Starbucks to form joint venture to run China business

Starbucks Forms Joint Venture with Boyu Capital to Boost China Operations

Starbucks has announced a joint venture with Boyu Capital, a leading alternative asset management firm, to operate its locations in China. The deal, valued at roughly $4 billion, will see Boyu hold up to a 60% interest in the joint venture, while Starbucks will retain a 40% stake and maintain its ability to license the brand and intellectual property.

The partnership is the result of a months-long review of options by Starbucks, which values its China business at over $13 billion. This valuation includes the sale of the controlling stake in the joint venture, as well as the value of both its retained interest and the ongoing licensing fees that will be paid to the company in the future.

Background and Context

Starbucks first entered the Chinese market in 1999 and has since grown to become one of the company’s largest markets, with over 8,000 locations across the country. However, in recent years, the company has faced significant challenges in China, including increased competition from local rivals such as Luckin Coffee, which has surpassed Starbucks in terms of store count.

Despite these challenges, Starbucks remains committed to the Chinese market, with CEO Brian Niccol expressing ambitions to expand the company’s presence to 20,000 or even 30,000 locations nationwide. The joint venture with Boyu Capital is seen as a key step towards achieving this goal, enabling Starbucks to tap into the vast market opportunity in China.

Market Trends and Implications

The deal comes at a time of significant change in the Chinese market, with many US companies rethinking their strategies in response to an economic slowdown and increased competition from home-grown brands. While some companies, such as Burger King’s parent company Restaurant Brands International, have chosen to exit the market, others, such as McDonald’s, have increased their investment in China.

For Starbucks, the joint venture with Boyu Capital represents a major opportunity to boost its operations in China and tap into the country’s vast consumer market. With the deal expected to close in the second quarter of fiscal 2026, pending regulatory approval, Starbucks is well-positioned to achieve its ambitious growth targets in China and maintain its position as a leading player in the global coffee market.