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07/11/2013 07:08 GMT | Updated 07/11/2013 07:08 GMT

To What Extent Should Starbucks Glocalise its Products in China?

Starbucks, a "postmodern brand", is also labelled as "an archetypical brand" that turns a "physical", "tangible" business idea into a "big", "abstract" concept. (Haig 85) From a two- dimensional brick-and-mortar store to a three-dimensional brand with high "emotional power", (Haig 87) Starbucks has thrived and grown with larger economies of scale.

Since its birth in 1987, Starbucks has continuously expanded into new markets like China to become one of the world's most recognised brands within 26 years (Haig 87). While Starbucks' marketing success is "legion" since the "gourmet coffee shop" had transformed into a "mainstream consumer brand", (Thompson and Arsel 631) it has, in many ways, strayed from some of its mission and founder Howard Schultz's original vision, in the China market, where the "new middle class" emerge as China's powerful consumers (Forbe). One significant factor that leads Starbucks China to stray from Starbucks' global brand image at times is "glocalisation", which is the hybrid product of globalisation and localisation that may be inevitable in today's global market.

The phenomenon of glocalisation occurs largely due to the increasing competition between businesses of the same industry (One Planet Education). However successful Starbucks may be in terms of its high growth potential and strong revenue figures in the China market, one may still question the positive and negative implications of the super-brand's glocalisation approach. For instance, Pulitzer Prize winner Friedman writes that "glocalisation is the product of freedom" and should "enhance society" instead of "overpowering them". (One Planet Education) Arguably the political and social climate is the opposite of Friedman's proposal, since China has yet to become liberal, for instance, in trade (China Context), and that patriotic rebellions against Starbucks' contribution in westernising China exemplifies an "overpowering" influence (BBC).

Although the coffee company has apparently gained entrance into this traditionally tea-drinking market by introducing tea-themed products including green tea cheesecake (glocalising its products to fit traditional Chinese culture), (CNBC) after it has created the demand for the "rising middle-class consumers" (Forbes), Starbucks needs to step forward to sustain consumer loyalty. Would glocalisation still be the right approach? A study of Starbucks' current glocalised marketing approach can provide insight into this investigation, begging the question: "To What Extent Should Starbucks Glocalise its Products in China?"

ABUSE OF LOCAL CUSTOMS AND CORPORATE SOCIAL RESPONSIBILITY

If glocalisation is a baby born to globalisation and localisation (One Planet Education), then it may have the advantages and disadvantages of its parent concepts. Many customers interviewed at Starbucks' Wanjia Shopping Centre stated that they thought the green tea cheese pie launched to celebrate the Chinese New Year with the oriental element of green tea was far too sweet and oily. Observational research demonstrates that green tea cheese pie was originally a product in the China Starbucks market, but due to unknown reasons that staff are unwilling to disclose, is no longer sold. The reintroduction in the market during the Chinese New Year Festival, based on the customers' feedback, was overall unsatisfactory. The combination did not result in having Western products with local flavours that attracted local customers, based on the informal interviews with 10 customers from China and abroad. Meanwhile, Manager Liu from the same store said that Chinese New Year products were inspired by the Chinese traditional culture, which was not originally intended by Starbucks China's marketing department. Liu said that she personally considered that Starbucks prefers glocalisation across the globe. The intention of introducing Chinese-culture-oriented products during the festival periods is to blend Chinese culture with Starbucks' original Western products. In order to achieve this goal, the shop employees introduced the cultural elements to each customer who visited the store. Nevertheless, the results were not as satisfactory. When asked how well the Chinese New Year merchandise sold, Liu admitted that those glocalised products did not sell well at all. Only about 20 products were sold each week (for approximately 10 weeks in January and February), despite shop assistants and baristas' efforts in marketing them to the customers.

Hui Zhao, a graduate from a top business-school in China, who regularly purchases coffee from Starbucks and its rival companies in China, as well as Starbucks in the U.S., commented, "Starbucks' glocalisation has been merging the most ugly facets of Chinese culture in the modern society into the company's original corporate culture." He urges us to evaluate its glocalised products.

What Manager Liu from Starbucks' Shenzhen store admitted, "not easily recognised by either Chinese or foreign customers as Chinese-culture-inspired", has been condemned by Zhao as brand dilution and Corporate Social Responsibility (CSR) contamination. Ironically, while Starbucks' global Environmental Mission Statement is:

Recognise that fiscal responsibility is essential to our environmental future.

Instil environmental responsibility as a corporate value.

