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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEATTLE / HONG KONG, November 3 (local time) — Global coffee chain Starbucks Corp. (NASDAQ: SBUX) announced that it will sell a 60% stake in its China operations to Hong Kong–based private equity firm PAG Capital for approximately $4 billion (₩5.75 trillion). The partnership aims to leverage PAG’s local network to expand Starbucks’ footprint in China to over 20,000 stores.
Under the agreement, Starbucks will retain a 40% ownership stake, while PAG Capital will hold the controlling 60% interest in a new joint venture that will manage more than 8,000 stores across China. PAG will also assume management control of the venture.
According to Reuters, Alvin Zhang (Zhang Zicheng), grandson of former Chinese President Jiang Zemin, is among PAG Capital’s co-founders. Starbucks will continue to own its brand and intellectual property rights, which will be licensed to the new joint venture.
Starbucks first entered the Chinese market in 1999 and has operated the business directly ever since. However, growth has slowed in recent years due to the lingering impact of COVID-19, sluggish consumer spending, and intensifying competition from domestic coffee chains.
Local rival Luckin Coffee has surpassed Starbucks in store count by attracting a loyal customer base through lower prices and aggressive discount strategies. In June, Starbucks cut prices on a dozen non-coffee beverages in an effort to stay competitive, though its products remain relatively expensive compared with local brands.
Starbucks estimates that its remaining equity stake and licensing rights value the company’s total China operations at over $13 billion.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
