The Coffee Club Business Plan

Topics: Coffee, Starbucks, Han Chinese Pages: 7 (2357 words) Published: May 22, 2012
Industry analysis
Coffee consumption in China is highly concentrated in large cities such as Beijing, Shanghai and Guangzhou. Also other cities like Wuhan coffee culture seems to expand. Recently coffee appeals to adventurous young, rich, and urban consumers. This is just because originally coffee is considered as a Western concept to most Chinese consumers. According to Subhuti (2003), the Chinese do not consume coffee because of its potential health value either in terms of modern medical data or traditional Chinese medical concepts. Rather, it has been consumed until now as part of the fascination with western culture that has grown during the past few decades. However the coffee culture is getting well known in China nowadays. Chinese coffee consumers are more exposed to Western influences and tend to look up to Western lifestyles.

China’s high growth economy and improved investment has attracted substantial foreign direct investments, which has led to rapid increases in the number of foreigners. Foreigners are at the high-end of coffee consumption and are also regular patrons of cafes. It is reported that Westerners and businessmen from Hong Kong and Taiwan represent 30% of customers at chained cafes such as Starbucks. Total volume sales of coffee in China grew by nearly 90% between 1998 and 2003, to 6,504.5 tones. Domestic production of coffee beans also expanded rapidly. China Agriculture Yearbook reports that China produced a modest figure of 3,573 tons of coffee beans in 1997, but by 2000 this had risen to 11,568 tones. The United States Department of Agriculture (USDA) estimated that this figure had risen to 13,000 tons by 2001. The expanded local production of coffee beans coupled with the low price of green coffee in international markets has contributed to the reduction of the retail price of coffee in China. This situation encouraged investment in coffee, which in turn resulted in a higher visibility in the retail market, particularly in large cities. The level of publicity and media interest in coffee also notably increased.

The Chinese coffee market is expected to grow by 70% in total volume sales between 2003 and 2008 to reach 11,073 tones. Euro monitor findings show that, within Asian countries, affluent consumers with a high degree of Western influence are more likely to accept a coffee culture (Hope Lee, 2004). According to (2010) there are approximately 200 million potential coffee consumers in China, which would potentially put China on a par with the major coffee consumer. The coffee market is growing by 30% annually. In contrast, coffee consumption worldwide is growing at an annual rate of only 2%. In the future China has the potential to become a major coffee-consuming country. As a consequence, the coffee industry and coffee shop operation represent highly promising blue sea business areas. This show that The China Coffee Market has endless Potential thus, China will play a pivotal role in the world coffee industry's future strategies.

Market analysis
After China transformation to socialist market economy, and many years developing, China became the world’s second largest economy country. China’s government controls a lot of the rights of the Chinese people and economy market, because China is a code law country, this will influence the local taxation laws and regulations, and the high taxation may decrease the Coffee shop’s profit. However, China owns over 1.3 billion people which provide a huge potential market for coffee shop.

Chinese tend to be dependent lifestyles, and this may influence their social class, so they likely to adapt their behaviors and view points to the extent approved by the social group, and when drink coffee becomes a fashion, most of Chinese will likely to follow it, maybe not because they love it, but just because of their dependent lifestyles. The growth rate of demand for coffee in China is increase by 15%-20% a year, and the world average...
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