Economy

Coffee Wars In China: Starbucks vs. Costa

Both the American and British coffee chains have big plans for expansion in China. Starbucks, which has opened 500 stores since it first arrived in China in 1999, is giving more autonomy to its Chinese managers to tailor shops to local tastes.

A Starbucks in Shanghai (Joris Leermakers)
A Starbucks in Shanghai (Joris Leermakers)
Wang Fang

BEIJING - In the capital's Blue Harbor International Business District, there is a Starbucks on one of the outer street corners, and a Costa in the central courtyard. While local Chinese coffee shops dread the opening of a Starbucks in their neighborhood, the British chain shop goes out of its way to try to be as close to as many Starbucks as possible.

The American coffee giant first came to China in 1999. Currently there are 500 branches, with the aim of 1500 more by 2015. Costa entered China in 2006, has just 100 shops now, but is hoping to reach its goal of 2500 stores by 2018.

Expansion, expansion, expansion: that's clearly the China policy for both coffee giants.

Starbucks has recently carried out a global restructuring. In order to strengthen its business in China, the company has focused on particular local requirements. "From selecting the location to the designing of the store, the Chinese regional office is authorized to make its own decisions," says Wang Jingying, the new president of Starbucks China.

The American company is counting on building up its chain in first-tier cities like Beijing and Shanghai, two to three times faster than before, Wang stated. It will also expand its rate of setting up shops in in the second and third-tier cities. Last year alone, Starbucks entered 13 new Chinese cities.

Costa's tactics are those of a boxer getting into the ring to spar with the champion. Almost all its shops are right beside a Starbucks. In terms of expansion, it's the No. 1 in China, with two to three stores opening each week. By the end of this year, it will own 170 stores. Its ambition is to have one-third share of the coffee chain market of China, according to a recent company announcement.

In June this year, Starbucks signed an agreement with Maxim Group, its long-term partner, to take over 100% of its ownership in certain provinces, hence it now has full control of more than half of its Chinese retail stores.

Meanwhile, Costa is taking a much different approach. It has signed a cooperation agreement with the Beijing Hualian Group, a leading Chinese retailer, betting on rapidly entering high-end business complexes through the retailer's 70 supermarkets and department stores as well as 10 shopping malls. To shorten the opening time of its new stores, Costa also gives its China office plenty of autonomy, just like its American rival.

The pace of expansion seems to be the first consideration of both chains. Whoever ends up conquering the most territory will be China's king of coffee.

Read the original article in Chinese

photo - Joris Leermakers

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Green

In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.


It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park

Xinhua/ZUMA

Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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