Starbucks, the iconic Seattle-based coffee chain, is making headlines in China—but not for the reasons it might have hoped. On November 3, 2025, Starbucks announced a major shift in its strategy for the world’s second-largest economy: the company will sell a controlling 60% stake in its Chinese retail operations to Boyu Capital, a Hong Kong-based private equity firm, in a deal valued at $4 billion. The move, which surprised some industry watchers, comes after years of mounting pressure from fierce local competitors and changing consumer tastes across China.
The joint venture, which is expected to be finalized in early 2026 pending regulatory approval, will see Starbucks retain a 40% interest in its China business while continuing to own and license its globally recognized brand and intellectual property. Starbucks China and its nearly 8,000 cafes will remain headquartered in Shanghai, but the company now has its sights set on a much larger prize: expanding to 20,000 stores across the country in the long term.
“Boyu’s deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions,” Starbucks CEO Brian Niccol said in a statement, according to Reuters. “We’ve found a partner who shares our commitment to a great partner experience and world-class customer service.” Niccol emphasized that the partnership combines Starbucks’ coffee expertise and unique partner culture with Boyu’s deep understanding of the Chinese market.
For Starbucks, China has long been a land of opportunity. The company opened its first shop there in 1999, at a time when tea dominated and coffee culture was nearly nonexistent. As China’s middle class grew and aspired to global brands, Starbucks flourished, becoming a symbol of modernity and cosmopolitan taste. Today, China is Starbucks’ second-largest market, accounting for about 8% of its global revenue. As of June 2025, the company operated 7,828 stores across the country, compared to 17,230 in the United States.
But recent years have brought headwinds. According to Al Jazeera, Starbucks’ once-dominant market share in China has plummeted from 34% in 2019 to just 14% last year, based on data from Euromonitor International. The primary culprit? A new generation of homegrown rivals like Luckin Coffee and Cotti Coffee, who have rewritten the rules of the game. Luckin, for example, boasts more than 26,000 locations worldwide—most of them in China—and has built its brand around aggressive pricing, tech-driven convenience, and a focus on take-away and delivery. A small Americano at Starbucks costs 30 yuan ($4.21), but at Luckin, the same drink retails for about 10 yuan ($1.40). It’s no wonder budget-conscious consumers are flocking to these alternatives, especially as economic uncertainty lingers.
Olivia Plotnick, founder of Shanghai-based social marketing company Wai Social, told Al Jazeera that Starbucks has struggled to keep up with local competition on price, footprint, and flavor. “Between domestic players such as Luckin and later Cotti Coffee undercutting Starbucks on price, footprint and flavour fuelled by tech, wider beverage competition from the rise of milk tea brands and delivery platform wars, Starbucks have lost their once very competitive edge,” she said. The so-called “delivery platform wars” have only intensified the pressure, as apps battle to offer ever-lower prices and faster service.
Starbucks, for its part, has tried to adapt—cutting prices for some non-coffee beverages and introducing new, localized products to appeal to Chinese tastes. The results have been mixed. Comparable-store sales in China increased 2% in the quarter ending June 29, a modest improvement after zero growth in the previous quarter, according to Reuters. But the broader trend remains clear: Starbucks is losing ground to nimble local upstarts who know how to win over Chinese consumers in both big cities and smaller towns.
That’s where Boyu Capital comes in. Founded in 2010 by Alvin Jiang, the grandson of former Chinese President Jiang Zemin, Boyu has offices in Shanghai, Beijing, Singapore, and Hong Kong, and a track record of investing in some of China’s top tech and consumer brands. “Together, we aim to combine Starbucks global coffee leadership with Boyu’s deep market insights and expertise to accelerate growth and create exceptional experiences for millions of customers,” Alex Wong, a partner at Boyu Capital, said in a statement.
The deal is also part of a broader trend among multinational brands operating in China. As Jason Yu, managing director of CTR Market Research in Shanghai, pointed out to Al Jazeera, Starbucks is following a playbook used by other global giants. In 2016, Yum Brands (the owner of KFC and Pizza Hut) sold a stake in its China business to local investors after a food safety scandal. McDonald’s sold a majority stake in its China, Hong Kong, and Macau businesses to CITIC and Carlyle Capital in 2017, later buying back some of its business after a period of rapid expansion. These partnerships have allowed Western brands to tap local expertise, streamline operations, and accelerate growth—McDonald’s doubled its outlets in China to 5,500 as of late 2023 and aims for 10,000 by 2028, according to CNBC.
For Starbucks, the partnership with Boyu Capital offers a much-needed shot in the arm. The company’s stock has fallen 17% in the past year, and in late September, it laid off 900 corporate staff and shuttered over 600 underperforming stores. While global revenue rose 5.5% to $9.6 billion in the most recent quarter, net income dropped 85% to $133 million. The challenges in China are a significant test for CEO Brian Niccol, who has spent much of his tenure trying to bolster the chain’s fortunes at home and abroad. Last year, he told Wall Street analysts that Starbucks needed to “figure out how we grow in the market now and into the future” in China—and that growth could come with the help of a strategic partner.
The new joint venture is expected to be completed in early 2026, after regulatory approvals are secured. Starbucks expects the total value of its China retail business—including proceeds from the sale, the value of its remaining 40% stake, and projected licensing fees over the next decade—to exceed $13 billion. The company’s long-term goal is clear: bring the Starbucks experience to more customers, in more cities, across China.
Whether this bold move will be enough to reclaim lost ground remains to be seen. But with a powerful local partner in Boyu Capital and a renewed focus on innovation and regional expansion, Starbucks is betting it can still find a winning blend in China’s rapidly evolving coffee market.
