Starbucks will sell a 60 percent stake in its China operations to Hong Kong-based private equity firm Boyu Capital for $4bn, marking a major retreat from direct control of what was once its fastest-growing market.
The US coffee chain announced the deal on Monday, describing it as a “new chapter” in its 26-year history in China. Starbucks will retain a 40 percent stake and continue to own its brand and intellectual property.
Boyu Capital, which has offices in Shanghai, Beijing and Singapore, counts among its cofounders Alvin Jiang, the grandson of former Chinese President Jiang Zemin, according to Reuters.
The joint venture will give Starbucks both financial breathing room and local expertise as it tries to reignite growth in a market increasingly dominated by domestic competitors.
Starbucks currently operates 8,000 stores across China but aims to grow to 20,000 through the new partnership
China’s homegrown coffee chains have surged ahead. Luckin now boasts more than 26,000 stores, far eclipsing Starbucks’ footprint. The company has also captured market share by undercutting prices: while a Starbucks Americano sells for around 30 yuan ($4.21), Luckin’s equivalent costs roughly 10 yuan ($1.40).
The “delivery platform wars” she referred to, intense rivalry between Chinese food delivery apps, have also driven prices lower and reshaped consumer behaviour.
Analysts say the Starbucks deal mirrors moves made by other Western chains to localise and stay competitive. Yum Brands, owner of KFC and Pizza Hut, sold a controlling stake in its China business in 2016 to Primavera Capital and Alibaba affiliates. McDonald’s followed in 2017, selling the majority of its China operations to state-backed CITIC and Carlyle Capital before later buying back a portion.
Both brands went on to double their store counts, aided by Chinese partners’ capital, logistics, and regulatory know-how.
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