Name: Starbucks CEO on China Trade Tensions: 'We're Playing the Long Game'
Uploaded: 2018-10-30
Duration: 4 min 46 s
Description: CEO Kevin Johnson plans to open a new Starbucks store every 15 hours in China.

[ MUSIC ] Kevin, everyone's talking about the tensions between the United States and China, but you're betting big on China, you say that you're gonna open a new Starbucks store every 15 hours between now and the year 2020, are you at all concerned though that these trade tensions could disrupt your plans for growth? Well Suzie we've been in China for 20 years now. And we've really been playing the long game. We're now at about 3, 500 stores in China We are building China in China, for China. So if we look at our growth agenda in China we see significant opportunity going forward. Thus far we haven't seen impact from the geopolitical situation, but we're not immune from that. And we're aware of that, but we're still so pleased to be in China, and so much opportunity ahead. We're gonna stay focused on our strategy of growth. Well Starbucks is this iconic American brand, and that can work for or against you in this kind of political environment. I mean, to what extent could geopolitical Events impact you? One thing I do believe is the number of jobs that we create in China, the number of customers we serve in China. The investment we make in building our stores is from local Chinese contractors. We work with Chinese artisans. That make many of the art work and much of the design in our stores so we're really integrated in China and we're playing a long game. Tell us a little bit about the local compettition in China because we've been hearing more and more about this company called Luckin coffee, came from nowhere and now they're opening stores everywhere, they seem to be pretty popular. How do you feel about them coming in on your. You know, clearly, there are going to be more competitors. And we've always had competitors. So, it's no surprise that they're will be new competitors in China and new competitors around the world. But we have to stay focused on the experience we Create in our stores. We serve 100 million customers a week in our stores, and that's really where we set the brand. And you've also gotta compete on price, and [ UNKNOWN ] is dropping his price by a few dollars compared to a cup of coffee from As robots what do you gonna do about them? Look, we've always been a premium experience, a premium brand and for that we charge a premium price. Now we always mindful of the balance in pricing, but when we create that [ UNKNOWN ] experience it is unique, it's differentiated and it deserves a premium. So you're not gonna cut the price on your pump [ UNKNOWN ] That's what I hear you're saying. [ LAUGH ] That's right. I mean we look at pricing all the time. And we are constantly adapting in the marketplace. But I think the meta point is a premium brand, a premium experience, and we're gonna have a premium price. And you're partnering with Alibaba. I mean, how can they help you? Whether it's about lurking or just business in China So the Alibaba partnership is all about innovating around the concept of new retail. How can we take the Starbucks mobile experience and embed in in Alibaba properties? How do they bring things like artificial intelligence Delivery and other technology that can help us really bring to life not only the experience in our stores but bring it to life on the mobile app. So what are you counting for Alibaba to do for you in China? Well the first thing is they have 550 million. Users of their apps. They are embedding Starbucks mobile app in all of their properties. So that's gonna provide access to 515 million Chinese customers to Starbucks. Second is a partnership with Alima. Alima is owned by Alibaba. Alima will be doing our delivery. We've already implemented that in Beijing And Shong High and we're going to expand that even further. And what about Bill Ackman? I mean out of the blue here he comes and he buys a stake in Starbucks, and we all know he's a very aggressive. Activist investor, have you talked to him? Do you know what he wants to do? Look I don't get into who I talk to in our investor community but certainly I welcome a constructive dialogue and that's where we're headed. Most likely, you will be talking with Bill Ackman at some point, either he's gonna call you or you're gonna call. Call him and when that happens, what are you gonna say to him? Look, I talk to all of our large shareholders and welcome that opportunity to spend time with Bill Ackman, along with our other shareholders. This last 90 days, I think I've met with over 60 of our largest shareholders, and have a conversation with him like I do any of our other large shareholders. [ BLANK_AUDIO ]

Starbucks CEO on China Trade Tensions: "We're Playing the Long Game"

Leadership

CEO Kevin Johnson plans to open a new Starbucks store every 15 hours in China.