This document analyzes the coffee and clothing markets in China. For coffee, consumption is growing as coffee becomes a symbol of success, but tea culture remains influential. Starbucks is a major player but faces competition and opportunities to expand offerings. The clothing market, especially ladies' and children's wear, is also growing rapidly. Online and mobile commerce are expanding while integrating with physical stores. Brands utilize strategies like in-store QR codes, integrated membership, and mobile payment options.

1. Market Analysis of Coffee and
Clothing Industries in China
中国咖啡和衣服工业的市场
分析
By: William Sheehy 9/15/15

2. • Coffee Market Overview
– Executive Summary
– Consumer Trends
– Market Demographics
– Starbucks SWOT analysis
– Marketing Strategies
• Clothing Market Overview
– Executive Summary
– Market Overview
• Subsector Analysis
– Marketing Strategies

3. Executive Summary
China’s coffee consumption
per capita is low, but its
coffee industry has large
potential to grow
It is important to utilize
China’s traditional tea
culture
In China, coffee is considered
a symbol of a successful life
and coffeehouses are
becoming popular as a social
gathering
Several factors influence
coffee consumer behavior
such as price, location, brand
loyalty, and health trends

4. Unit: thousand bags
Source: ICO (2013)
0
200
400
600
800
1000
1200
2005 2006 2007 2008 2009 2010 2011 2012
Total Consumption of Coffee in China
Total Consumption of
Coffee in China

5. Consumer Trends
• Customer purchase coffee based on the these main
factors
– Brand-familiarity
– Quality
– Flavor
– Price
– Health
– Ethics (Fair trade)
• Chinese generally prefer lattes, cappuccinos, and
mochas over espressos, which are considered too
bitter

6. Consumer Trends: Integrating Tea
Culture
• Since coffee culture is relatively new in China,
it is important to use China’s traditional tea
culture
• Nearly a quarter of Chinese consumers chose
to buy tea drinks even in coffee shops
• China’s tea culture emphasizes ‘Harmony,
Respect, Gratitude and Love’, these
characteristics should be integrated into
coffee culture

7. Market Demographics
Current primary consumers
• Young affluent Chinese
• Chinese returnees from overseas
• Westerners and businessmen from Hong Kong
and Taiwan represent 30% of customers at
chained cafés such as Starbucks
• Working class (generally instant coffee)

8. Age distribution of China’s coffee
customers
0
10
20
30
40
50
60
70
80
1 cup/day 2 cups/day >3cups/day Never
17-24
25-34
35-44
>45
Source: Pollster 2012

9. Gender distribution of China’s coffee
consumers
0
10
20
30
40
50
60
1cup/day 2cup/day >3cup/day Never
Male
Female
Source: Pollster
2012

10. Major Market share
Sales
Starbucks
Dunknin' Brands Inc.
Other

11. Starbucks SWOT Analysis
Strengths Weaknesses Opportunities Threats
•Strong Market
Position and Global
Brand Recognition
•High Quality
Products
•Location and
Aesthetic appeal
•Human Resource
Management
•Providing a unique
“Starbucks
Experience”
•Supreme customer
service
•Clean and well-
maintained stores
•Stores that reflect
local culture, building
customer loyalty
•Expensive Products
(not a huge issue in
China)
•Self-Cannibalization
through
overcrowding
•Overdependence in
the United States
market
•Negative large
corporation image
•American/European
coffee culture clash
with that of other
countries
•Expansion into
Emerging Markets
•Expanding Product
mix and offerings
•Expansion of retail
operations
•Technological
advances
•New distribution
channels
•Brand extension
•Increased Competition
•Price Volatility in the
Global Coffee Market
•Developed Countries
Market Saturation
•Developed Countries
Economy
•Changing Consumer
tastes and lifestyle
choices: consumers
toward more healthy
products

12. Marketing Strategies
• Consider building up other products along with coffee such as tea and
juice
• Expand to include health food options
• Build strong relationships with suppliers
– Try to secure contracts with coffee bean suppliers at a low swing price
mitigate price fluctuation
• Invest in packaged coffee packets and other beverages
• Invest in advertising and marketing initiatives
– Develop in-store programs: displays, in-store promotions, etc
– Develop Social Loyalty through online initiatives and following current
events
– Develop in-store programs: displays, in-store promotions, etc
• Custom Latte Art
• Base menu on “sets” of items to raise total expenditure, but keep unit cost
low
• Invest in packaged coffee packets and other beverages

