Starbucks risks being scalded by Hong Kong
On Friday, prominent Hong Kong activist Joshua Wong joined calls for Starbucks to cancel its franchise with one of the city’s biggest restaurant companies, after a member of the founder’s family criticised the unrest. Annie Wu, whose father established Maxim’s Caterers Ltd in 1956, made these comments earlier this month at the UN Human Rights Council in Geneva, where she called the protests “riots” and expressed “full support” for the Hong Kong government and police.
Wong’s tweet included a petition that has already picked up more than 12,000 signatures.
This could turn out to be awkward for Starbucks, which franchises its Hong Kong and Macau operations to Maxim’s. The fracas comes as the American company expands its footprint in China: Since opening its first shop in Beijing in 1999, Starbucks has set up more than 3,900 cafés in the country, and boasts of plans to open one new store there every 15 hours.
Starbucks now fully owns all of its Chinese locations — after steadily buying back stores in recent years — and has singled out the mainland as a key market, while scaling back some of its European business.
Part of everyday life
Maxim’s is part and parcel of everyday life in Hong Kong. Facing boycotts at shopping malls and university campuses, Maxim’s has taken pains to distance itself from Wu’s comments.
Maxim’s — whose ownership is split between the Wu family and Jardine Matheson Holdings Ltd, the old British trading house closely linked with the city’s founding in 1841 — introduced Starbucks to Hong Kong in May 2000.
While Jardine doesn’t break down how much profit Maxim’s gets from its Starbucks licence, Bloomberg Intelligence estimates that Hong Kong makes up 90 per cent of the profit at Jardine’s retail arm Dairy Farm International Holdings Ltd, which includes the Wellcome supermarket chain and Mannings drugstores, among other businesses.
If there was ever a moment for Wong to grandstand, this could be it. Saturday marked the five-year anniversary of the Occupy movement that brought him to prominence, and the People’s Republic of China celebrates 70 years since its founding on Tuesday.
Starbucks has long sought to portray itself as a reflection of the communities it serves; that will become increasingly difficult as it tries to please so many masters. In recent years, the coffee chain has also shown that it can respond swiftly to PR disasters. This might be a good time to dust off that playbook.