Marketing Case Study: Starbucks in China: Selling Coffee in the Land of Tea

Case Study: Starbucks in China

Question One:

During Starbucks entry into the Chinese market, it was imperative that they took into account the one-party dictatorship type of political regime that would ultimately influence the manner of their operations. The country also is still considered a communist country which necessitates that a foreign firm’s entry into the market should be fully approved during the initial stages. The legal aspects were also restrictive to foreign firms in terms of bureaucracy involved that were eased after the country agreed to join World Trade Organization in 2001.

The riskiness of entering such market with the aforementioned political and legal factors relates to the uncertainty that clouds any possible change that might occur with a change in the regime. The next regime could have decided to close the market to foreign firms without any notice and there would be no legal strategies for restitution. Secondly a one-party dictatorship regime had the right to direct nationalization of properties that were owned by foreign investors to help the country remain in control of their own market, which would prove costly to Starbucks after resources and effort had been put in to expand their global expansion.

In terms of changes in the legal concept relating to foreign investments,