Starbucks China: Coffee in The Land of Tea
Making the decision to enter China can present both tremendous opportunities as well as daunting challenges for brands that are unfamiliar with Chinese consumers. When mainstream coffee brand Starbucks entered China in 1999, they faced a nation rooted historically and culturally in drinking tea. Yet, today, Starbucks boasts over 800 stores throughout China and continues to grow. An outstanding example of understanding consumers, Starbucks can credit its success to a keen understanding of the Chinese market and their approach towards constant innovation.
Marie Han Silloway, Chief Marketing Officer of Starbucks China, joins me on this episode ofWorldmakers to discuss how brands can effectively become consumer anthropologists by blending global focus with local tastes. She also talks about the importance of embracing differences in the Chinese market, creating a ‘feeling’ and not just a product, and leveraging opportunities to stay innovative.
Marie advises marketers, “Try to pinpoint and zoom in on what’s special about a given market—about a given city—and try to celebrate that aspect.”
Watch our insightful conversation below:
Marie Han Silloway, Chief of Marketing for Starbucks China, on Worldmakers
Modern China is about cultural collision, from Shanghai’s stock exchange to Beijing’s ancient treasures. The world’s best brands know that to succeed here, you must do more than speak Mandarin—you must understand the motivations unique to this market and the people. Today, we’ll learn what it takes to be WORLDMADE in China. Welcome to Worldmakers.
Today I’m sitting down with Marie Han Siloway, Chief Marketing Officer of Starbucks here in China. Marie, welcome to World Makers. Glad to have you here.
Marie Han Silloway: Thanks, Bob. It’s nice to be here.
Bob Jeffrey: So, what drives global brands in China?
MHS: It’s all about having the right brand promise that you can deliver here in China. But more importantly, it’s delivering on it. And I think that that’s one of the special things about Starbucks which has been about delivering an authentic coffee house experience, but doing it in a different and a fresh way.
BJ: But when I think about China, I think about it being such a dominate tea market. So talk to us a little bit about here’s this great coffee brand that’s, you know, growing in leaps and bounds here in China. How have you managed that because again, you know, from a cultural point of view it’s been so different.
MHS: I know. Everyone said when we first entered China, “How are you going to get people to drink coffee?” And I think that when Starbucks came to China, we had such a different brand promise it was about offering this wonderful third place where you could feel welcomed, especially in China one of the things that our customers often say to us is, you know, “What I love about coming to Starbucks is my barista knows me. She knows my drink. Even before I’ve ordered, she’s making it for me.” And so it’s that level of personal interaction that makes such a huge difference to our customers. And much of how we communicate with our customers has been in the digital space because we tend to look at that as a way to have a personalized one on one conversation.
BJ: I think about it through two lenses. One is what you talked about with engagement. But the other thing is also the innovation that seems to be going on from a product point of view seems to be unique to what’s going on here in China. So how do you see the two working together, innovation on the product relevant to the Chinese customer and also digital?
MHS: It really has to be so well integrated. For us, we really strive to bring Starbucks global brand experience and global brand standards to China. But we also need to strive to be relevant locally. Chinese New Year is a very good example of a time when we launched our first China signature beverage. So the Chestnut Macchiato was developed in China, inspired by China because we talked to consumers about the memories and the feelings and the aromas of Chinese New Year and the wintertime and really we found that the Chinese have a very warm nostalgic feeling when it comes to chestnuts and the smell of roasted chestnuts. And so we built a whole drink around that for an iconic time of year which is the Chinese New Year holiday.
BJ: So how often do you do those innovations that are really rooted in understanding the Chinese customs and culture?
MHS: Well, we actually never stop. I would say that the most innovative program that we’ve come up with recently is actually some of the work that we’ve done with Wechat, um which is a very interactive platform and through that we’ve been able to really increase our fans engagement significantly and communicate for example our product information but in a fun way.
BJ: So I’m fascinated with that because again, the social media environment here is very different. I almost wonder you’re doing so much with social that you could actually think about applying some of that learning to other markets including the U.S.
