Starbucks' China business could surpass US, according to CEO

'I wouldn't be surprised if one day we have more stores in China than we do in the US,' says Howard Schultz

PUBLISHED : Friday, 27 May, 2016, 3:44am
UPDATED : Friday, 27 May, 2016, 2:14pm

Starbucks is betting big on China, where the java giant's business has the potential to grow past that of the United States, according to CEO Howard Schultz.

Starbucks announced Thursday it would open its first international Starbucks Reserve Roastery & Tasting Room in Shanghai in 2017.

"I wouldn't be surprised if one day we have more stores in China than we do in the U.S.," Schultz says.

"We've been so successful in China over many years and we're just starting to get the morning-day part — where we're educating local Chinese to drink coffee in the morning."

China is the Seattle-based company's largest international market, with more than 2,100 stores across more than 100 cities. There over 300 locations in Shanghai alone.

While he's predicting a strong expansion in China, Schultz isn't planning to speed up the pace of store openings. Starbucks plans to open 500 locations a year in China over the next five years.

He's also unconcerned about the changes expected in the Chinese economy over the long term.

"There's going to be cyclical changes as the Chinese government goes through this significant economic transformation. But I think what we've established early on is a great enduring relationship with the local customer and … the municipalities," said Schultz.

"I'm very optimistic over the long term that we will succeed there and build long-term value for our shareholders."

Even if China falls into a recession, Schultz said Starbucks will stay on the offense.

"If there's something cataclysmic, that certainly could change our plans," he said. "But we have no intent of slowing down. We're building our business in China and playing the long game."

The coffee company also sees big potential in India, where it currently has 100 stores.

"The growth will be slower there than China because of infrastructure issues. But our growth in India is going to parallel the growth in China in terms of the number of stores we'll have over the long, long-term," said Schultz.

He's not the only CEO who sees potential in that market. Apple 's Tim Cook recently said he sees "huge" opportunities in India, where the population is exploding.