Starbucks, the global coffeehouse giant, has announced a major strategic move in its China business—a $4 billion sale of a 60% stake in its Chinese retail operations to Boyu Capital, a Hong Kong-based private equity firm. The deal, disclosed on Monday, signals Starbucks’s long-term ambition to significantly scale its footprint in one of its biggest international markets.

Starbucks Hands Over Majority Control, Retains Brand Ownership

Under the newly formed joint venture, Boyu Capital will hold the majority stake, while Starbucks retains a 40% interest. Despite ceding operational control, Starbucks will continue to own the brand’s intellectual property and trademarks in China.

The company described the agreement as a “new chapter” in its 26-year history in China, characterized by strong competition and evolving consumer preferences. With this partnership, Starbucks expects to accelerate growth, improve logistics, and expand more aggressively into lower-tier cities and rural regions.

“This deal brings Starbucks not just investment, but local insight and infrastructure to help it grow deeper into China,” said Jason Yu, the Shanghai-based managing director of CTR Market Research.

Expansion Plans: From 8,000 to 20,000 Stores in China

Starbucks currently operates more than 8,000 stores in China, making it the company’s second-largest market after the United States. But with increasing pressure from homegrown brands like Luckin Coffee, Starbucks has set its sights on an ambitious target of 20,000 stores, according to its official statement.

Luckin Coffee, now the world’s largest coffee chain in terms of store count, boasts over 26,000 stores—most of which are in China. Its rapid growth, lower pricing strategy, and strong digital integration have challenged Starbucks’s dominance.

Starbucks vs. Local Rivals: Price, Flavor, and Tech Play a Big Role

Starbucks has traditionally flourished in China’s major urban hubs like Shanghai, Beijing, and Shenzhen. However, local competitors have excelled in reaching third- and fourth-tier cities while offering more affordable prices and tech-driven convenience.

For example, a basic Americano at Starbucks costs around 30 yuan ($4.21), but the same drink sold at Luckin averages just 10 yuan ($1.40). Frequent discounts and in-app loyalty programs have also made Luckin a popular choice among younger Chinese consumers.

“Starbucks has struggled to compete on price, personalization, and tech innovation compared to local brands like Luckin and Cotti Coffee,” said Olivia Plotnick, founder of Wai Social in Shanghai.

A Trending Strategy Among Global Brands in China

Starbucks’s move mirrors strategic decisions made by other major international brands to stay competitive in China. KFC and Pizza Hut parent company Yum Brands partnered with Primavera Capital and Alibaba’s affiliate in 2016 following a food safety issue. McDonald’s also sold a majority stake in its China operations to CITIC and Carlyle in 2017—a decision that helped double its number of outlets to over 5,500 by the end of 2023.

Like those brands, Starbucks is looking to leverage the local expertise, supply chain advantages, and commercial know-how of Boyu Capital to pave the way for faster expansion across China’s booming coffee culture.

The Road Ahead for Starbucks in China

With renewed investments, stronger logistical backing, and a streamlined local partnership, Starbucks hopes to regain ground and reshape its presence in China’s hyper-competitive beverage market. As the company pushes to adapt to changing tastes and price-sensitive consumers, the partnership with Boyu Capital represents a bold strategy that could redefine the future of the global coffee chain in Asia.