Starbucks brews a new chapter in China

Starbucks Coffee Company and Boyu Capital, a private equity firm, have entered into an agreement in China, one of Starbucks' fastest-growing markets globally.

As part of the deal, a joint venture has been formed. Boyu will hold up to 60% ownership of Starbucks’ retail activities in China, while Starbucks will keep a solid 40% stake. Starbucks' headquarters in Shanghai will stay in charge of the 8,000 Starbucks stores currently operating across the country. 

The joint venture represents a strategic move to grow the business in the world's second largest economy, with plans to expand to as many as 20,000 Chinese locations over time. 

Starbucks has valued its operations in China at $13billion(!) having stated that the partnership combines “Starbucks globally recognised brand, coffee expertise, and partner (employee)-centred culture with Boyu's depth of understanding of Chinese consumers”. The deal aims to help Starbucks to stay competitive in China, where local brands are gaining popularity.

Under the agreement, Starbucks will continue to own its Chinese trade marks. They will grant the new joint venture the right to use their trade marks under a trade mark license agreement. 

Starbucks currently owns over 200 trade marks in China alone, for plain word marks, and various logo variations. Clearly, the repute of and investment in the Starbucks brand have played a key role in enabling this impactful collaboration.  

This is a strong example in how brands drive business growth. Trade marks grant their holders monopoly rights, allowing them to control how and whom is authorised to use them. 

When considering where to register your trade marks, remember, these are territorial rights. It is essential to consider potential licensing opportunities where local knowledge and expertise are crucial to build a customer base. 

My advice to business owners: invite a trade mark attorney for a coffee. We will tell you business expansion is not just about brewing the perfect cup, the key is smart and strategic brand management. 

Under the agreement, the world's biggest coffee chain will have a 40% stake in the Chinese retail operation and retain ownership of the Starbucks brand there.

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