Our case analysis is themed on business communication. Hey, hey, Ethan, new hairstyle, I like it. Oh, so sweet. How's it going? Pretty good. So today, Grand Halla, take with thin foam as usual? Oh my god, you got me! Is my usual system available?

Of course! Your throne is awaiting my liege. Wouldn't be the same without you in it. Just go ahead, it's all wiped down, and your usual brew is coming right up. Thank you so much. Exactly. Office is stuffy, home is not for work. This spa is perfect to be focused without noise. My mobile office for sure. And yes, that's exactly the third place. Not at home or at work. Right here, you can just be yourself.

Whether claiming for a plan or taking a breath, Starbucks is always the best choice. Here's a coffee, Ethan. Have a great one. Thank you. Hey, Ethan! Julian? What a surprise. Didn't expect to see you here. Do you allow, modify, take this seat? Of course not. Take a sit. Haven't seen you since last pitch. Why are you here? Well, meeting a client in 10 minutes. This place is quiet for chats. No awkwardness.

Grabbed a coffee first. Way better than the office break room. You here to work too? Yes. Nowhere's better than here. Don't leave after the meeting. I'll buy another. Let's chat through last pitch. You bet. I'll definitely find you once I'm down. See you later. See you later. Starbucks again? That's too boring. Like, it's just selling a luxury vibe instead of good coffee. But in 2023, where else can I...

Hey boss, what's up? Wait, wait, wait. You look like you just need to pick me up right now. Don't tell me you start choosing which coffee spots. of you know Starbucks used to be nice now it's just kind of forced this day the local cafe spots get it fast cheap and not trying too hard to be fancy oh have you heard of that multi-flavor latte multi-flavor latte sounds interesting but is it good boss you're missing out that one is now located a must try and it's going viral and literally all over my FYP see that that's true Most importantly, you don't have to wait around the table. Just order, grab and go.

Today's my first shot. You should come with me. You're right. Forget about Starbucks. Let's get the latte. Let's go. Order 137. Maltai flavor latte. Um, excuse me. I want two more of those. Happy checks, please. Sorry, lady. Order via phone. Order screen. Payment first. Two minutes wait. Okay. That's okay. Ding. I'm down. Okay. Ta-da. Your lattes. So quick. Thank you. Wow, this is legendary, isn't it?

Yeah, it's truly amazing. Excuse me, may I know what's the secret of this latte? Well that simple Just a creamy latte with a dash of Maotai the famous Chinese liquor And it also our viral signature these days Bravo you said it Yes what a nice mix There no let save it a moment nonsense We don't have to dress up or act sophisticated. This is what we need. It's just a cup of coffee. Yeah, just coffee. It's much better this way. Let's get back to work.

Let's go. Good evening, everyone, and welcome to Global Pals. where we explore how culture shapes business success. Tonight, we'll bring up a story that's been simmering for decades. The ups and downs, the reflections of Starbucks in China. Once a symbol of urban sophistication, now a mirror for something deeper.

What happens when a global brand meets a fast-evolving local identity? To unpack this journey, we're joined by two important guests tonight. The first is Mark, a market analyst specializing in GCCS, also global consumer culture sensitivity. Welcome, Mark. Thank you, Luna. Hello, everyone. I'm Mark, and I'm very glad to be here. Please. And the next one is Dr. Chen, an expert in intercultural communication identity studies.

Welcome, Dr. Chen. Hello, everyone. Dear audience and hosts, I'm Dr. Chen. Today, I'm really glad to be here. And thank you for having me, Luna. I'm so glad, too. So please take a seat and let's start from the very beginning. Way back in 1999, when Starbucks first entered China with a mission to introduce coffee culture, they did it and gained some dominance in China. Mark, from the business perspective, what made their early success so remarkable?

Well, it wasn't just about coffee. It was a reflection of how people wanted to see themselves. And I think there are two main reasons for Starbucks' intercultural acculturation. Firstly, Starbucks didn't sell caffeine. It offered a sense of belonging. And for China's emerging middle class at that time, the green logo represented the access to a global lifestyle. Modern, refined, and connected, these also reflect Starbucks' high global consumer culture sensitivity.

They noticed the subtle needs of the customers. And the second factor is the third place concept. Positioned between home and office, it's aligned naturally with Chinese white-collar's aspiration for a new identity in this changing society. Therefore, each cup of coffee carried a quiet message that you were part of something larger. Something larger, that's fascinating.

And Dr. Chen, from the cultural identity perspective, what do you think is the secret to their early success? Well, I agree to the previous analysis and from cultural identity perspective, Starbucks' success in early years maligned their close connection with Chinese customers and the constructions of the culture identity. And Starbucks noticed something subtle that it can never be inherited, it is performed. So only one hand in early 2000 China, drinking coffee wasn't about taste, It was about a kind of self-expression, and Starbucks was a stage for those young professionals to rehearse this kind of modernity.

On the other hand, Starbucks localized with care, from Yunnan coffee beans to stores housed in historical buildings, sending a message, global but grounded. And this sensitivity has turned into a ritual of new culture identity, self-definition, and a sense of belonging. And in this sense, Starbucks did not just adapt to the culture. It participated in creating one. It participated in creating one, so beautifully put.

But after almost two decades of glory, things began to shift. At around 2018 sales slowed competition rose especially from some domestic brands like La Quinta we can see from the retail their market share in China has dropped from over 70 to only 14 last year Apparently, the last is Sparkle and Dominance in China. Mark, could you please analyze for us what went wrong?

Well, Starbucks do have the ambition to expand their market share in China. But it's really a pity that in this process, their intercultural sensitivity seemed to weaken. According to their financial report last year, although the number of stores in China account for 20% of its global stores, its profit contribution rate of China's Starbucks stands at only 9%.

The main reason from my perspective is that by 2018, the Chinese consumers were no longer seeking for Western validation, as they called it. Instead, they had viewed confidence in their own cultural identity. Yet Starbucks seem to still tell the same story, one centered on global sophistication, while local brands like Luckin Coffee, as you mentioned, has started to speak in another language that is better suited to the times.

Digital convenience, affordability, and local relevance. Take Luckin Coffee as an example again. Instead of being third place, they create efficient spaces, fast, data-driven, and tailored to everyday routines. That is what the customer really needs. Wow. So the same coffee, but a totally different conversation. And it seems like there are some problems and difficulties all this year.

So there are some challenges. Can this be inevitable? Dr. Chen? Oh, for me, in a way, I would say yes, because market is always changing and challenges always exist from intercultural perspective, which is my area. it never stays still. When Chinese customers' local identity strengthened, the global narrative lost its sparkle. And Locking Coffee was a really good example. So Starbucks' sluggish market performance was an arrogance. It was just inertia. Inertia, the exact word. Right. It is also the inertia that brings us to today, 2025, where China's coffee landscape has transformed dramatically.

Okay, tonight, Starbucks journey reminds us what intercultural communication truly means, not just to understand the differences, but also growing through them. After all, we all wish Starbucks could reorient and re-rise in China. At last, thank you Mark, thank you Dr. Chen, and thank you all for joining us on Global Pulse.