Sure, there are very few truly "must-see" offers. But I have one for you, Starbucks in China. Massive corporations are fed on meat in a dictatorial environment reminiscent of the days when kings granted exclusive licenses to fur trapping. Starbucks has the product, the relationships, and with an agile campaign, they'll have the brand everywhere in no time. It would be game, set, match - if it hasn't already been done.
China is the emerging economic powerhouse in the world today, but it is not a dead end for foreign companies. Many companies, in the US and elsewhere, would argue that it's quite the opposite. China is notoriously lax in its enforcement of intellectual property laws. Tech companies in particular, such as Microsoft, have been disappointed to see their work pirated in China. You can add golf club producers, music companies, movie studios, and several industries to the list of injured parties.
And then there's Starbucks, our giant American coffee shop. I'm watching the franchise right from my office at ICMediaDirect.com in the Empire State Building. It's always busy, full of tourists. Did you know that there is a franchise at the Great Wall of China? Did you know that Starbucks announced the opening of one of their stores in the Forbidden City in Beijing, the Chinese were furious? They resisted at first, but quickly got used to it? (I guess the Chinese are like everyone else.)
What does Starbucks have that Calloway Golf doesn't do business like this? A product you can't copy, that's the thing. You cannot simulate bulk coffee beans. This is the foundation that ensures Starbucks' success in mainland China. Their CEO, Howard Schultz, said China was their "number one priority" for growth.
Schultz and Starbucks are not afraid of their China ambitions. Currently, they have about 11,000 stores in 37 countries, of which about 375 are in China. By 2008, Starbucks is expected to derive 20% of its revenue from Chinese websites. Starbucks has a long-term goal of 30,000 stores and about 8,000 stores in China.
This is an acceleration of really enormous proportions. Remember that China may just be a nominal communist country. While some of the communist economic policies may have been abandoned, the ministers in Beijing still clung to their power. Starbucks all bustling, green lights, red carpets, welcoming cars - the works. Not because they think the CEO is a nice guy, but because their product, distribution, and everything can't be copied.
I could complain all day about this, but there's more proof the fix is coming on behalf of the Seattle-based coffee chain. In recent weeks, Starbucks has won not one but two lawsuits in China to protect its intellectual property rights. Some bold and certainly observant locals decided to copy elements of the Starbucks brand and serve their own compatriots. There are no dice. The Chinese court ruled in favor of Starbucks.
I wonder if the local coffee dealer thinks he has a chance? Did the Chinese judge think long and hard about the different merits of each side? Are economic ministers in Beijing curious about how this case will play out? No drama. A successful executive like Schultz would not openly mention such lofty goals for achieving success in countries like China without knowing that he could achieve it first. Someone in Beijing likes them, or someone else, likes the revenue they generate.
This reminds me of a book I read recently about the infamous pirate Captain Kidd. In short, the British crown hired Kidd to rob pirate fleets for profit. While at sea, the tide of political change somewhat shifts and he becomes the scapegoat - his "trial" is a farce. The powers needed to be condemned quickly and Kidd had to pay with his life. The stakes may not be as high, but the outcome is similarly assured when China ruled in favor of Starbucks against domestic counterfeiting.
Okay, Starbucks has quality coffee and international distribution channels, they have a gold contract from Beijing, now all they have to do is convince a country with 5,000 years of experience in the field. the tea scene that there's something new, something different - called coffee. This requires branding.
China is moving towards westernization, or towards a more capitalist economy. The growing cravings and expectations of a consumer-driven society make it easier for Starbucks, especially when their competition is negligible. With reasonable agreements reached in Beijing, now is the time for Starbucks to market itself to the Chinese people. Here's how they'll win:
• They're targeting China's young, urban population and laid-back store locations and offering a social setting - one that welcomes you away from the apartments. cramped household.
• Starbucks locations will serve as Internet user hubs, where socializing and downloading music will be central to the Starbucks experience. Advertising agencies, like ICMediaDirect.com, will launch seasonal online campaigns (similar to the US Christmas Red Cup campaign) for Starbucks to link the chain to what's hot. The intersection of Medias such as music downloads and entertainment sites will be important.
• There is a new consumer consciousness for capitalist cultures (which has never actually receded) emerging in China as in Russia. Coffee will be the drink of change and through multimedia branding with government support; This idea will be firmly established.
I don't push stocks. I don't talk about politics. I do not seek justice or defend the oppressors. But there's one thing I know - Starbucks can't miss.