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Starbucks to sell majority stake in China business

  //business-finance.news-articles.net/content/202 .. ks-to-sell-majority-stake-in-china-business.html
  Published in Business and Finance on Tuesday, November 4th 2025 at 3:43 GMT by BBC
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Why sell a majority stake?

China’s coffee market has been growing at a rapid pace, driven by a younger, more urban population that is increasingly open to Western coffee culture. However, the market is also crowded, with domestic players such as Luckin Coffee and local franchise chains vying for market share. Starbucks’ own sales have plateaued in recent quarters, prompting the company to seek ways to inject fresh capital and local agility into its operations.

According to Johnson, the sale is “a strategic decision to give Starbucks the resources and flexibility it needs to double down on growth in China while maintaining our core brand values.” By partnering with local investors, Starbucks can tap into additional capital that would otherwise be unavailable through its global capital markets. The local partners also bring regional knowledge that can help Starbucks fine‑tune its product mix to suit local tastes—something that is crucial in a market where consumers are increasingly looking for unique flavors, such as matcha and red bean.

The move is also consistent with a broader trend of Western companies seeking joint‑venture models in China to navigate regulatory hurdles and benefit from local partners’ established supply chains and distribution networks. In the past, Starbucks has operated in China through a partnership with the China Pacific Group, a conglomerate that owned the franchise rights. However, the new structure shifts control more decisively to local stakeholders, giving the Chinese partners a stronger say in day‑to‑day operations.

Financial implications

Financially, Starbucks has reportedly received a substantial cash infusion from the sale, with the new partnership injecting roughly $200 million into the Chinese franchise arm. The deal will allow Starbucks to free up capital that can be redeployed in other high‑growth markets, such as India and Southeast Asia. The company’s earnings forecast for 2024 includes a positive impact from the China stake sale, with analysts expecting a boost to operating income in the first quarter following the transaction.

Starbucks’ board approved the deal, and the transaction is expected to close in the second quarter of the year after regulatory approvals. Investors have largely welcomed the move, with Starbucks’ shares rising by 3% on the news. Analysts noted that the partnership will improve Starbucks’ return on equity in China, as the company no longer bears the full burden of capital expenditures.

Reactions from local partners

Local investors in the partnership include a mix of private equity firms and regional retail conglomerates. One of the key partners is a well‑established beverage chain that has already expanded to over 1,000 stores across China. The chain’s CEO expressed enthusiasm about the partnership, saying, “This collaboration will allow us to bring Starbucks’ premium experience to more Chinese consumers while leveraging our deep distribution network.”

The partnership also includes a major Chinese e‑commerce firm that will play a key role in Starbucks’ digital initiatives. This aligns with the company’s broader strategy to integrate online and offline channels, especially in a country where e‑commerce continues to dominate retail. The partnership will likely accelerate the rollout of Starbucks’ mobile ordering and delivery services, which have been critical to its growth in the Chinese market.

Implications for the broader market

The sale is seen as a signal to other multinational coffee brands operating in China, such as Dunkin’ Donuts and Tim Hortons, that the market is maturing and that local partnership models may be the most viable path to sustained growth. Industry analysts suggest that the joint‑venture approach could become the norm in China, as foreign firms look to mitigate risks associated with regulatory changes and local competition.

The deal also underscores the changing dynamics of the coffee market in China, where consumers are shifting from instant coffee to specialty drinks. Starbucks, which introduced the “Caffeine Free” range and a line of tea‑based beverages in 2022, will likely leverage its partnership to deepen its product offerings further. The local partners will help customize menu items to align with regional preferences, such as adding more regional flavors or collaborating with local artisans.

Looking ahead

Starbucks plans to use the cash from the sale to expand its store network and invest in technology, including a new AI‑powered ordering system that will help streamline operations. The company will also bolster its sustainability initiatives, committing to source 100% of its coffee from ethically sourced farms by 2025, a pledge that has resonated with environmentally conscious consumers in China.

In summary, Starbucks’ decision to sell a majority stake in its China franchise operations to a local partnership is a strategic maneuver aimed at unlocking new growth opportunities while ensuring local relevance. By leveraging local capital and expertise, Starbucks positions itself to capture an ever‑widening share of China’s booming coffee market, while freeing up resources to pursue other global opportunities. The move reflects a broader trend of foreign companies adapting to China’s unique business environment through collaborative, locally focused models.