Starbucks in Beijing

By Haili Cao

The Eternal Chao Yang Boulevard near the second ring road in Beijing in some ways separates the new from the old. On one side of the boulevard sits a four-story domestic supermarket. Local residents flow in and out with bags of moderately priced goods, mindful of their own modest budgets. On the other side of the Boulevard stands a modern high-rise plaza. At its edge is a coffee shop, where customers pushing through the glass door seem to come from another world.

Few of the working-class residents shopping at the supermarket cross over to the coffee shop, though they do stop to peer inside sometimes. There, young women in tank-tops and spaghetti straps sip coffee and tea alongside men and women in sophisticated business suits, their leisurely and graceful manner a sign of education and also high salaries. The grocery shoppers stare curiously at the round green, black and white sign board outside the shop. The Chinese characters have no meaning, but translate the sound of "Starbucks," the popular Seattle-based American coffee giant.

This particular cafe is the largest of nine Starbucks thriving in China's capital. Its two casual seating areas, separated by a counter, admit more than fifty customers. Its menu, service and décor replicate the atmosphere of any Starbucks in the United States. "When you walk in the door, you feel at home," said one American who lived in Beijing for five years. "The same friendly, helpful staff, the same bags of coffee beans, the same funky, coffee-themed decor. And the same guys sitting hunched over laptop computers."

But what seems familiar to Americans is new to Chinese, who have just learned how to pronounce "cappuccino" and "frappacino." Even though most of the beverages and desserts are locally produced, the American-style croissants, muffins, doughnuts, assorted fruit pastries and cakes are novelties to local customers.

Western paintings hang on the walls, and American cafe tables and chairs mix with Chinese antiques. Large bronze kettles topped with glass serve as tables, and handsomely carved rosewood sideboards function as cashier counters and condiment stands. Velvet couches fill the corners, and carefully selected Western music, both classical and popular, completes the coffee house atmosphere.

The price of Starbucks coffee is beyond the reach of most urban residents, whose average annual income is 5,854 yuan (US$705), according to Xinhua News Agency. A small Cappuccino costs 18 yuan(about $2.20), almost the same as in the U.S. But despite the cost, Starbucks rarely has empty seats, especially in the evening and on weekends.

The blossoming of Starbucks in Beijing is not by chance. In January 1999, many Beijingers looked curiously at the first Starbucks store that appeared in a posh downtown office building. Lion dances, speeches and huge paper flower wreaths celebrated the opening, and foreigners crowded the café, making it feel remote from China's ancient capital.

But while the Seattle-based coffee company serves expatriates, it has also introduced a new option for Chinese consumers. In many ways it mimics the fast food franchises McDonald's and KFC that launched their China operations 10 years ago. It also has expanded to Shanghai, where it plans to open 10 new stores each year over the next five years.

More than a decade ago, the first KFC restaurant to appear in Beijing triggered both curiosity and contention-some nationalists considered it an "invasion" of Western culture. But, KFC's novelty at "having a taste of modernity" eventually faded. Now KFC and McDonald's have become so familiar and domesticated that ordinary Chinese no longer view the fast-food outlets as symbols of America.

But unlike KFC or McDonald's, which have been especially successful luring families with children in large Chinese urban centers, the Starbucks brand carries a suggestion of maturity, along with wealth, success and status. Sipping a cup of Starbucks coffee in China is still a strictly urban and upper-class experience.

At first, customers were mainly foreigners and Chinese nationals who had lived or studied abroad. Starbucks picked the right time to enter the China market. A year and a half ago, overseas Chinese were flocking back home to take advantage of business opportunities and tap into the Internet gold mine. Most had received higher education in the U.S., and they commanded high salaries. Lee Li Zhang, the CEO of elong.com, an Internet start-up in Beijing, holds a PhD from Harvard University and frequents the Starbucks near his office. There he can talk business with his partners or escape temporarily from his demanding work.

Starbucks caught on fast. Chinese who returned from abroad soon found themselves sharing the coffee-drinking habit with more and more local Chinese. Because of the increasing number of joint ventures, a growing proportion of the population is becoming familiar with Western-style work environments, and coffee consumption is increasing.

Also, thanks to the emergence of private domestic businesses, especially high tech companies, a white collar labor force is reshaping China's civil society and its popular culture. Young entrepreneurs now look for a social life, seeking not only business contacts but personal enjoyment. They are willing to pay for a cup of coffee that costs what some Chinese families spend for a day's expenses. In this process of startling social change, Starbucks plays a transforming role.

Starbucks is not the first coffee house in Beijing, but it is the most popular and successful. Just a decade ago, the earliest coffee shops appeared in the spate of luxury hotels catering only to foreign customers. Maxwell House and Nescafe were the main options, and no one imagined switching a billion tea fanatics to a foreign beverage. But traditional patterns change when people with disposable incomes begin to hunger for a taste of the West.

For many young Chinese, coffee houses are now the meeting place of choice, replacing the traditional tea houses where the older generation still whittles away the morning hours, sipping, reading, gossiping and sometimes napping. The popularity of coffee and the habit of hanging out in cafes are little part of the ever-tightening embrace of Western ways since China began opening up to the world.

However, not every coffee shop can assume a compelling profit from the growing market. Sufficient capital to back business expansion is required to gain a significant market scale and share. Starbucks seems to have filled the market with its solid capital backing.

"Asians are fascinated with Western brands," said Hsu Da-lin, chairman of H&Q Asia Pacific, a private equity firm that is part-owner of Starbucks' Beijing joint venture. The Chinese are no exception. Rather than the coffee, it's all about atmosphere-about the coffee shop. The company even trained its Chinese staff in Seattle so they could recreate the Starbucks experience. The same uniforms and the same coffee shop lingo appear in San Francisco and Beijing.

Unlike some of Beijing's European coffee shops, where customers have reputations for being pretentious and arrogant, Starbucks creates a casual yet elegant environment, catering to young Chinese.

Sitting in Starbucks, you see people in crisp business suits talking alongside casually dressed young men weaving internet start-up dreams. Someone works on a computer, someone else reads quietly, but many engage in lively conversation. Even more novel in China's collective culture is a respect for difference and for personal space.

So people happily pay more for coffee at Starbucks, buying something still luxurious to average Chinese, and something invisible, like privacy.