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Kevin Johnson, chief executive officer of Starbucks Corp., speaks during a Bloomberg Television interview in Shanghai, China, on Thursday, Aug. 2, 2018. Starbucks is joining forces with Alibaba Group Holding Ltd. to begin delivering its drinks and baked goods in China, rolling out an effort to stave off competitors and turn around sales in the country.
In Starbucks’ fiscal third quarter, its China business — which has historically been a growth driver for the company — weakened slightly. While Starbucks’ revenues in the Chinese market grew 17 percent, its same-store sales, a key metric for retailers, fell 2 percent.
But “most of the growth of transactions in China is coming from our new store growth,” Starbucks CEO Kevin Johnson told Cramer on Wednesday.
“Now, yes, we did have a negative 2 percent same-store sales comp last quarter, but, you know, if … I look at what we’re doing here with Alibaba and the digital flywheel and enabling delivery, this is like rocket fuel for the digital flywheel in China,” he said.
The key to succeeding as a U.S.-based business in China? For Johnson, it’s all about embracing the culture.
“The approach that we’ve taken has been one of approaching the market with humility and respect for the Chinese culture and the Chinese consumer,” he told Cramer, adding that Starbucks’ research and development teams have tinkered with some of the company’s flavor profiles to better fit the Chinese consumer.
“We hire local contractors to build our stores. The store design team sits here in China,” the CEO said. “So by embracing the Chinese culture and approaching the market in the right way, you know, we believe that you can really have a very symbiotic relationship and grow a very health business like Starbucks in China by taking that approach.”