Starbucks China Hit by a Strayed Bullet
Unlike KFC and McDonald, Starbucks China seems immune from China’s economic downturn so far and may overtake Japan to become its second largest market outside of America. However, similar to other internationals, Starbucks’ success in China is hard to explain simply in business term, but has to be tied to China’s political and social environment, which not only fosters tremendous growth but may also undermine the potentials all in the same time.
Nowadays in China, there is a phenomenon so ubiquitous that it becomes a folklore maxim: hit by a strayed bullet. It means that someone get a beating or into a fight completely unintended and even without any awareness of how, why and what happened. Seemingly haphazard, the root of these happenings is very much of a reflection of China’s fragile and paradoxical system.
Starbucks China is just hit by a strayed bullet. CCTV News, a government news machine and one of the most watched news programs in China, claims that Starbucks China has the highest coffee price comparing its stores across the world. That is not even a news because coffee price has been too high in any emerging market starting withJapan100 years ago. (See reference readings at the end of this article) Starbucks China is merely following the trend when most of the coffee shops have even higher price than Starbucks.
Not by accidence, KFC China was also hit by a big strayed bullet last year, chicken scandal. It has been an open secret that China’s poultry industry had fed chicken with over-dosed anti-biotic drug for many years. The exposure was also triggered by CCTV report, and involved nearly all of the most established and largest poultry farms and processors. However, as the largest chicken user in China, KFC is complicated into the scandal despite of its layers of firewall on food safety control, and was hit hard.
China has so many problems but has so few easy solutions. One thing is connected to another, which is a chain reaction of problems. All problems root in the complicated political and social system embedded in China for hundreds of years and further aggravated by the swift economic reform. The more successful and the bigger has a company already been, the more would it be exposed to the system, the harder will it be able to make change because its success is tied to the Status Quo in spite of its unhealthiness and un-sustainability.
Basically, the business model of Starbucks China is much more about life-style than about coffee. China is still one of the poorer countries in the world, but does have some highest coffee price and can become the second largest market for Starbucks. It reveals several things: how big China’s market is, strong willingness of Chinese to the western culture, the capacity of a strong brand with right niche capable to do in China and how far a brand can go astray from the market fundamentals but still find success in China. On the other hand, it also reveals that, no matter how strong a brand is, how successful is it to take the advantages of the current system and how imperfect a system itself is, a brand always has to be on the edge in China because the whole system is on a hyper stage embedded with too many irregularities and swift changes. Some of the seemingly haphazard events could trigger the downfalls.
For this instance, it may just be a scare to Starbucks China and may even be a good publicity because its clienteles are composed of well-off white collars, wealthy housewives and foreign expats. Among them, foreign expats are more likely to complain than Chinese for the high price. Nevertheless, it is a reminder to Starbucks or any foreign company that, in a 'irregular' market place, the downfall may be omnipresent right in front. If one's success cannot be simply explained, it must be some dangers lingering not too far.