The JV called Beijing Mei Da Coffee was set up in 1999 when Starbucks first entered the China market. At the time, the US cafe giant was restricted by rules governing foreign ownership levels so established a JV with H&Q Asia Pacific whereby the private equity firm owned a majority stake in Beijing Mei Da. At the time, Starbucks wrote in an option to increase its stake after five years, at a price to be negotiated. Beijing Mei Da currently operates 60 Starbucks retail stores.
The move to increase its stake to 90% is expected to pave the way for Starbucks' accelerated growth in the region. Jinlong Wang, president of Starbucks Greater China, says: ôWe are now poised to expand rapidly in this important region two years before the Beijing 2008 Olympics.ö Beijing Sanyuan group, whose major activity is the manufacture and sale of dairy products, will continue to own around 10% of Beijing Mei Da.
In 2005 China accounted for less then 10% of StarbucksÆ $6.4 billion revenue but it is forecast to be one of the coffee companyÆs largest markets. As of October 1, 2006 Starbucks had 430 stores in Greater China including more than 190 stores in 19 cities on the Mainland.
Starbucks has been increasing its direct ownership in its China operations in phases. In Shanghai and Taiwan, the company initially had a 5% stake in a joint venture with TaiwanÆs Uni-President group. In 2003, Starbucks announced that it would acquire a further 45% for $21.3 million, making it a 50:50 partnership. Then in June 2005, Starbucks increased its stake in its Hong Kong joint venture with partner, MaximÆs Caterers from 5% to 51%. Financial terms of the deal, which included MaximÆs taking a stake in StarbucksÆ Chengdu operations, were not disclosed.
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