Korean coffee chains enjoying life in China

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The economy of China has long made the country a prime target for investors and companies who are looking to expand their portfolios and, importantly, their revenue streams. And when it comes to coffee things are no different.

Western giants have seen massive growth in country, with the large, bustling and increasingly wealthy cities of Shanghai, Beijing and Guangzhou leading the way.

Perhaps unsurprisingly, Starbucks leads the way in this department.

But the Seattle-based monoliths of the coffee chain world is increasingly under pressure from traditional Asian chains from South Korea.

A report published by the Korea International Trade Association (KITA) stated that as of the start of September there are 700 Korean franchised stores in China. By the beginning of 2015 that number is expected to jump up by about 50%, bringing the total to well over 1,000.

China has long been considered a country of tea,” Park Si-soo writes. “Yet Korean franchise coffee stores entered the market in 2012 as things began to change.”

The change has been rapid: The market research and analysis firm Euromonitor estimated that in 2012 the Chinese coffee sector was worth a staggering $11.1 billion and it has shown double digit growth since.

In 2013, the monetary value of coffee products exported to China on behalf of these newly founded Korean coffee chains reached $10 million. For the first six months of this year KITA believes that there has been a year-on-year upsurge of around 80%.

Obviously, there is a large profit to be made within this market that has continuously shown above average growth: “A Korean or Japanese person drinks 300 cups of coffee a year on average, while a Chinese national drinks five or less,” Si-soo commented.

According to KITA’s approximations, each franchised store in China will bring in $385,000 worth of profit on an annual basis.

Franchised coffee shops in China represent prime financial real estate.

photo: epsos (Flickr, used and web optimised under creative commons)

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