Starbucks in Shanghai, China: Modern Shanghainese Favorite Third Place (Page 1/2)
November 2, 2015
Akira Kondo
 Starbucks store at Yuyaun Garden in Shanghai
Shanghai, one of the most dynamic cities in China, never stops changing itself. Despite overall China’s economy continues to slump, the city turns into a utopia, as new immigrants flock to the city on a daily basis to look for a job while local residents, commonly known as “Shanghainese,” enjoy attaining modernity. The modernity is what they are always seeking for. A great example of it is a new iPhone. On the Line 2 subway stations between the city’s financial hub, Lujiazui, and Shanghainese’s bed town, Jingan Temple, most passengers onboard hold the newest iPhones in hands while the gold-, now the rose gold-, colored back of the devices colorfully shine throughout inside the train cars. Up on the ground, green mermaids shine across the city. A Starbucks store at Ruffles Square, a few blocks south of the popular pedestrian East Nanjing Street, attracts local Shanghainese as well as tourists throughout the day. Across the Huanpu River, the stores at Lujiazui area welcome white-collar workers for morning as well as afternoon coffee. Over the past years, the company has been very aggressive expanding its stores in China’s largest commercial city and its number now hits 382, out of over 1,700 stores in the country.
Basic Facts
An overall economy in China grew at 7.4 percent last year while the most recent annualized GDP growth rate hit slower 6.9 percent in the three months through September from a year earlier. In the meantime, Shanghai Stock Exchange Composite Index nosedived from 5,166 in June to around 3,300 in October. China’s spectacular economic growth in the past decades are no longer seen today and every single article from newspapers about China’s economic slowdown make people think the country’s economy is over before catching up with developed economies’ income levels, like the United States or neighboring Japan. Per capita GDP in China last year was 46,629 yuan or US$7,346 per person. 
(L) Mainland China: GDP Growth Rate, 2001-2014, (R) Shanghai Stock Exchange Composite Index, Jan-Oct 2015. Sources: National Bureau of Statistics of China, Yahoo! Finance
China’s economic slowdown is obvious when just looking at various data written negatively on newspapers, such as The Wall Street Journal or the Financial Times, but you may want to throw a question like this, “is China’s economy really slowing down?” if you ever walk down Shanghai’s populous East Nanjing street. While you walk down this street in the evening, you will always be in the center of the crowds, where you may not experience such atmosphere in your home country. Shanghainese (local Shanghai people) are dancing and singing among the crowds without any hesitation while trams are moving, like a snake, from west to east or the other, to dodge coming pedestrians.
Shanghai is different. Annual per income per person in the city now reached 97,118 yuan or US$15,287 (in 2014), more than twice higher than the nationwide average. Again, it is an average basis. Among Shanghai’s over 24 million population, local Shanghainese are said to be much wealthier thanks mostly to rising property prices over the past decades. According to Bloomberg, 159,000 people in Shanghai are known to be millionaires (at least 10 million yuan or about US$1.6 million). Including Shanghai’s neighboring cities, Hangzhou, Suzhou, and Ningbo, 235,500 people are said to be millionaires. There is no reason luxurious Porsche Cayenne SUVs are extensively popular in the city while Ferrari and Lamborghini are often seen in five-star hotels’ parking lots.
Basic Facts: Starbucks in Shanghai, China | Sources: Deutsche Bank Research: Shanghai, National Bureau of Statistics of China, Starbucks China
Prices of popular Caramel Macchiato and morning Café Americano (both Tall, hot) in Shanghai are 31 yuan and 22 yuan, respectively. Thanks to the higher-than-nationwide average income level in the city, Shanghainese as well as white-collar immigrant workers are comfortable purchasing premium Starbucks’ beverages. Though the 31-yuan Caramel Macchiato is not inexpensive for ordinal people. With that amount, one can enjoy a reasonable amount of dinner at one of food courts in one of many available shopping malls across the city. Or one can grab a bowl of fried rice or noodles at an outside food stand at reasonable 6 yuan. A BigMac meal at McDonald’s next door, for instance, costs 23 yuan. That being said, Starbucks’ products are generally expensive. However, affluent Shanghainese are willing to visit their favorite Starbucks stores to enjoy premium coffee and its modern experience without considering a wallet inside.
Thanks to wealthier Shanghai, the number of Starbucks stores available in the city is currently 382 (according to a telephone interview with Starbucks China Shanghai office on October 26, 2015), out of over 1,700 stores throughout mainland China. That means 22.5 percent of total Starbucks stores in mainland China is concentrated in this special municipality. While Starbucks’ expansion in China is likely to continue in coming years as its store count in the country grew more than tripled from 500 stores in 2011, the store counts in Shanghai are also likely to grow in tandem.
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