Encourage all partners to share in our mission. (Starbucks' Official Website, UK),

In China, due to the focus on glocalisation strategies and tactics, one of the most environmentally-unfriendly contemporary cultures is blended into this otherwise mission- fulfiling company: tendency to bribe senior officers with expensive gifts, that are usually heavily-packaged. (China Context) Those over-packaged Starbucks moon cakes are sarcastically assimilating the corruptive social fault. (Xinhua News Agency)

Another business school graduate and "white-collar" employee who would be part of Starbucks' targeted segment in China, Ms. Liu also suggested that Westernised moon cakes with coffee flavours are uncommon among local people in terms of taste, "they are neither attractive in terms of flavour nor the level of loyalty to tradition people look for when selecting moon cakes for family reunion purposes during the Festival." According to Liu, families she knows would not purchase from the Starbucks' moon cake product line. The product portfolio is untraditional and not particularly tasty, lacking the symbolic level demonstrated by cheaper moon cakes with purely local ingredients such as yolk, produced by Chinese foodstuff companies like Daoxiangcun. Whilst a piece of a typical Starbucks' coffee-flavoured moon cake would cost around RMB 60.00 (Starbucks Official Website, China), a piece of Daoxiangcun moon cake only costs RMB 5.00.

Starbucks employees who do not wish to be named also said that the main customers for moon cakes are Chinese nationals, and hardly any Westerners purchase those products, suggesting that most people buy those cakes as gifts to impress business partners, usually executives, by selecting the more highly-priced moon-cakes. Liu agreed, asserting that, "those people are paying for the fashionable style by showing off Western tastes. Honestly, no one, Chinese or non- Chinese, would seriously like those moon-cakes, hybrid products of Western flavours and despised Chinese bureaucratic customs." The countless layers of packaging cover the original scent of moon-cakes, metaphorically the beauties of Chinese culture, and become mountains of wastes after the Festival. It is like over-applying makeup on a six-year-old, whose natural beauty would be disguised. (GreenBiz Website)

In addition, upon reviewing the core principle of Starbucks' focus on Corporate Social Responsibility (CSR) and the Environmental Mission Statement above, one may easily find the inconsistency between a socially-responsible community "Third Place" based on the Italian model, and the negative aspects introduced by the hybrid product line born to a blend of two potentially incompatible cultures. The Starbucks brand can face problems like dilution should major media companies report on this example of heading towards the wrong direction in terms of CSR and Environmental Mission. (China Context) Moon cakes have now become a status symbol in the contemporary Chinese society. (Culture Briefings Website) The price to be paid by Multinational Corporations (MNCs) like Starbucks by compromising to this social custom through glocalisation could be the lost of consumer loyalty and brand dilution.

REASONS WHY STARBUCKS SHOULD CONSIDER LESSENING ITS GLOCALISATION

Firstly, China's shift towards a tertiary-industry-oriented-market is yet to be developed. Services may not be up to the global Starbucks standard. Due to its demographic features, this populated country cannot be easily occupied with community-centred stores where employees know frequent drinkers by first names.

Secondly, the Chinese rising middle class has pushed Starbucks, as it attempts glocalising its products, to transform its emphasis on community and coffee as daily necessity to a "Xiaozi trend"1, a desire amongst the Chinese urban youth to 'express individuality and status' through participating in Western consumerism" (Colangelo 29). In this regard, Starbucks' globally offensive, rather than defensive, marketing approach has turned more passive in China in order to meet the needs of the Xiaozi class profitably.

Thirdly, to align with local customs or culture, Starbucks has, to certain extent, failed to meet its CSR and environmental mission to introduce over-packaged products into its product portfolio. While this may not be necessary, it is a way to help Starbucks continue its high market share and market leadership in the China market, since rivals such as Costa have also launched similar products. (Costa China's Official Website)

CONCLUSION

Through comparison and contrast, Starbucks' glocalised marketing approach in China may lead to potential brand contamination, since existing brand dilution has attracted media attention and discouraged loyal customers. Although Starbucks China succeeds in creating a demand for the coffee-culture and leading a trendy lifestyle emotion-wise, it largely is unsuccessful in creating a sense of community amongst China's "Xiaozi" urban youth, as demonstrated through its marketing mix, and therefore failing to stay coherent with Starbucks' philosophy, marketing concept, and brand image guidelines. As the website Lab Brand Innovations suggests, too much localisation can become "a detrimental strategy" for global conglomerates, and lead those companies to lose both their "foreign" and "international appeal".

From Italy2 to the United States, to emerging markets including China, Starbucks has altered significantly from Howard Schultz's original vision. The ironic indifference towards Starbucks by the Italians and global coffee connoisseurs may be set aside by those who view Starbucks' success worldwide as the successful big picture. However, brand dilution, partly due to glocalisation in China, is a serious issue that may ruin the world's most successful brand to certain degree, financially and non-financially. It is recommended that Starbucks find the most comfortable extent to which it could balance glocalisation and localisation through carefully evaluation, especially what elements to "glocalise" so that local "bad" customs are not included.

2 Italy is the main inspiration for Schultz, but ironically, Starbucks has not yet managed to win the Italians' favour after an unsuccessful attempt to enter the Italy market. (CNBC)

*Note: The following article is part of my IB Extended Essay.

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