Starbucks' first store in China opened in January 1999 at the China World Trade Center in Beijing. At that time, a cup of cappuccino cost 19 yuan, but many consumers didn't know what cappuccino was. In the early 2000s, at the dawn of the new millennium, coffee was still a niche beverage in the Chinese market, and Starbucks' pricing far exceeded the everyday consumption level of the general public.

Founder Howard Schultz once publicly stated, "We position Starbucks as an 'affordable luxury'."

According to market research firm Euromonitor International, Starbucks' share in the China-related market rose from 12% to 31% between 2008 and 2013.

However, in recent years, Starbucks has been dethroned by the rise of Chinese coffee brands. In 2023, Luckin Coffee's (瑞幸珈琲) sales in the Chinese market reached 24.86 billion yuan (approximately 571.8 billion yen), surpassing Starbucks China for the first time to become the largest coffee chain brand in the Chinese market. By 2024, Luckin Coffee's stores had exceeded 20,000, rapidly capturing market share in "sinking markets" such as third- and fourth-tier cities and county-level regions, thanks to its high-density store openings and cost-effective products.

The essence of Luckin Coffee's explosive popularity lies in stripping away the 'illusion' surrounding coffee and promoting mass coffee consumption. Coffee, once a high-end social luxury, has become something ordinary people drink daily to stay awake or refresh themselves, and consumers are no longer willing to pay for the brand's premium value or the added value of a cafe space.

Starbucks' rivals are not just Luckin Coffee. Cotti Coffee (庫迪) and Lucky Cup (幸運珈) are also showing fierce momentum. In 2024, Starbucks' share of the Chinese coffee market fell to 14%. The industry widely believes that "if Starbucks does not quickly adjust its strategy, it will face even greater challenges."

Starbucks announced in November 2025 that it had agreed to a strategic partnership with Boyu Capital, a Chinese alternative asset management company. The two parties will jointly operate Starbucks' retail business in the Chinese market, with Boyu Capital holding up to 60% of the joint venture's shares. Some view this as "an important signal of Starbucks' strategic adjustment."

Starbucks has made some "compromises" in the market regarding pricing. In June 2025, Starbucks China announced its first price reduction, stating that it would lower the prices of dozens of products by an average of about 5 yuan (approximately 115 yen). However, a price reduction of this magnitude is not a big deal for Starbucks, as many of its product prices still exceed 30 yuan (approximately 690 yen) even after the reduction, with some exceeding 40 yuan (approximately 920 yen) and even 50 yuan (approximately 1150 yen).

Furthermore, in terms of product innovation, Starbucks' competitive advantage through differentiation continues to weaken. Compared to the seasonal new products and trending items that Chinese coffee brands are continuously launching, Starbucks' products are losing their power to attract younger consumers.

Hit by the trend of lower prices and intense competition within the industry, voices in the industry say, "The market strategy that once propelled Starbucks' success is now, on the contrary, hindering its development." How to find a balance point between its high-end positioning and the needs of the sinking markets? This is the challenge Starbucks must face for its continued growth. (Source/People's Daily Online Japanese Edition - Editor/KS)