Starbucks could lose out amid U.S-China trade war, report says

Starbucks. Photo: Wikimedia Commons/ 4028mdk09

July 17 (UPI) — Trade tensions between the United States and China are changing Chinese consumer attitudes and preferences, and the world’s No. 1 specialty coffee retailer might be the next casualty of rising nationalism in the world’s second-largest economy.

Chinese state tabloid Global Times reported Tuesday working professionals in China’s largest metropolises are looking toward Starbucks’ competitors for their next caffeine fix.

“I used to love Starbucks. But because of the China-U.S. trade tension, I have a negative feeling toward it, so I will choose a domestic brand instead,” said one “Beijing-based coffee lover” with the surname Shen.

Starbucks faces stiff competition from local coffee makers, including Luckin Coffee, a firm that recently secured $200 million in a round of fundraising, according to the Global Times.

Shen said she would choose Luckin over Starbucks, which charges more for popular drinks, such as the large-sized latte.

A second source said she would “give up” on Starbucks if this “trade row gets more and more intense.”

China’s coffee market is estimated to be worth more than $16 billion.

“Starbucks has to realize that it’s just at the beginning of a fierce competition with homegrown rivals,” said Lian Yu, general manager of think tank pintu360.

The trade tensions between the United States and China could have an impact on neighboring economies.

Joo Won, an economist with Hyundai Research Institute, said Tuesday an overall increase in world tariffs to 10 percent from the present 4.8 percent would cause a 0.6 percent decline in South Korea’s economic growth rate, Yonhap reported.

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