Starbucks to follow Apple in China consumption decline

Famed US companies like Apple and Starbucks are declining in the Chinese market because of pressure in the current macroeconomic context and intensified competition with local rivals.

Starbucks will be the next US brand to warn of China trouble after Apple, US media outlet CNBC said in a recent report, citing Goldman Sachs.

Analysts said that given the slowdown in the domestic economy and consumption sentiment toward US brands due to the trade tension, Starbucks will find it hard to compete with local cost-effective rivals and it’s possible it will lose more consumers, just like Apple did.

In recent days, the two US companies have been eager to offer strategies such as price cuts and discounts to win Chinese consumers.

Several Chinese electronics retailers including JD.com Inc, Alibaba’s Tmall and suning.com, have cut iPhone prices by as much as 1,200 yuan ($178).

“Starbucks recently provided many discounts such as ‘buy one, get one free’ with an invoice valid within three days,” a white-collar worker in Beijing surnamed Shen said.

Another consumer named Han Han in Beijing said that “although I have long been a fan of Starbucks, the ongoing China-US trade friction has somewhat affected my choices and some local emerging brands like Luckin have become more favored. I like its low price and good-tasting snacks.”

As Luckin aims to overtake Starbucks, its rapid expansion will be a “nightmare” for Starbucks’ growth in the Chinese market, Han said.

Apple and Starbucks are gradually declining in the Chinese market because of pressure in the macroeconomic environment as well as competition from local cost-effective rivals, said Liu Dingding, a Beijingbased industry analyst.

“It is very possible that Luckin will overtake Starbucks in the domestic market in terms of the number of physical stores in 2019,” Liu said.

Zhang Yi, CEO of Guangdongbased iiMedia Research Institute, agreed, saying that Starbucks has begun feeling the pressure from intensified competition in the domestic coffee market, and the large discounts and delivery service offered by Luckin have indeed attracted some of its consumers.