<div id="readability-page-1">“Three Starbucks peach lattes for 84.90 yuan [US$12]”, a live streaming host tells viewers on Douyin, China’s popular short-video platform. “Three, two, one – the link is up. Don’t miss this deal, babes.” As Starbucks’ planned sale of a majority stake in its China business to Boyu Capital, announced three months ago, awaits regulatory clearance, the US coffee chain has stepped up its push into China’s heated live streaming shopping race, using discounts to bring down the cost per cup. The transaction is nearing completion, with China’s antitrust regulator ready to give its blessing any day now. On January 21, the State Administration for Market Regulation said that the deal qualified for a fast track review, typically reserved for buyouts that were unlikely to raise competition concerns. If approved, the transaction would leave the Chinese private equity firm with a 60 per cent share of Starbucks’ more than 8,000 stores on the mainland, marking a major turnaround in the Western food and beverage chain’s course in its China operations. “I have stopped going to Starbucks anyway,” is a common refrain among social media users on the RedNote platform, with prices cited as the main reason. “Just drink Luckin or Mixue instead,” users say, referring to the more affordable home-grown chains.  Since the Seattle-born coffee chain entered the mainland 26 years ago, the retail and economic landscape has completely transformed. Chinese consumers are a lot wealthier and more discerning, while it has become much harder to make them part with their money. China’s breakneck growth has lost momentum. The middle class, Starbucks’ key demographic, is grappling with dimmer career prospects following crackdowns on sectors from internet and real estate to after-school tutoring that created millions of white-collar jobs. A prolonged property downturn has eroded the value of the real estate where many have parked most of their savings. China posted its weakest retail sales growth in nearly three years last month. In December, sales grew just 0.9 per cent, the lowest since February 2023, and far below the double-digit growth seen in most years before the Covid-19 pandemic. At the same time, domestic competition has turned increasingly cutthroat, with nimble rivals emerging and catering to local tastes and preferences. Competition among local brands has been intensifying, with chains like Luckin, Cotti and Mixue locked in fierce price wars. Late last year, Good Me began selling an Americano for as low as 4.90 yuan, which reset people’s expectations of what a cup of coffee should cost. The price war was initially sparked by a Luckin campaign in 2023, offering coffee at 9.90 yuan. The shift is also generational. Younger cohorts of Chinese consumers came of age in an era of abundance and choice, according to Jason Yu, an analyst with CTR Market Research. The older generations had a nostalgic attachment to Western brands like Starbucks and Haagen-Dazs, which entered the market when they were young and were often associated with a prospering Chinese middle class, but not the current generation, he added. “For China’s post-1990 and post-2000 generations, the reality is different,” Yu said. They view the world differently; they are not awed by Western brands, he added.  That has reflected in Starbucks’ declining market share in China, which plunged to 14 per cent in 2024 from 34 per cent in 2019, according to data from market research provider Euromonitor International. Its same-store sales finally turned around, growing 7 per cent for the quarter ended December after declining 1 per cent in the previous financial year ended September and 8 per cent in 2024, according to its latest earnings. Its net revenues grew 11 per cent. It did not disclose its net profit. “The role of our international business is very clear,” said Brady Brewer, CEO of Starbucks International, during the earnings release last week. “We are an asset-light growth driver for Starbucks that increases Starbucks margins.” In a bid to reverse its fortunes on the mainland, Starbucks announced in 2024 that it was seeking partners to grow its China operations – eight years after ending its regional joint venture to go fully independent. After months of speculation about the fate of its mainland operations, Starbucks in November announced a joint venture with Boyu. The private-equity firm, incorporated in the Cayman Islands and headquartered in Hong Kong, holds a 60 per cent stake in the joint venture, while Starbucks holds the rest. “Boyu’s deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions,” said Brian Niccol, chairman and CEO of Starbucks Coffee. The private-equity firm hopes to grow the chain’s current more than 8,000 stores to 20,000 over time.     “The old mantra was ‘think global, act local’, but honestly, just having a global company ‘act local’ is no longer enough,” said Yu. “What we’re really seeing today is ‘in China, for China’. Global brands have to plant their feet firmly on Chinese soil and build their entire competitive strategy around the Chinese consumer.” Starbucks is not alone. A week after the Starbucks deal, Restaurant Brands International, owner of fast-food chain Burger King, announced it would sell a majority stake to Chinese private-equity firm CPE. Burger King operates roughly 1,250 restaurants on the mainland. More are likely to rush to the exit. General Mills is mulling the sale of its Haagen-Dazs ice-cream stores in China. Luckin Coffee, which displaced Starbucks to become the largest coffee chain on the mainland in 2023, and its controlling shareholder, Centurium Capital, are said to be bidding for Nestle’s Blue Bottle Coffee. The Swiss food giant acquired a majority stake in the premium coffee chain in 2017. “It is a general trend among multinationals evaluating or re-evaluating their China strategy,” said Miranda So, head of global law firm Davis Polk’s Asia M&amp;A and private equity practice. She added that while market conditions had changed and geopolitical uncertainties remained, multinationals were not completely exiting the mainland but were rethinking their strategies.   China has seen a sharp exodus of foreign investment in recent years amid elevated US-China tensions. Net foreign direct investment plunged 29 per cent in 2024 after falling 14 per cent in 2023, going back to a level last seen in 2010, according to data from China’s Ministry of Finance. Meanwhile, Chinese private-equity firms are hungry for deals, pushed to the sidelines since 2021. Chinese private-equity firms experienced a significant slowdown in recent years due to a slowing economy and exit uncertainties, following a regulatory crackdown on tech firms and tightening of rules. In 2020, Chinese regulators called off an initial public offering from Ant Group, which would have been the world’s largest on record, at the last minute in Shanghai and Hong Kong. The incident started a years-long regulatory crackdown on China’s tech firms and sent shock waves through the global investment community. Private equity-backed mergers and acquisitions targeting Chinese assets crashed to a decade low of about US$45.9 billion in 2024 from a peak of over US$120 billion in 2021, according to data from the London Stock Exchange Group (LSEG). In 2025, although the number of deals increased nearly 80 per cent year on year to 1,320, the value rose 0.7 per cent to US$46.2 billion. Investments from Boyu reflect that trend, remaining low since 2021 when it was involved in 15 deals. It made five investments in 2025, four in 2024 and only three in 2023, according to Bloomberg data. Private-equity firms were sitting on a significant amount of capital, according to Frank Bi, a partner and head of corporate transactions practice at Ashurst in Hong Kong. “I believe they are under immense pressure to deploy the funds,” he said. “If they merely purchase wealth management products or engage in some structural planning, the returns would actually fall short of their expectations. Therefore, they are compelled to invest directly in industries.” Bi added that as global companies sold down, Chinese private equity firms had a rare opportunity to acquire assets that were well established. “It’s a golden opportunity.” Chinese private-equity firms were increasingly emerging as active buyers when global conglomerates carved out noncore brands or business units, according to Xiaoxi Lin, a partner at Morrison Foerster, the law firm that advised CPE in its takeover of Burger King’s China stake. The dynamic was driven less by headline ambition and more by fit, he added. “Chinese investors step in where they can accelerate growth, strengthen supply chains, and bring a clearer cultural and market alignment to how the business operates, especially in China, which remains a critical market for many global brands,” said Lin. In January, merger and acquisition activity targeting Chinese assets supported by private equity started to pick up, with 135 deals worth US$2.8 billion, more than double the level in the same period last year, according to the latest LSEG data.</div>

161725

159736

LKNCY

515710

159843

515170

SBUX

159928

02097

516900

<p>Starbucks is adapting to China's changing consumer landscape by enhancing its live streaming shopping strategy and offering discounts as it awaits regulatory approval for a majority stake sale to Boyu Capital. The deal, which would give Boyu a 60% share of Starbucks' 8,000 stores in China, comes amid fierce competition from local brands like Luckin and Mixue. As consumer preferences shift, Starbucks' market share has dropped from 34% in 2019 to 14% in 2024, prompting the company to seek local partnerships to expand its presence in smaller cities.</p>

- Starbucks is seeking to strengthen its position in China, where it plans to sell a majority stake to Boyu Capital amid a challenging market.  
- The company faces intense competition from local brands and has seen its market share drop significantly, although it reported a 7% increase in same-store sales recently.  
- As multinationals reevaluate their strategies in China due to geopolitical tensions and market changes, private-equity firms are seizing opportunities to acquire established brands.

How Western brands are adapting to China’s changing consumer landscape