Starbucks to sell majority stake in China business to Boyu Capital

A strategic recalibration: how Starbucks’ China partnership redefines its growth model amid rising competition and local headwinds

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Starbucks Coffee Company has agreed to transfer a majority stake in its China business to Boyu Capital, a Hong Kong–based private equity firm. Under the new structure, Boyu will own up to 60% of the Chinese retail operations, while Starbucks will retain a 40% stake and continue collecting royalties on its intellectual property.

The transaction values the business at roughly $4 billion, signaling one of the most consequential foreign ownership shifts in the Chinese consumer sector in recent years.

Why Starbucks is restructuring its China operations

Starbucks first entered mainland China in 1999, expanding to nearly 8,000 stores across the mainland by 2025. Yet growth has slowed in recent years as the brand contends with declining market share—down from 34% in 2019 to about 14% in 2024—amid aggressive expansion by local rivals such as Luckin Coffee.

According to Starbucks CEO Brian Niccol, the partnership represents “a next chapter of growth” that pairs Starbucks’ global brand strength with local execution and expertise.

“China remains a critical growth engine for Starbucks,” Niccol said. “This partnership allows us to accelerate expansion while staying true to the Starbucks Experience.”

In fiscal Q2 2025, Starbucks’ same-store sales in China rose 2% year-over-year, after stagnating in the previous quarter (Reuters Q2 earnings coverage).

Rising competition from homegrown players

The move underscores how local coffee brands are reshaping China’s premium beverage market. Luckin Coffee, once hobbled by an accounting scandal, now operates over 20,000 stores—more than Starbucks—and routinely sells its popular Americano for about one-third of the Starbucks equivalent. Analysts at World Coffee Portal note that price and convenience have become critical differentiators.

In response, Starbucks has sought to expand beyond major cities like Shanghai and Beijing into China’s lower-tier urban centers, where growth is accelerating. The new partnership with Boyu Capital—whose portfolio spans retail, logistics, and food & beverage—will help the company localize store formats and pricing strategies.

Structure of the deal and financial implications

Under the joint-venture structure, Boyu will assume operational control while Starbucks retains brand and licensing authority. The deal reflects a broader pattern among multinationals seeking to reduce exposure to geopolitical and market volatility in China while still participating in growth opportunities.

Starbucks will likely benefit from:

• Reduced capital burden on expansion into smaller cities

• Recurring royalty income from continued brand licensing

• Localized expertise via Boyu’s extensive regional network

However, ceding majority control introduces execution and governance risks, and the success of the partnership depends on maintaining Starbucks’ brand equity while adapting to local consumer preferences.

Starbucks estimates the total economic value of its China business—including the retained stake and future royalties—at over $13 billion.

What it means for Starbucks’ global strategy

This transaction may serve as a blueprint for other Western consumer brands grappling with China’s regulatory complexity and shifting consumer dynamics. Similar asset-light models have emerged in industries from automotive to fashion, where local partnerships now drive scale and distribution.

Starbucks’ pivot aligns with a trend toward strategic joint ventures that balance brand control with local adaptation—a model increasingly favored in emerging markets where direct ownership carries higher operational risks. As noted by Wharton management professor Regina Abrami, “The key to foreign brand survival in China today is the ability to localize without losing identity.”

Starbucks Store Count in China (2015–2025)

(Example visualization — showing growth curve plateauing from 2023–2025 while Luckin surges)

Year Starbucks Stores Luckin Stores

2015 2,000 —

2018 3,600 2,000

2020 4,700 4,300

2023 6,000 10,000

2025 8,000 20,000

Starbucks’ partial divestment in China is less a retreat than a strategic recalibration—a pragmatic adjustment to one of the world’s fastest-moving consumer markets. By aligning with Boyu Capital, Starbucks is betting that local knowledge, faster execution, and shared capital can achieve what global brand muscle alone could not. Whether the model holds will depend on the delicate balance between scale and brand integrity.

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