Starbucks to boost its expansion in Beijing
STARBUCKS plans to accelerate its expansion in China, shrugging off concerns about a slowdown in the coffee chain’s secondlargest market behind the US and a potential further depreciation of the yuan.
The company plans to add about 500 new stores in the year ending September 27, up from 450 new outlets in the previous year. China is Starbucks’ fastest-growing market.
“We have no intention of slowing down and we remain very optimistic and bullish on the opportunities that Starbucks has in China, both in the short term as well as in the long term,” John Culver, Starbucks president of the China and Asia-Pacific region, said yesterday. Starbucks joins SAP, the world’s biggest maker of business-management software, in expressing optimism about China, betting on a sales boost as consumption and corporate spending grows even as a decline in the yuan would erode the value of profits they generate in the country.
Volatility seen in China’s stock market was common among emerging markets and can create opportunities, Asia’s richest man Wang Jianlin said yesterday, after announcing the $3.5 billion (R57.05bn) takeover of Hollywood film company Legendary Entertainment by his Dalian Wanda Group.
Concerns over China’s economy have hurt markets from Shanghai to New York, with government officials pushing back against expectations of a continued rapid depreciation of the yuan to prop up the slowing economy. The People’s Bank of China repeatedly intervened in the overseas yuan market yesterday, according to people familiar with the matter, as the currency tumbled to a five-year low against the US dollar.
“We deal in 70 countries around the world, and foreign currencies change and fluctuate in all countries,” said Culver, who’s in the western city of Chengdu with chief executive Howard Schultz. Starbucks had not seen any impact on its operations due to the recent yuan volatility, he said, declining to comment on how the coffee chain hedges against the currency’s slide. Seattlebased Starbucks had said last January that it actively hedged against foreign exchange risks, and was able to offset the impact of a stronger US dollar.
As US-based restaurant chains including McDonald’s and Yum! Brands face difficulties in China, including from food safety issues and rising competition from local chains, Starbucks is instead speeding up its expansion plans.
Starbucks was seeing growth not just from new Chinese customers, but also existing ones increasing the frequency of their visits, said Culver. – Bloomberg