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Starbucks is Ready to Ramp Up Its China Expansion

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On Wednesday, coffee giant Starbucks Corp. (SBUX - Free Report) announced that it is ramping up its expansion into China, with the company on track to have a total of 5,000 store locations by 2021.

CEO Howard Schultz met with the Shanghai Party Secretary Mr. Han Zheng, and received full support from the government for the expansion and its first international Starbucks Roastery and Reserve Tasting Room. The China Roastery will be similar to the one in Seattle where customers can watch coffee beans get roasted and sip coffee drinks.

At this rate, Starbucks will double the amount of stores in China in just five years. The company is looking at the country to fuel future growth; Mr. Schultz has said in the past that China could potentially surpass the U.S. as Starbucks’ biggest market, where there are roughly 13,000 stores.

Starbucks opened its first China location 17 years ago, and it’s been a long road for the company in the region. In an interview with CNN, Mr. Schultz said that "We had to educate and teach many Chinese about what coffee was -- the coffee ritual, what a latte was…So in the early years, we did not make money."

Now, Chinese consumers are spending much more money on coffee and food in Starbucks stores than Americans, said Mr. Schultz. Like many food and beverage companies do overseas, Starbucks has added unique, regional flavors to its China menus. It serves a Black Forest Latte, which is a mix of coffee, cocoa powder, and cherry juice, as well as traditional Chinese teas and mooncake treats.

Starbucks named Belinda Wong as the first CEO of its China division in order to oversee the expansion. Ms. Wong has been with the coffee maker for 16 years, and was previously the president of Starbucks China.

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