14. Executive Summary
China’s clothing
market is one of the
fastest growing in
the world
Ladies wear is the
major contributor
to total clothing
sales
Children’s wear is
one of the fastest
growing subsectors
in the market
Department stores and
specialty stores are the
major distribution channels
in China. But, online
retailing is the fastest
growing method
Overall, Chinese consumers
are more hesitant to buy
luxury apparel, but are
quicker to buy affordable
luxury apparel

15. Market Overview
Retail sales volume of selected apparel categories in
100 major retailers in China, 2012 – 2013
2012 2013
Million pieces yoy % growth Million pieces yoy % growth
Men’s suit 12.94 5.2 14.08 9.4
Men’s shirt 9.90 -1.7 8.78 -5.9
T-shirts 13.23 0.7 11.28 -8.2
Ladies’ wear 141.71 4.1 142.31 7.3
Children’s wear 34.53 5.1 36.38 11.1
Denim wear 4.78 -7.9 4.10 -6.6
Jackets 7.44 -2.8 5.97 -2.9
Sportswear 25.38 4.6 28.58 5.4
Thermal clothing 9.51 -1.5 9.45 -6.9
Leather wear 1.16 11.9 1.09 1.1
Trousers 10.29 -2.9 9.49 -3.5
Knitted underwear 58.12 1.1 54.30 -2.9
Woolen wear 21.51 -6.7 19.37 -4.8

16. Analysis of Ladies' Wear sub-sector
• Ladies’ wear market remains highly segmented –
casual wear, fashion for young ladies, fashion for
mature women, fast fashion, business casual and
high-end fashion are some major sub-segments.
• Fast fashion market is growing fast. Consumers are
favoring international fast fashion brands which offer
affordable luxury styles
• Korean and Japanese fashions are increasingly
popular among Chinese female shoppers as their
designs are more appropriate for Chinese people
given similar skin tone and stature**.
** “Womenswear in China.” 28 May 2014. Euromonitor International.

17. Analysis of Children’s Wear sub-sector
• Clothing is the second most bought product
by Chinese parents
• Total sales in 2014 were Rmb 130.3 billion and
are expected to increase by 10.5% annually
from 2014-2018
• Safety and health is a major concern when
buying
• Parents look for fashionable but also
comfortable designs

19. 专业商店 网站 第三者平
台
手机入口
网站
社会性
媒体：
微博
社会
性媒
体：
微信
商店里倡议 网上和离
线整合
√ √ √ √ √ -免费Wifi
-衣服标签上有 QR
codes, 直接
Banggo.com
-接受手机付款
-在线和离
线会员整合
-在线和离
线价格一样
√ √ √ √ √ -商店里有QR code
Uniqlo手机 app扫描
-接受手机付款
-在线和离
线会员整合
-在线和离
线价格一样
√ √ √ √ √ -衣服标签上有QR
code
-在线和离
线会员整合
-在线和离
线价格一样
-在线定购
-商店活邮
政产品可以
退还

20. Marketing Strategies
• Use online pre-order services to help manage
inventory
• Establish new websites to offer discounts on
obsolete items
• Integrate online and offline membership and
pricing
• Maintain excellent customer service on-line and
in-store
• Support Mobile payment methods
• Use in-store QR codes

21. Sources
• “Coffee Market In China: Trends and Consumer Strategies”, Zhang Nan,
2014,
https://riunet.upv.es/bitstream/handle/10251/44210/Nan%20Zhang%20II
IIII.pdf?sequence=1
• “Strategic Analysis of Starbucks Corporation”, Nithin Geereddy, 2014,
http://scholar.harvard.edu/files/nithingeereddy/files/starbucks_case_anal
ysis.pdf
• “China’s Apparel Market, 2014”, Fung Business Intelligence Centre, 2014
http://www.funggroup.com/eng/knowledge/research/industry_series25.p
df
• “Children’s Clothing Market in China: Trends and Dynamics”, Alice Tsang
HKTDC Research, March 26, 2015, http://economists-pick-
research.hktdc.com/business-news/article/Research-Articles/Children-s-
Clothing-Market-in-China-Trends-and-
Dynamics/rp/en/1/1X000000/1X0A1WEY.htm