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Starbucks logoImage via WikipediaStarbucks is one of the enterprises in China that is being hit hard by the global downturn, harder than others, writes Shaun Rein in Seeking Alpha, because they rely to a large degree on foreign customers. Rein, director of the China Market Research Group (CMR) has been one of the pundits refusing to accept the common feeling that China’s is following a global trend downwards. But for the popular coffee house he has to make an exception, as for other high-end restaurants in Shanghai.
Business has been hard very hard, because two of the three key markets of Starbucks are foreigners, expats living in China’s big cities, or visiting executives who used Starbucks as the replacement office.

As one waiter of a top foreign-focused restaurant in Xintiandi told me, “The Chinese are spending the same if not more than before. The foreigners are just not coming anymore or, if they do, are cutting back spending.” This has been a sentiment echoed in interviews we have conducted with dining establishments throughout China, from small restaurants to expensive hotel restaurants in a Starwood (HOT) or Marriott (MAR).

As expected, in the long term (say the second half of 2009) Shaun Rein remains optimistic about China’s economy.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him for your conference, board meeting or panel? Do get in touch.
shaunreinShaun Rein
by Fons1 via Flickr

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1 Comment

  1. It would be interesting to find out the numbers of foreigners in China, and if those numbers have any correlation to the troubles at Starbucks. It seems just from anecdotal evidence that a lot of foreigners left China just before and in the months after the Olympics, while at the same time tourist numbers dropped off (partly because of increased scrutiny of the issuing of visas).

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