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Starbucks China takes full control of eastern business

Starbucks is to invest US$1.3 billion buying out its 50 per cent joint venture partner in East China, clearing the way for its rapid expansion on the mainland.

The payment to Uni-President Enterprises Corporation and President Chain Store Corporation represents the Seattle-based company’s single largest acquisition yet. Starbucks will assume 100 per cent ownership of some 1300 Starbucks China stores in Shanghai and Jiangsu and Zhejiang Provinces, building on the company’s ongoing investments in China, its fastest-growing market outside of the US in terms of store count.

In return, the former Chinese partners will acquire Starbucks’ 50 per cent interest in President Starbucks Coffee Taiwan joint venture, taking 100 per cent ownership of the Starbucks Taiwan operations, for $175 million. Founded in 1997, the Taiwan JV currently operates approximately 410 Starbucks stores in Taiwan.

“Unifying the Starbucks business under a full company-operated structure in China reinforces our commitment to the market and is a firm demonstration of our confidence in the current local leadership team as we aim to grow from 2800 to more than 5000 stores by 2021,” said Kevin Johnson, president and CEO of Starbucks Coffee Company.

“Similar to our decision in 2011 to fully license our Hong Kong and Macau market operations, we are pleased to transition our business in the Taiwan market to our long-time partners Uni-President Enterprises Corporation and President Chain Store Corporation, both highly-recognised local operators, as we continue to grow in Taiwan.

“This is a critical next-step as we advance our multifaceted China growth strategy for long-term profitable growth in Asia.”

East China is a significant and strategic region for Starbucks in China, with Shanghai containing nearly 600 stores, the largest number of stores globally of any city where Starbucks has a presence. In December 2017, Shanghai will also be the first city outside of the United States to welcome the opening of the ultra-premium Starbucks Reserve Roastery.

“This is the beginning of yet another exciting new chapter for Starbucks in China. Full ownership will give us the opportunity to fully leverage our robust business infrastructure to deliver an elevated coffee, in-store third place experience and digital innovation to our customers, and further strengthen the career development opportunities for our people,” said Belinda Wong, CEO of Starbucks China.

“Our East China partners’ relentless pursuit of operational excellence and leadership has provided us a solid foundation to maximise the unprecedented growth opportunities ahead and we look forward to extending our world-class network of unique programs to support their personal and professional dreams.”

Alex Lo, chairman of Uni-President Enterprises Corporation, said he was confident the new ownership model and continued collaboration with Starbucks will enable the company to be even more focused on delivering an elevated Starbucks Experience to customers Taiwan.

“We’ve had a strong friendship with Starbucks for nearly 20 years, starting with the opening of the first store in Taiwan and then further extending our partnership with the opening of the first store in East China.”

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