Starbucks announced Monday that it will hand over control of its China operations to Boyu Capital in a deal valued at $4 billion, marking one of the largest exits by a global consumer brand in the country in recent years.
The agreement creates a new joint venture in which Boyu will hold as much as 60% of Starbucks retail operations in China. Starbucks will retain a 40% stake and will continue to own and license its brand and intellectual property to the partnership.
The coffee chain said it expects the total value of its China retail unit to surpass $13 billion, combining the sale proceeds with the value of its remaining ownership.
The divestment comes as Starbucks faces a dramatic decline in market share in China, its second-largest market. The company has struggled against fast-growing domestic rivals that attract cost-conscious customers with cheaper drinks during an economic slowdown. Starbucks’ share of China’s coffee market plunged to 14% last year, down from 34% in 2019, according to Euromonitor International.
The deal signals a major shift for Starbucks as it seeks to stabilize its position in an increasingly competitive and price-sensitive environment.
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