At the beginning of this chapter, you read about the historic changes to restrictions on travel to Cuba, as well as the continued embargo on U.S. exports to this island nation. Using the information presented in this chapter, you should now be able to respond to these questions.

China is a country famous for tea. Over thousands of years, tea has been the beverage of choice in China. This, however, did not deter Starbucks from entering one of the fastest-growing consumer markets in the world. The first Starbucks opened in Taipei, Taiwan, in 1998 and the first mainland store was opened in Beijing in 1999. In an interview with CNN, Starbucks CEO Howard Schultz discussed the initial road bumps the company encountered in the tea-obsessed country. “We had to educate and teach many Chinese about what coffee was—the coffee ritual, what a latte was … So in the early years, we did not make money.” However, by late 2016 there were over 2,300 stores in China, and Starbucks announced a goal of 5,000 by 2021, opening one new store every day for the next five years.²³

Starbucks analyzed the Chinese market and found that their brand was valued not only for their food and beverage offerings but also for the atmosphere of Starbucks stores. Chinese consumers enjoyed the opportunity to meet with friends and business partners in a comfortable location and appreciated the upbeat music and chic interiors. While kiosks have become popular in the United States, some Chinese Starbucks locations are as large as 3,800 square feet.

Starbucks has customized its product offerings, introducing the Green Tea Frappuccino^® Blended Crème beverage in 2002 and Starbucks bottled Frappuccino^® coffee drinks into Chinese markets in 2007. Not all Chinese consumers are fans of Starbucks coffee. Cheng Xiaochen, an English teacher who likes to meet students at Starbucks, exclaims, “It’s a good place to meet people, but the coffee is so bitter it tastes like Chinese medicine.” Responding to Mr. Cheng and others like him, the company offers mint hot chocolate and red bean frappuccinos. Food offerings have also been customized to the Chinese market, with Hainanese chicken sandwiches and rice wraps.²⁴

Starbucks has also worked to enter the ready-to-drink market, teaming up with Chinese Company Tingyi Holding, a leader in ready-to-drink teas and instant noodles. Starbucks hopes to expand its sales of bottled beverages, which were available in approximately 6,000 retail locations in 2014. The ready-to-drink market is especially appealing because it is projected to grow at a rate of 20 percent over the next three years in the very large Chinese market. Through this partnership, Starbucks will provide “coffee expertise, brand development, and future product innovation,” while Tingyi will manufacture and distribute the product.²⁵

Starbucks acknowledges that employees are at the center of its success and makes a considerable investment in training, developing, and retaining these employees. However, Starbucks faced a challenge in an achievement-oriented Chinese culture, where parents aspire for their children to take jobs in traditionally successful fields such as financial services and banking. In response, Starbucks launched a family forum in 2012, which provided stories from managers who have worked their way up the career ladder with Starbucks.²⁶

Starbucks has worked to extend every component of its corporate culture into its Chinese expansion. The company has a long-established tradition of community commitment, and it has brought this to China. Through a $5 million grant to the Starbucks China Education Project, the company aims to help students and teachers in rural China, increase access to clean drinking water, and provide relief from the 2008 Sichaun earthquake.²⁷ Starbucks has demonstrated that a long-term commitment and sensitivity to international market conditions are the keys to success.²⁸