Shanghai Starbucks is Smiling, Interview with President Louis Chang-Je

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Starbucks, whose name reverberates like thunder in the US, is a large and renowned chain coffee bar group.

A few years ago, it secretly entered China. The reason for using the word “secretly” is that Starbucks has kept its individuality in never blowing its own horn when entering the country. However, Starbucks has recently attracted the attention of the Chinese media, for two main reasons. Firstly, it is a coffee company enjoying a high position and therefore prone to attacks. Secondly, as explained, Starbucks entered China in a secret way and was highly efficient in expanding its operations. There are now 15 outlets in the city of Shanghai, all located in attractive and visible surroundings. On the east side of Huaihai Zhong Lu, which is always bustling with crowds of office workers employed in the many prestigious office buildings, Starbucks has opened three outlets – in Central Plaza, Lippo Plaza and Xintiandi. Driving past Starbucks, you may catch a whiff of the smell of coffee through the large window displaying the black and green emblem with a double-tailed mermaid. Why is it then that those sharp-nosed media don’t seem to pay much attention to these achievements?

Starbucks – the legend

Q: The Starbucks logo is quite characteristic and can be remembered at first sight. What does it represent?
A: Starbuck was the name of the chief mate in Herman Melville’s novel “Moby Dick”. He was a calm man who loved coffee very much. The logo was designed by Terry Hackler when Starbucks opened its first store in Seattle, US. The centre part of the logo features a smiling double-tailed mermaid. She is a water deity who, according to the ancient Greek mythology, enchanted sailors with her rapturous chant and protected them when transporting the coffee beans safely to every port. We want to use this story to imply that the aroma of our coffee is alluring.

Q: Starbucks so far has a fairly short history, but we still don’t know much about it. Could you tell us more?
A: Originally, Starbucks’ activities included producing coffee, tea leaves and spices. It has moved away from such traditional activities and now processes coffee beans into fresh coffee. Since 1971, the company has opened 4,500 outlets around the world, and is still expanding at the speed of 3 outlets per day on average, ie. about 100 Starbucks coffee bars are born every month. We can say that Starbucks is undoubtedly the company with the highest number of coffee outlets worldwide.

Q: Starbucks’ development is quite legendary, how do you explain your position now?
A: One of the main factors explaining our company being the number one exquisite coffee bar chain in the world is our solid management principles, according to which we always look for the best coffee beans for our customers. Till now, our purchasers still go to Indonesia, East Africa, Central and Latin America, etc., to get the best coffee beans. It is the top quality coffee beans, the strict way of baking these beans and the fresh and professional method of coffee-making that makes Starbucks the most fashionable brand amongst all coffee bars.

Starbucks in the US

Q: Starbucks originates from the US. What is the business like over there?
A: In the US, we have around 2,800 outlets that bring convenience to our customers, so that no matter whether they are in an office area, a commercial area, or in the town centre, the smile of the Starbucks goddess can always be there for them.

According to a valuation carried out by the magazine “Fortune”, the Starbucks brand value ranks 70 in the US and the company tops the ranking in terms of sales. In the US, almost all consumers come to Starbucks to have their breakfasts, so nearly 65% of the total sales there come from breakfast.

Q: Is Starbucks the oldest coffee bar chain in the US? What makes it thrive day after day?
A: In 1971, the first Starbucks opened in Seattle and at that time, there were not many other coffee bars there. It is our strong management principles, our professional coffee-making technique, our outstanding service, our experience sharing and the creation of the “third living space” that makes our company so dynamic.

Starbucks has become a kind of popular culture in the US, entailing concepts of freedom, comfort, liberty and effectiveness, which are all characteristic features of the American culture. We apply these cultural features to everyday life and our company also symbolises kindness, easiness and leisure. We can call it the “coffee culture”, and more accurately the “American coffee business culture”.

The number of our customers is growing fast, along with Starbucks itself.

Starbucks in China

Q: We have noticed that your company’s name is Shanghai President Coffee Ltd. Could you say something about the cooperation between President and Starbucks?
A: President Ltd is always interested in new ideas, and when we found out that the American company Starbucks intended to develop their business in Shanghai, we hoped we could get into a new business area with the opening of coffee bars. President Ltd has already begun its business in Shanghai, and we feel very confident in and familiar with Shanghai’s market. Selecting Shanghai was the result of careful consideration. At that time, there were about ten enterprises competing with President Ltd. The only reason behind our success in this competition lies in our hard work.

I believe that with our endeavour, we can be the best coffee bar group in Shanghai.

Q: How about the scale of Starbucks’ development in Shanghai?
A: In 1999, Starbucks entered Shanghai, and now has 15 outlets in the city. This September there will be 20. Moreover, we plan to expand to areas around Shanghai, for example we will open our first outlet – Guoda Store – in Hangzhou on 25th August. We are glad to see that the people there can also see the smile of the Starbucks mermaid.

Q: The three stores – Xintiandi, Lippo and Central Plaza – are very close together. Is this likely to cause competition between them?
A: The only thing we ever consider when deciding on the location of our outlets is how to bring convenience to our customers. And the Starbucks interactive network can establish communication with our customers in a flexible and rapid way. We have a motto: “Starbucks goes where you go”.

Q: Starbucks came to China from the other side of the ocean. Does the company have any management principles that are specific to China?
A: Starbucks believes in diversity as our main management principle. We intend to be in harmony with every country’s different culture. For example, in the US, with regards to the race problem, Starbucks put forward a certain principle which aims to integrate all customers. But in China, this principle is somewhat modified, it aims to include the experience of various local businesses from which we can learn a few lessons. This may also be one of the reasons why Starbucks has been growing so rapidly in the world.

Q: What exactly is the idea of a “third living space” you mentioned before? Could you say something more about it?
A: Creating a “third living space” is one of our management principles. Starbucks hopes that besides the office and the family house, we can create a new living space, where people can enjoy the particular “coffee feeling” which Starbucks brings to them. While unwinding in a cozy atmosphere and enjoying the sounds of soft music, you can chat with your friends, taste some coffee and enjoy Starbucks’ brilliant wall-paintings at the same time. All these help to relax your every cell and wrap you completely in the Starbucks coffee culture.

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