Global Economics

Forbidden Starbucks


Starbucks has been banished from Beijing's Forbidden City. China says its cultural history and American coffee chains shouldn't mix

Want to grab a Green Tea Frappuccino or a Grande Latte? For the past seven years, visitors to Beijing's 587-year-old Forbidden City have had that option as they tramped through the historic complex of sprawling gardens and halls that takes up 178 acres at the heart of Beijing. But that ended when Starbucks (SBUX) finally shut its store on July 13 after a storm of opposition from patriotic mainland Chinese. "The Forbidden City is a cultural and historical site, while Starbucks represents the fast pace of metropolitan life," says Maggie Chen, a 26-year-old membership salesperson at a Shanghai golf club. "The two should not be mixed together," she says, echoing the sentiments raging across the Internet in recent months.

The campaign to oust the Seattle-based coffee chain from one of China's most historic sites was led by a popular news anchor from the country's national television broadcaster, CCTV, who ignited a firestorm after taking up the issue on his popular blog last year. "Starbucks has good quality stuff, but it is still a symbol of America's low-class food culture," wrote Rui Chenggang on Jan. 12, 2007. "It's maybe O.K. to have a Starbucks around the Forbidden City. But having one inside the City is inappropriate. This is not globalization, but an erosion of Chinese culture."

Expanding Elsewhere

Starbucks, for its part, downplays the importance of the store's closure and says the company was given the option of continuing its coffee business in the same location, albeit not under the Starbucks name. "We would have had to use the Forbidden City as our brand. The other choice was to shake hands and part ways," explains Eden Woon, Starbucks' vice-president for Greater China. "We decided we can't operate a store that on the marquee says Forbidden City Coffee."

Not surprisingly, Starbucks still has big plans for China. Of its 530-some shops in Greater China (which includes Taiwan, Hong Kong, and Macao), around half, or about 260 outlets, are on the mainland, points out Woon. "We continue to think China will become our second-largest market outside of the U.S.," passing Britain and Japan in importance within several years, says Woon.

Indeed, even among those happy to see Starbucks vacate the Forbidden City, there are fans of the coffee giant. "I like the 'Starbucks feel,'" says golf club salesperson Chen, adding that she frequents Starbucks several times a week. "I like the environment. If I want to go somewhere to sit down, relax, or read, there is nowhere else I would go except a Starbucks."

Roberts is BusinessWeek's Beijing bureau chief.

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