Starbucks Continues Dominance In China

Starbucks has had great success in China with revenues growing at a rate of 30 percent in the past year. However, Food Navigator-Asia reports that there will be market challenges for Starbucks to face.

Over the last year, Starbucks has opened 500 stores in China and there are plans to open one thousand locations by the end of 2013. These new stores are backed by a younger generation of clients.

Despite the growth, there are some problems that have occured in the Chinese market. The first store that opened in Beijing was forced to move from its original location in June and a Goyard store immediately took its place. Being replaced by a french luxury coffee brand suggests that coffee retail major is starting to lose competition in major Chinese cities.

Starbucks also had internal issues. One of the issues are the high prices that many regular consumers can't afford. To many middle-class Chinese citizens, Starbucks is still considered a luxury item.

There are no plans to slow down, even though there could be potential backlash from opening so many new stores. Chinese company officials want to become the second largest Starbucks market worldwide, just behind the U.S.

"Starbucks's value may decrease of the next couple years due to the overwhelming number of stores and competition from other global coffee brands like Nestlé," Wen-Jie Huang, president of Guandong Circulation Chamber of Commerce.

However, experts believe that Starbucks will continue to be successful, at least in the short-term because of its popularity with young people and its ability to secure new locations.