Starbucks announced on November 3 that it would sell a majority stake in its Chinese business to investment firm Boyu Capital for $4 billion.
According to the terms of the agreement, a joint venture will be formed through which the equity company will control 60% of Starbuck’s retail operations in China.
The world’s largest coffee maker will retain a 40% interest in the business and will remain in control of Starbucks’ brand and licensing as well as the intellectual property rights over the new venture.
The coffee chain expects the value of its retail business in China to surpass $13 billion, which includes the proceeds from the deal with Boyu Capital, its stake in the new enterprise and the current licensing deals.
“The partnership between Starbucks and Boyu marks a new chapter in Starbucks’ 26-year journey in China, combining Starbucks’ globally recognised brand, coffee expertise, and partner (employee)-centred culture with Boyu’s depth of understanding of Chinese consumers,” a press release says.
“Together, under this new joint venture, the two companies will elevate the Starbucks customer experience, accelerating innovation in beverages and digital platforms, expanding into new cities and regions, and deepening connections with customers through meaningful local relevance.”
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Fierce competition among the reasons behind the deal
China is the second-largest market for Starbucks outside the US with over 8,000 locations throughout the country.
The Seattle coffee chain entered the Chinese market almost 30 years ago and has been credited with growing the coffee culture in one of the largest economies in the world.
But the US giant has been struggling in recent years due to the COVID-19 pandemic, the economic downturn and the fierce competition from homegrown brands such as Luckin Coffee, who offer cheaper alternatives.
Founded in 2017, the Beijing-based competitor has quickly taken a great chunk of the Chinese coffee market by attracting millions of loyal customers.
The brand, which can be found in over 26,000 locations in China alone, targets Gen Z drinkers by offering TikTok-worthy beverages through cashier-less stores at heavy discounts that can reach between 30% and 50%.
According to analysts, however, Starbuck’s largest rival is operating at a loss due to its pricing strategy, which makes its business not sustainable long term.
“Starbucks is always striving to be profitable on a single occasion… Usually, trying to target a minimum of 15% margin per store is our estimation,” said Danilo Gargiulo, a senior research analyst at Bernstein US.
“In the case of Luckin, the idea is I want to grow in awareness… even though at the beginning, this means that I might need to be suffering from some smaller losses on a per store basis.”
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Boyu Capital saves Starbucks China
Although the prognosis of Luckin Coffee’s future seems uncertain, research conducted by Euromonitor International suggests that Starbuck’s market share sharply declined from 34% in 2019 to 14% last year, which has urged the newly appointed Chairman and CEO, Brian Niccol to find a solution.
It was disclosed that Starbucks is looking for a partner to help the company further grow its Chinese presence and in July 2025, Niccol said they’re evaluating 20 offers for partnership.
“We’ve found a partner who shares our commitment to a great partner experience and world-class customer service,” he said after the deal was announced on Monday.
“Boyu’s deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions.”
“Together we will write the next chapter of Starbucks’ storied history in China,” Niccol concluded.
Alex Wong, a partner at Boyu Capital, believes the US coffee chain has built a deep connection with Chinese consumers and that strategic partnership will allow for further innovation in that space.
“Together, we aim to combine Starbucks’ global coffee leadership with Boyu’s deep market insights and expertise to accelerate growth and create exceptional experiences for millions of customers,” he said.
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Geoffrey H. Latayan 
Vivien Bernardino