Starbucks in China: The Third Place
There have been many articles about how one of the main strategic objectives of Starbucks is to create a “third place”, a place other than home or work which is nearly as important as these first two places.
Leaving aside whether Starbucks has succeeded in doing so in America, it is obvious that Starbucks has succeeded in doing so for some people, especially expats and Chinese real estate moguls, in China.
This is going to be the first in a series of posts about Starbucks in China exploring Starbucks’ characteristics and reasons for success in the Chinese marketplace. Before coming to China, I thought Starbucks was a decent place. Since coming, I have come to the conclusion that Starbucks in China is a godsend.
Starbucks in China: The Third Place
While other coffee shops have had reasonable success in China, none have succeeded in creating the same atmosphere or pull that Starbucks has. How has Starbucks been able to do so? The reasons are many, but one is that Starbucks has been able to create an environment that some find helpful, and others almost necessary, within China.
Coffee shops are by their nature an easy place to get in and out of. They make ideal places for gatherings or meetings. While any coffee shop, given the right cachet and location, can succeed at this in spades, Starbucks is the only one to have really done so in many stores throughout China. The reality is clear: most coffee shop gatherings in China are occurring in Starbucks.
Why would Chinese people and expats in China chose Starbucks over another coffee shop? Here are some reasons:
7 Reasons Why Starbucks in China is Winning
- Location
- The “culture” within Starbucks
- 1st rate service (Often Hard to Find in China)
- The overall design
- Comfortable seating and appropriate music
- High quality and addictive coffee
- Wi-Fi
All of these issues will be addressed later on. Suffice it to say, they all help make Starbucks the leading meeting spot for more and more (relatively well-off) Chinese people and expats. Anecdotal evidence overwhelmingly supports this proposition. Large numbers of people decide to meet in various Starbucks stores in China, often for business and just as often for pleasure. Other coffee shops, especially ones with a Starbucks nearby, have far fewer people in them.
I know of a large number of local Chinese businesspeople and expats who come to Starbucks every day. Perhaps they are addicted to the coffee and have this as their primary reason for coming. Yet many of them spend significant amounts of time in Starbucks. More time than a similar person would back in the States.
Real Estate Moguls and Expat Exporters
For many local Chinese businesspeople who are of a “leisure” class (often owners of large amounts of real estate who do business on the side and live quite well off their rental income of properties that were worth next to nothing 20 years ago), Starbucks stores in China have become a several hour daily ritual. Many China expats of the “exporter” variety also end up spending several hours a day in Starbucks. I often find myself doing the same (although this may change very soon)… spending a good amount of time reading and meeting with other expats and locals.
Do you agree with the notion that Starbucks has succeeded in creating a “third place”, a place apart from home and work that carries a similar importance as these two places, for some people in China? It’d be great to hear your thoughts on the issue.
I cannot say that I often go to Starbucks, personally. My hometown has always been very supportive of local business, and actually managed to keep Starbucks out of the city (though there was on in the airport for a long time) up until just a few years ago.
So I have a habit of avoiding Starbucks in general. That, in addition to the fact that I am not fond of their coffee.
I was lucky enough to come upon a local coffeeshop here that has surprisingly good coffee, much lower prices, good food, and good service. Now that they have re-decorated the inside it is also has an especially great atmosphere. They also have wireless service and a growing collection of both Chinese and English books.
However, you do make an interesting point as to how much of their time people spend in coffeeshops. I wouldn’t have thought of Chinese people spending so much time in a coffeehouse, but I know many people who go there everyday for several hours. They also constantly use it as a place to meet with people. I myself often choose this place as a location to hold meetings.
The most amusing part is…this coffeehouse is located around the corner from a Starbucks.
Hi Belle,
Since coming to Shanghai, I have had coffee at Starbucks just a handful of times – it’s just not quite the same kind of place to meet new people as the Starbucks in Shenzhen were… maybe that’s just because there are so many Starbucks in Shanghai, though.
You make a very convincing case for this, though I myself would have put Coffee Bean above Starbucks as the ‘third place.’ I personally prefer Coffee Bean, every location I go to is always packed, and best of all, their WIFI is free. But, based on the number of locations, I guess they just can’t compete.
Any idea if there are any other ‘third place/space’ locations in Shanghai? I mean, besides chain coffee shops?
Tan,
Third spaces? I don’t think so. But hang out places there are others.
But in terms of a place expats are drawn to, there’s probably no place stronger than Xintiandi (which has a Starbucks, even though I don’t go to Starbucks anymore
).
Maybe someone else will correct me.