Starbucks in Asia: From serving expats to serving locals

Starbucks in China

Starbucks currently has 19,000 locations of which 11,000 are in the US.

According to this Wall Street Journal Q&A (reg. required), Howard Schultz remains optimistic about Asia:

Outside the U.S., Starbucks is now in 62 countries. “The biggest opportunity we have is clearly in Asia,” he says. So far, there are 1,000 stores in both China and Japan, 16 in India and one in Vietnam. Mr. Schultz hopes to open thousands more in China.

“We’ve been in China now for over a decade,” he says. “The most gratifying thing is, when we first got there, most of our customers were tourists and expats, and now they’re Chinese nationals.”

The Starbucks website finished #14 in our 2013 Web Globalization Report Card — a big improvement over the year before.

 

When does localization become capitulation?

I begin this post with a question because I don’t have an answer.

A book making news these days is The Collaboration: Hollywood’s Pact with Hitler. It’s about Hollywood’s active self-censorship to appease German censors during Hitler’s reign.

According to the book, movies critical of the Nazi regime were killed because they would have threatened all Hollywood exports into Germany at the time.

According to this NY Post piece, Hollywood is making the same sort of deal with the devil with China.

Changing plot lines, adding characters and scenes, changing the “bad guys” from  Chinese to Russian — all to appease Chinese censors.

China is very careful about what movies it allows in its large and lucrative  market. And this gatekeeper role gives it enormous power over Hollywood.

Which leads me to the question at hand: At what point does localization become capitulation?

This is question every company must ask itself when trying to expand into new markets and cultures.

A Hollywood studio would no doubt argue that it is simply localizing its product to comply with local laws and to succeed with customers.

Which means that Hollywood may end up one day localizing the “bad guys” for each market it enters.

Is this a bad thing? Or is this just good business?

Localization is, after all, about adapting to the market.

I do believe there is a line there, somewhere, that you shouldn’t cross.

When you find that you’re changing who you are to adapt to a market, you should pause to understand exactly what you are changing, exactly what you are sacrificing.

As for Hollywood “selling its soul” to succeed in China I would ask: What soul was there to sell? 

But in all seriousness, this is a big issue and it’s not going away. Companies are  desperate to succeed in markets around the world — markets where they may indeed be asked or required to do things they don’t want to do.

I think of Mean Girls and the lengths that Lindsay Lohan’s character went in order to fit in. (Yes, all the great business issues of the world have been addressed by high school movies.)

And then I think of a quote I from the former CEO of Starbucks:

On a country-by-country basis, the largest hurdle we had to overcome was thinking we had to be different.

 

 

 

Starbucks CEO on Globalization: Don’t Go Changing

Chief Executive Magazine recently featured a brief Q&A with Jim Donald, CEO of Starbucks. He shed some light on the company’s global strategy. in short, Starbucks is trying to change as little as possible in each new market they enter.

He says:

On a country-by-country basis, the largest hurdle we had to overcome was thinking we had to be different. There are regional differences in every market, but the main reason we are successful in the US is the same as why we are successful internationally.”

“I was in a Starbucks in Kuwait a year ago and other than the language spoken, I could have been in Tacoma.”

But Starbucks does indeed localize when it has to. For example, he says:

“The peak time in China is not 7 to 10 in the morning, it is 4 to 6 in the afternoon. And there are also food preferences we had to adapt to. There is the holiday Yorkshire pudding that is big in the UK but does not work in New York. Breakfast sandwiches in Germany, for example, are made up with a hard roll with sausage and tomato and served cold. So we listen hard to what our partners in a region say.”

Starbucks does what most companies do when they go global — which is as little as they have to. Localization isn’t easy and less is usually more. Of course, the magic comes from deciding what needs to be localized — and how best to do it.