I’m sitting at my local Starbucks (Nasdaq: SBUX) having a morning coffee as I write this, so it seems only appropriate that I begin today with a look at this coffee juggernaut which is turning up its China PR campaign as it seeks to triple its size here over the next 3 years. This latest campaign comes at an interesting time, as other media are reporting separately that China’s coffee growers are coming under growing pressure due to a plunge in prices that have left many with big volumes of unsold coffee beans, a fact Starbucks would probably rather people didn’t know. But let’s look at the upbeat news first, which has Starbucks saying it will launch a virtual Starbucks China University and set up a modest fund totaling 1 million yuan, or about $160,000, to assist its local partners in their times of need. (company announcement) Starbucks puts most of its emphasis on the university initiative, saying it is part of its drive to become an employer of choice in China. It has plenty of reason for wanting to be a good employer, as it has recently embarked on a campaign that will see it sharply boost its China store count from around 570 at present to 1,500 stores by 2015, a number that would make the market its second largest after the United States. But as a cynical former journalist, I was more interested in the second part of the announcement, namely the part focused on the fund for helping its partners in need. Perhaps not coincidentally, Starbucks announcement comes just a day after the China Daily ran another coffee-related news item, though this one was decidedly more downbeat about suffering coffee growers in southwestern Yunnan province, China’s main coffee-growing region. (English article) The article notes that a 50 percent plunge in coffee prices over the last year has left many farmers in with beans they now can’t sell due to a global supply glut, and adds that one of the biggest buyers, food giant Nestle (Switzerland: NESN), has already completed its purchase plan for the entire year. Starbucks made headlines a couple of years ago when it announced a major initiative to promote coffee growing in China, and reiterated that commitment last July by announcing the formation of a joint venture to buy Chinese coffee beans for use both at home and abroad. (previous post) The China Daily article doesn’t mention Starbucks, but I suspect that if Nestle has already completed most of its buying for the year, then Starbucks has also probably done the same and may be quietly slowing or halting operations at this new joint venture, adding to the woes of local farmers. Of course none of this will really affect Starbucks China business, as a new class of Chinese yuppies in major cities have already shown they are quite willing to wait in long lines and pay big money for a chance to sip a latte with their friends at their local Starbucks. But the last thing this company needs as it embarks on its aggressive expansion is negative PR to tarnish its image, which is exactly what could happen if word emerges that it’s abandoning the coffee farmers it used in its previous PR campaign.
Bottom line: Starbucks’ latest PR campaign showing its commitment to China looks at least partly designed to divert attention from woes being suffered by Chinese coffee growers.
Related postings 相关文章:
◙ Starbucks Wide Open for China Business with New JV 星巴克在云南建合资厂
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Shanda’s aspirations to become a major entertainment company are becoming an increasingly distant memory, as the cash-strapped company embarks on a series of asset sales that look like a desperate attempt to pay down its large debt. Of course, Shanda founder Chen Tianqiao is spinning the story a bit differently, saying the sales are designed to dispose of non-core assets to let the company focus on its main entertainment business. The latest in the recent string of spin-offs has seen Shanda sell its Jisheng Technology unit, a maker of Internet cafe management software, to a company called iCafe8 (Shenzhen: 300113) for a relatively modest 80 million yuan, or about $12.7 million. (English article) That follows Shanda’s sale last month of 2 other units, online board and card game operators Bianfang and Haofang, which Shanda had purchased in 2004 for $80 million. (
As China’s mainstream car market shows increasing signs of little or no growth this year, General Motors (NYSE: GM), one of the industry’s top players, is finally noticing the luxury segment still has plenty of growth potential by making a very late move into the space with its upscale Cadillac brand. Now the big question will be whether luxury sales are still so strong in the year or 2 it will take GM to start making Cadillacs in China, especially as Beijing takes moves to restrict luxury car buying by government organizations. (
