identity, middle class

How Starbucks brought coffee to china?

BY GIGI DEVAULT

Updated October 29, 2018

Starbucks has developed an internationalization strategy to enable the company to

open stores and franchises in countries across the globe. Market research is at the core
of many of the market entry strategies Starbucks is employing. This case study will
consider how market research has strengthened Starbucks entry into the Chinese
markets.

Starbucks International Business Strategy

Starbucks entry into emerging and developed markets is informed by market research.
Starbucks conducted market research to enable a deeper understanding of the Chinese
markets, and the way that capitalism functions in the People's Republic of China (PRC).
China contains a number of distinct regionally-based markets, a factor that makes
market research crucial to launching new stores and franchises in China.

A deep understanding of intellectual property right laws is critical to successful market

entry in emerging markets. Starbucks articulated an entry strategy that would address
the dominant Chinese markets and that was designed to be as inoffensive with respect
to the Chinese culture as possible.
Instead of taking the conventional approach to advertising and promotions—which could
have been seen by potential Chinese consumers as attacking their culture of drinking
tea—they positioned stores in high-traffic and high visibility locations.

Moreover, Starbucks very deliberately began to bridge the gap between the tea drinking
culture and the coffee drinking culture by introducing beverages in the Chinese stores
that included local tea-based ingredients.

Market research supported the development of Starbucks' competitive

internationalization strategy. The overarching competitive strategy was to create an
aspirational brand. Prospective Starbucks customers in China could look forward to
what Starbucks refers to as The Third Place experience.

The Starbucks experience conveys status that is highly appealing to those aspiring to
Western standards or to climbing the ladder in their own culture. Market research
indicates that brand consistency is important to Starbucks' customers. When Starbucks
opens a new store in an emerging market like China, the best baristas are sent for the
launch and to conduct training of the baristas who will carry on when once the launch
has completed.

Market Research Addresses the Emerging Market Political Environment

Market research helped to identify the attributes of capitalism in the Peoples' Republic
of China (PRC). The middle class in China has rapidly accepted Western standards as
an acceptable standard of the bourgeois class. Moreover, Chinese consumers accept
purchases of luxury goods as a means of pursuing quality lifestyles.

Under the influence of Communism, the Chinese considered conspicuous

consumption to be decadent or indicative of a lack of a nationalistic orientation.
Capitalism in The Peoples' Republic of China supports the status-conscious population
that manifests its interest in keeping up with the Jones' through excessive luxury
consumption.
The Chinese government's support of luxury consumption is particularly apparent in
certain cities in China. The second-tier city of Chengdu serves as a market research
case study in Chinese governmental support of capitalism. Chengdu promotes
capitalism at a level evidenced by the presence of stores like Louis Vuitton and Cartier
in its downtown.

According to the Chengdu Retail Industry Association, stores selling 80 percent of

international luxury brands are located in Chengdu, and the city ranks just third in luxury
sales after Beijing and Shanghai. It is easy to see how this national orientation toward
luxury goods extends to the Starbucks brand, which is characterized by a certain
degree of exclusivity.

Market Research Reveals Attributes of Emerging Market Legal Environment

It is essential to understand the intellectual property rights laws and licensing issues
when planning market entry in an emerging market. Starbucks has used intellectual
protection laws to prevent its business model and brand from being illegally copied in
China.

Four years after opening its first café in China in 1999, Starbucks had registered all its
major trademarks in China. A number of Chinese businesses have overstepped legal
bounds in their efforts to mimic the successful Starbucks model.

The organization and structure of Starbucks' global operations were informed by market
research. The organizational strategies employed by Starbucks were derived from
Starbucks' experiences in other emerging markets supported an early recognition that
China is not one homogeneous market.

The organizational strategies employed by Starbucks addressed the many Chinese

markets. The culture dominant in northern China differs radically from the culture in the
eastern parts of China, as reflected in the differences in consumer spending power
inland which is considerably lower than the spending power in coastal cities.
The complexity of the Chinese markets led to regional partnerships to aid in Starbucks'
plans for expansion in China; the partnerships provided consumer insight into Chinese
tastes and preferences that helped Starbucks localize to the diverse markets.

 Northern China - a joint venture with Beijing Mei Da coffee company.

 Eastern China - partnered with Taiwan-based Uni-President.
 Southern China - worked with Maxim's Caterers in Hong Kong.

Starbucks' competitive advantage is built on product, service, and brand attributes,

many of which have been shown through market research to be important to Starbucks'
customers. Western brands have an advantage over local Chinese brands because of a
commonly accepted reputation for consistently higher quality products and services, a
factor that establishes the Western brands as premium brands in the minds of
consumers.

When Western brands attempt to increase market share by cutting prices, they erode
the very competitive strategy that gives them an edge in consumer perceptions.
Moreover, Western brands cannot effectively maintain a lower pricing strategy than
local Chinese brands.

Maintain brand integrity in new markets. Starbucks' global brand is valuable and
maintaining brand integrity is a fundamental focus in Starbucks' internationalization
efforts. The baristas in China acted as brand ambassadors to help embed the Starbucks
culture in the new market and ensure that high standards for customer service and
product quality are maintained at each new and established local store.

Starbucks' ability to address changing markets is honed by effective and ongoing

market research. Establishing and maintaining a global Starbucks brand does not mean
having a global platform or uniform global products. Starbucks marketing strategy in
China was based on customization in response to diverse Chinese consumer target
segmentation.
Starbucks created extensive consumer taste profile analyses that are sufficiently agile
to enable them to change with the market and to create an attractive East meets
West product mix. Moreover, the localization effort is sufficiently flexible to permit each
store to have the flexibility to choose from a wide beverage portfolio.