Starbucks, the world’s largest coffee chain, has sold a 60% stake in its China business to Boyu Capital—a deal that has stunned global markets. Since entering China in 1999, Starbucks has ridden the wave of explosive economic growth and played a pivotal role in spreading modern coffee culture across the country. So why would the company hand over more than half of its second-largest and most critical market to local investors? Is this a bold step toward future expansion—or a sobering sign that Starbucks’ once-dominant presence in China is eroding? Let’s unpack what’s really going on.
The “Next Chapter” Starbucks Doesn’t Want to Spell Out
Starbucks frames the divestment as a “next chapter” strategy. According to the company, partnering with Boyu Capital—known for deep local expertise—will accelerate expansion into China’s smaller cities and fast-growing new urban clusters. With Boyu’s extensive networks, Starbucks announced an ambitious plan to scale from roughly 8,000 stores today to as many as 20,000 across the country.
But investors aren’t buying that explanation at face value. Reuters recently pointed out a startling trend: Starbucks’ market share in China plunged from 34% in 2019 to just 14% last year. Once the pioneer and trendsetter of China’s coffee boom, Starbucks now faces shrinking influence amid fierce local competition. Many analysts argue that the stake sale is less about “strategic expansion” and more about “defensive survival”—a move to stem further losses in a rapidly shifting market.
Local Rivals Are Crushing Starbucks on Price: The 6,800 KRW vs. 9 RMB Reality
The biggest force behind Starbucks’ decline is the meteoric rise of local brands like Luckin Coffee and Cotti Coffee. With China’s economy slowing and consumer sentiment turning cautious, domestic players capitalized on Starbucks’ biggest weakness—its premium pricing.
To put it simply: a Starbucks latte costs around 33 RMB (about 6,800 KRW), while Luckin and Cotti often run promotions offering drinks for 9 RMB (roughly 1,800 KRW). When consumers are tightening their wallets, the choice becomes obvious. Starbucks’ refusal to engage in price wars—once a proud strategic principle—has instead accelerated its loss of market share. As The New York Times noted, Starbucks’ resistance to discounting directly contributed to declining sales.
Cool Drinks, Social Buzz, Drive-Thru Photos: The Youth Are Choosing Something Else
Price isn’t the only issue—China’s younger generations are reshaping the entire beverage landscape. Instead of classic premium coffee experiences, Gen Z consumers crave visually striking, social-media-friendly drinks.
Domestic chains have mastered this shift, churning out creative hits like coconut-milk lattes, cheese-foam teas, and dessert-like seasonal beverages. Meanwhile, The Wall Street Journal reports that Starbucks’ sales are slipping not only in China but also in the U.S., where younger customers increasingly favor refreshing, colorful, Instagram-ready drinks that pair well with drive-thru culture. The old Starbucks identity—premium beans, cozy interiors, and the “third place” concept—no longer resonates as the centerpiece of local hangouts for many young consumers.
China’s Prolonged Consumer Slowdown Casts a Long Shadow
Even with Boyu Capital on board, Starbucks faces an uphill battle. China’s sluggish consumption environment and deflationary pressures present one of the toughest landscapes for a high-priced brand. With the Consumer Price Index falling and economic uncertainty lingering, Starbucks’ premium model is structurally misaligned with current market realities.
And Starbucks isn’t alone. Other global giants have begun retreating from China:
– Restaurant Brands International sold its Burger King China operations to a local private equity firm.
– Gap offloaded its Greater China business to a Chinese company.
If even veteran multinational brands with decades of experience are withdrawing, Starbucks’ stake sale starts to look less like a launchpad—and more like a last resort to secure localization, cost control, and market relevance.
Can Starbucks reclaim its crown in China’s booming yet brutally competitive coffee ecosystem?
What Starbucks Must Do: Practical Strategies for a Comeback
To regain momentum, Starbucks needs more than operational support from Boyu Capital. The company must consider:
Launching a lower-priced, locally tailored sub-brand to compete with aggressive domestic players
Developing bolder, youth-oriented products tailored for social media virality
Reinventing marketing to highlight trendiness, convenience, and lifestyle relevance
Starbucks can no longer rely solely on its legacy “third place” philosophy. China’s fast-evolving—and increasingly price-sensitive—consumer market demands adaptation, not nostalgia