MHS: Yes, actually we have many conversations with our digital team in the U.S. and other markets around the world. And I have to say that I think the fans in China, they just behave very differently. When consumers here make a decision about a brand or a product, it’s very much about asking their friends’ their opinions. So world of mouth, the opinions of the social communities that you identify with are really, really critical. And that’s how we’ve tended to look at social networks is how do we become a friend, part of the social circle?
BJ: I mean, I’m fascinated by this because without getting into specifics, I can’t tell you how many different companies I’ve seen over the years come into this market and not do their homework. So clearly, I mean from a marketing point of view you’re almost like anthropologists because you really do understand the market.
MHS: I think one of the things that struck me about why people join Starbucks and why people stay at Starbucks, it’s because they really love the brand and they love the culture of what we stand for. And I think that Howard Schultz said it best. He said that, “We’re not in the coffee business, we’re in the people business serving coffee.” And it really emanates throughout the entire organization the amount of empathy that people have, the respect, the sincerity. It’s really, really authentic and it’s something that really touched me as well. It’s something I didn’t expect but I’m actually very impressed by the fact that people tend to find the culture and the brand attraction to be so strong.
BJ: So speaking of the number of people, I mean we were talking earlier and I think you said there were 800 Starbucks now in China.
MHS: Over 800.
BJ: And where do you see that going in the next couple years in terms of increase?
MHS: Well, you know, 2015 we’ll have 1500 stores.
BJ: So you’re going public with that.
MHS: Well, we hope to become the second largest market for Starbucks worldwide by 2014.
BJ: So how would you define that connection between Starbucks and the Chinese consumer because you’re doing something that every global brand wants to do.
MHS: So we try to pinpoint and zoom in what’s special about a given market, about a given city, and we try to celebrate that aspect. And so I think people see that. They feel the internationalist but yet they feel the local connection.
BJ: I mean there’s been some really key principals that I’ve learned here. It’s about building that deeper relevance and connectivity, it’s getting deep into the culture to build a level of consumer engagement. But it’s about innovation on many levels. It’s innovation in product development, innovation in terms of how you actually have that store or that Starbucks experience. What else would you add to that in terms of advice to other global brands?
MHS: I would say that having respect for the local culture is really important. I think you hit on a really good point earlier, Bob, when you said many global brands come and they think whatever it is the way they used to do things should work in China. And I have to say it’s a big mistake if you think you can just cut and paste. Whatever you used to in your home market, you have to approach China very differently. You have to check your paradigms at the door, be prepared to break some rules, and to write history. You know, when we look at how to talk to customers and our fans here in the digital space, we’re doing things that we actually haven’t done before in other markets.
BJ: So the good news is that not only are you not cutting and pasting, but you’re constantly surprising and delighting your consumer with the innovations with how you make the connection.
MHS: That’s really critical. And also how you talk to your customers is really critical. You can’t be preachy. You need to make sure that you come across as having that conversation. So I would say that as far as being successful here definitely, you know, make sure that you find your voice, be authentic because people can see right through it if you’re not. And also constantly be innovative because people here are very, very demanding and very sophisticated. And so if you keep recycling the same programs people can see through that.
BJ: I think what’s interesting, too, when you were describing the growth of Starbucks I said, “Well maybe one worry is you’re building a category and it’ll be easier for competitors to come in, but it seems doubtful that a competitor could do what you’re doing in terms of the speed and level of innovation and engagement with the consumer. I can’t think of anybody else who’d be able to replicate that.
MHS: Well, we hope not. For sure. Of course there are many other copy companies here. Competition’s good, right? But we like to aim to always be the best.
BJ: To be the best. Be number one.
MHS: Yes, absolutely. And we have a very important responsibility on our shoulders, right? Our customers trust us. They tell us they love us for the high quality of the coffee, the high quality of the experience. And we can never forget that. We always have to challenge ourselves to deliver more and to do more for our customers here. Make them happy.
BJ: No, that’s great. That’s inspiring and I have no doubt you’ll continue to have Starbucks be number one. And thanks for joining us on World Makers.
MHS: It was a pleasure Bob, thank you for having me.
BJ: And thank you for tuning in to Worldmakers here in Shanghai.