Can Starbucks Win in China?

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Starbucks (NASDAQ:SBUX) is extending its presence in China in an effort to strengthen its global presence. The Seattle based company has 600 stores across the country, mainly located at big cities, according to Advertising Age.

But the company faces many challenges along the way, one of them being discretionary spending. Not many people can afford to spend on coffee considering that an average employee’s salary is $1,000 a month.

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Also, China is a tea drinking nation like most of East Asia. Starbucks faced a similar challenge in India when it opened its first outlet in Mumbai. But recent figures have shown coffee is becoming popular.

According to Forbes, Starbucks has been a very successful business venture in China. This has been attributed to its strong brand positioning, excellent customer service, and long term commitment.

Even if there was initial skepticism, things seemed to be working favorably for the coffee retailer. Net revenues for the fourth quarter increased sharply this quarter, showing strong growth in Asia.

As part of its 2013 target, it aims to open 1,300 stores globally and post 10-13 percent revenue growth. We may not know if it will achieve its revenue goals, but it definitely seems to be moving in the right direction.

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