Why Starbucks is Here to Stay in China

You might have heard that Starbucks opens a new store in China every 15 hours. You might have also heard about Luckin Coffee, a local competitor that is expanding at astonishing speeds and becoming a real challenger in the market: https://www.forbes.com/sites/panosmourdoukoutas/2019/01/21/starbucks-worst-nightmare-in-china-is-coming-true/#343bf78817ec

But one reason that I believe that Starbucks will succeed is because of how they treat their employees.

I was listening to an interview with Howard Schultz, former CEO of Starbucks on the Masters of Scale podcast: https://mastersofscale.com/howard-schultz-how-to-do-good-and-do-good-business/

Schultz is known for going the extra mile for his employees and really taking care of them. For example, in the U.S. every employee can get free tuition towards a degree at Arizona State University: https://www.starbucks.com/careers/working-at-starbucks/education

In China, he's made strides in similar ways to take care of his employees.

But where Schultz has shown real intelligence is in the area of localization and contextualization.

He says, "87% of our employees in China then and today are college graduates. The parents in China, especially given the one child rule, are deeply involved in the lives and aspirations of their children, and they felt, 'I sent my son or daughter to college and they’re working in serving coffee as opposed to working for Apple, or Google, or Alibaba, or Tencent. Why are they working at Starbucks? It’s not right.'

From a long-term friendship with Alibaba founder Jack Ma, Schultz learned about the importance of parents and the filial piety culture in China. He realized that to take care of his employees really meant to take care of the whole family.

So Schultz came up with a crazy plan. For the last 7 years, Starbucks has not only been offering employee benefits, but also parental benefits. 

Starbucks also puts on an annual celebration for their employees and the parents of employees.

Schultz says, "The entire annual meeting of parents and family is a celebration of families who are working at Starbucks, of us highlighting their children. We fly people, parents, to Shanghai or Beijing, who have never been on an airplane, they don’t have the right clothes because they might be farmers, and we surprise our partners who don’t know the parents are coming, and it is the most emotional, the most … It is the thing every year that I will not miss."

Though tech innovation is important, innovation in human connection and company culture may be the true key to success.