Selling a majority stake to locals looks smart.
Starbucks (SBUX $85 -7% YTD) announced last week that it would sell up to 60% of its China retail operation to Boyu Capital for a cool $4B.
Cue the familiar chorus: One more American icon fed into the dragon’s maw. The China-Century crowd warmed up its vocal cords, harmonizing on that old favorite, “America Is Managing Its Decline.”
At first blush, you can see why.
Another global brand shares a cab to the airport, stage left. Dunkin’ bowed out years ago. Krispy Kreme grabbed its hat. Barron’s went full misty-eyed, headlining its take: “Starbucks Bids Adieu to China.”
The Financial Times’s Lex column framed it as further proof that foreign logos no longer sparkle in China’s price war, “brand prestige” being about as useful as a Louis Vuitton umbrella in a typhoon. Reuters said US brand power alone “no longer carries the day.”
Forgive me, though, if I don’t join the mourners’ guild.
I’ve never quite gotten over Disney blithely relinquishing its theme-park souvenir empire to a local Japanese partner, a decision that still pays that partner dividends on a decidedly non-rodent scale — and could have been avoided with a 10-minute chat with any high-school exchange student. Dumb, dumb, dumb. Everyone in Japan knows souvenirs are the whole story. Tickets? Pff.
No, I prefer when foreign firms team up with locals instead of insisting their headquarters’ bullet-point revelations translate on arrival. Cultures differ. Keeping them separate is what countries are for.
So before we strike up the dirge, let’s inspect whether this is truly Starbucks beating a retreat or planning a strategic reroute…
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