Starbucks(US:SBUX) Sou Hu Cai Jing·2025-12-20 12:00Core Viewpoint - A major American coffee giant has sold 60% of its stake in its Chinese operations for $4 billion, effectively relinquishing its dominance in the Chinese market [2][26]. Group 1: Market Dynamics - The coffee giant entered China in 1999 and expanded to 8,000 stores at its peak, capturing 34% of the high-end coffee market [5][8][10]. - The company failed to adapt to changing consumer preferences and maintained high prices, with basic coffee costing over 30 yuan, which limited its appeal [12][24]. - Local brands have emerged, offering innovative products that cater to Chinese tastes, such as the sauce-flavored latte, which sold over one million cups on its first day [17][19]. Group 2: Competitive Landscape - Local brands like Luckin Coffee have gained market share by providing high-quality, affordable options, with prices ranging from 10 to 20 yuan [19][24]. - The shift in consumer behavior towards convenience has favored local brands that utilize digital tools for ordering and delivery, contrasting with the coffee giant's traditional in-store model [21][30]. - The coffee giant's market share plummeted from 34% to 14% as local brands captured consumer loyalty [24][36]. Group 3: Strategic Decisions - Faced with declining performance, the coffee giant opted to sell 60% of its stake to a local capital firm, Bo Yu Capital, after multiple failed attempts at localization [26][28]. - The transaction signifies a loss of control over its operations in China, although the company retains 40% ownership and brand rights [28][30]. - The deal reflects a broader trend in the Chinese market where local brands are increasingly preferred, highlighting the need for foreign companies to adapt to local demands [32][34].