Though Luckin Coffee is losing money every month to try to undercut Starbucks on price, Starbucks China is still an amazing foreign retail success story, and I see two reasons. 1. They adapted to China and Chinese tastes. 2. They maintained their core values.
Meantime, Starbucks has done an amazing job at recruiting, retaining, and training employees. Annual turnover rates 30% or higher are common in China, according to data compiled by my firm. Yet, Starbucks has far lower turnover than the industry average by offering good compensation packages, work environments, and career paths.
One barista who has been working at Starbucks for five years told me, “I feel taken care of by management. I enjoy my job and I enjoy working here so I expect to stay longer.” That is a rare comment in a country where job hopping is the norm among younger workers.
one more piece
Far too many multinational companies treat their Chinese employees as second-class citizens with little career development. Their senior management ranks are full of foreigners, Taiwanese or Hong Kongers without any mainland Chinese representation.
Starbucks understood that the value proposition it was offering Chinese was different than in the U.S. They were able to adapt their business model to fit China while keeping their core values. So far, it’s working pretty well.
I am color blind and nationality blind when it comes to placements. The right person is the right person no matter what passport he or she is carrying. Some company ask for a nationality and we can do that, but we would rarely recommend that. A lot of China indigenizing plans have ruined companies that once looked very good. A plan to indigenize should only be used when qualified Chinese are recruited and developed. I cringe when I see the Westerners go home when the finance people say it is time. Taiwanese and Hong Kong people can do work, but they are no panacea. To Western companies they are another non Western Leader, and they often do not get along with the Chinese Mainlanders. Some of them are excellent.
Starbucks China: Secret Sauce
Starbucks China has not given up its Starbucks culture. It has successfully recruited Chinese people who want to save the world. I do not know the details as am not their recruiter, but I guess they placed a leader who had an eye for the culture and for who else fit the culture. You cannot take people who have no interest in great leadership and make them into caring leaders and save the world people. You must recruit leaders who have some passion for culture development and give them a path to find more. Further, Starbucks China has leaders who care about workers, and that is critical to any good culture. Just training will never do that or else the results are quite temporary. There is a lot to learn from Starbucks China.