Case Study: Forbidden Starbucks

In 2000, Starbucks opened an outlet in Beijing, China, inside of The Forbidden City, the imperial city built in the early 1400s by Ming emperors.

As of July 2007, the outlet is closed.

Why, you may ask?

Several news agencies are carrying reports on what happened, with all sorts of conflicting facts–don’t we all adore the international media for its deep commitment to accurate reporting?

Sifting through a thick fog of half-done research, I think I’ve been able to determine the basic facts. I think they provide a useful case study for American businesses who lack experience dealing with culturally sensitive issues.

Approximately eight years ago, imperial palace management either invited or allowed Starbucks to open a Forbidden City shop. Palace management needed money for renovations and maintenance.

There was a public outcry in China. People were angered at the encroachment of something as foreign and as commercial as Starbucks on an important Chinese historical landmark.

Starbucks was allowed to open the store anyway and went about its business, selling a lot of coffee.

Two years ago, Starbucks, responding to a request from palace management, agreed to remove its logo from the storefront. Starbucks went on, selling a lot of coffee.

In January this year, a popular news anchor for China Central Television, Rui Chenggang (芮成鋼), posted a blog entry on cctv.com calling for the removal of Starbucks from the Forbidden City, asking for signatures and support from Chinese citizens. Some of the news reports quote Rui as having written that having a Starbucks in the Forbidden City “trampled on Chinese culture.”

Note that I cannot get into Rui’s blog archives, so I cannot verify that he actually wrote this. News media translations of written Chinese (simplified or traditional) are often inaccurate.

In any event, it seems that Rui got a lot of support for his campaign, to the tune of 500,000 signatures.

Starbucks was given the choice of running an operation that did not have its logo on any of its products (some reports are indicating that it would have to sell Forbidden City branded merchandise), or shutting down the Forbidden City location. It chose to shut down.

Analysis:

-Before we become too excited about the Chinese public’s possible overreaction to perceived Western cultural imperialism, ask yourself this question: How would you feel about Starbucks opening an outlet in your country’s most important landmark, whether it was invited or not?

-I don’t blame Starbucks for opening the outlet in 2000. Companies are in business to make money, and if you have the chance to make money by selling coffee at the top tourist spot in a country, then you take it. It may have been an impulsive decision (who wouldn’t be excited by such a prospect?), but it is entirely possible that Starbucks was in fact invited to open a shop there by imperial palace management.

-Chinese merchants make American business opportunists look like pikers, so I don’t see the criticism as being aimed at Starbucks’ opportunism. I see that people just didn’t want something so commercial on the grounds of their most important historical landmark.

-Starbucks handled the situation in the only way possible. In opting to leave the Imperial Palace grounds, it stuck to its policy of selling under its own brand, and in doing so, mollified the public outcry against “commercial imperialism.”

-Did Starbucks leave voluntarily? Not really. There are apparently political leaders in China who recently took up the cry against SB’s presence in the Forbidden City. When society and a few politicians are on your back, there isn’t much you can do in a country where people are serious about their cultural sensitivities. There was only one practical move for Starbucks, and it wasn’t resisting the call to close its imperial palace location.

-If your company is ever faced with a similar situation, i.e. there is a loud local outcry against a perceived affront to something sacred to natives of the country you are selling in, take a lesson from Starbucks. Resistance gets you nowhere. A graceful cessation of the activity causing so much offense is the only practical choice.