As Chinese consumers increasingly seek higher-quality and diverse products and services, foreign companies are adapting to meet their demands and tap into the vast potential of the market.
Consumption has remained a cornerstone of the Chinese economy, contributing significantly to GDP growth, accounting for 83.2 percent in the first three quarters of this year, as reported by the National Bureau of Statistics.
During this period, per capita spending on services made up 46.1 percent of total per capita expenditure, marking a 2 percentage point year-on-year increase, according to the bureau.
Belinda Wong, Chairwoman and CEO of Starbucks China, highlighted that China boasts the world’s fastest-growing market and the largest consumer base. This positioning enables companies like Starbucks to swiftly innovate their product offerings and introduce a wide range of blended coffee products tailored specifically to Chinese tastes.
On October 17, the coffee giant introduced the Starbucks Intenso Collection exclusively for the Chinese market. This collection, served in distinctive green cups, features four flavors designed to cater to the diverse preferences of Chinese coffee enthusiasts.
In a significant milestone, Starbucks recently launched its new coffee innovation park in Jiangsu Province, achieving a full-scale vertical integration “from bean to cup.” This development positions China as the first market in Starbucks’ global network to achieve this level of integration, allowing the company to respond more effectively to the evolving preferences of Chinese customers.
Belinda Wong expressed pride in the company’s ongoing investments in China, nearing $440 million in Kunshan, Jiangsu Province, and Shenzhen, Guangdong Province.
The scale of China’s coffee industry has exhibited remarkable growth, increasing from 165.1 billion yuan (approximately $23 billion USD) in 2021 to 200.7 billion yuan in 2022. Projections indicate it could reach 369.3 billion yuan by 2025, according to a report by domestic commercial data analysis firm CBNData and Shanghai Jiao Tong University.
Starbucks currently boasts a presence in over 6,500 branches across more than 250 Chinese cities, including 800 county-level markets. Driven by the immense growth potential of the Chinese market, Starbucks is committed to long-term development in the country.
The recent Mid-Autumn Festival and National Day holiday period saw a surge in travel, underscoring Chinese consumers’ willingness to spend, particularly in the accommodation and catering sectors. InterContinental Hotels Group (IHG), a multinational hospitality giant headquartered in the United Kingdom, reported a remarkable 43.2 percent year-on-year revenue increase in the Greater China region during the third quarter of 2023.
The Greater China region has witnessed continued growth in hotel development since the start of the year, aligning with the recovery of China’s culture and travel market. IHG achieved its highest number of signed projects in a single quarter since 2021.
According to Lu Haiqing, Chief Corporate Affairs and Strategic Relations Officer of IHG Greater China, “China is a vibrant market growing at the fastest pace in the world for IHG.” To cater to Chinese customers, the hotel giant introduced Hualuxe, a brand infused with traditional Chinese culture and aesthetics, in 2012. As of September 2023, Hualuxe operates 20 hotels in China, with 24 more under construction, encompassing major cities and popular holiday destinations such as Beijing, Xiamen, and Kunming.
China’s market potential is driven by the overall trend of consumption upgrading among its population, providing IHG with opportunities in the middle-end market. Holiday Inn Express, a middle-to-high-end hotel brand under IHG, caters to customers seeking quality hotel experiences, with nearly 500 hotels in operation or under construction across 31 provincial-level regions in the Greater China region.
With the Chinese economy on an upward trajectory and bolstered consumption capabilities, IHG is confident in its future development in China, its second-largest global market. The group plans to strengthen its collaboration in China and offer diverse travel experiences to meet market demand and serve local customers.