Starbucks (SBUX.US) is reportedly considering selling a stake in its China business, with KKR (KKR.US), China Resources, and other potential buyers expressing interest.

Starbucks (SBUX.US) is reportedly considering selling a minority stake in its China business, with several acquisition firms and Chinese companies expressing interest.

The potential buyers include KKR (KKR.US), FountainVille Capital, PAG, China Resources and Meituan (03690), according to insiders. The move is aimed at revitalizing Starbucks' business in its second-largest market.

The percentage of equity to be sold has not been determined, but Starbucks may prefer to strike a franchise agreement with a strategic partner. In such a deal, Starbucks China could be valued at over US$1 billion. The company plans to reach an agreement by the end of the year. Starbucks CFO Rachel Ruggeri is expected to visit China for sale negotiations.

Starbucks faces fierce competition in the Chinese market from local brands such as Luckin Coffee (LKNCY.US), which has successfully captured market share with lower-priced products and a wide presence in the lower-tier cities. Starbucks has been exploring strategic partnerships for its China business since the end of 2024.

Starbucks entered the Chinese market in 1999 with the opening of its first store in Beijing. Initially, it entered through a licensing agreement with Beijing Mocha Coffee Co., Ltd. Starbucks then rapidly expanded, forming joint ventures with different partners to enter various regions of China. As of 2024, Starbucks had over 7,596 stores in China. During its expansion, Starbucks emphasized localization and innovation to adapt to Chinese consumer preferences.