Starbucks' Mega Move: Unveiling a $220 Million Roasting and Distribution Center in China – Here's Why

Sign up for CNN's Meanwhile in China newsletter to stay updated on the country's rise and its global impact.

Despite a significant economic slowdown, Starbucks has invested over $200 million in a new campus in China, emphasizing the continued importance of the Chinese consumer to the global coffee chain.

In a statement, the beverage giant announced the opening of a significant facility in eastern China on Tuesday. This facility will serve as Starbucks' primary production and distribution center throughout the country, providing fresh coffee to numerous Chinese stores. The location includes a substantial coffee roasting facility and a designated area for visitors to observe the beverage manufacturing process. With a staggering investment of 1.5 billion yuan (approximately $220 million), this project marks Starbucks' largest commitment to a coffee manufacturing and distribution center outside of the United States.

The amount has been nearly doubled from the $150 million previously allocated in 2020, which was already higher than the $130 million announced earlier that year. When asked about the reason for the increased amount, a company spokesperson informed CNN that it was due to additional investments being made in advanced technologies and equipment to enhance operations.

The opening of the 80,000 square-foot (7,400 square-meter) "innovation park," located in the city of Kunshan, about an hour from Shanghai, comes after a year-long delay.

Starbucks' new campus in Kunshan, eastern China.

Starbucks/Handout

Starbucks had initially announced that the facility would be up and running by summer 2022. However, this timeline was provided in November 2020, during a period when China was facing significant pandemic-related restrictions. The company has not yet commented on the reasons behind the delay, despite a request for clarification made on Tuesday.

China has consistently served as a key contributor to Starbucks' overall growth, acting as its second-largest market globally and primary market abroad.

However, CEO Laxman Narasimhan acknowledges that the company is still in its early stages in China. He highlights that coffee consumption in this traditionally tea-drinking country is still relatively low. During an earnings call last month, he mentioned that revenue in China had recovered earlier this year after being affected by Covid-19 restrictions, which were subsequently lifted at the end of last year.

Tingshu Wang/Reuters

Starbucks' sales in China have rebounded significantly. Despite China's slowed economic growth resulting from a crisis-stricken property sector and volatile consumer confidence, recent data indicates that the decline is stabilizing.

Narasimhan stated that China, being one of the biggest consumer markets globally, offers significant prospects for Starbucks. He emphasized that the new facility would not only enhance the company's supply chain but also contribute to its sustainability objectives. Furthermore, it is expected to become Starbucks' most energy-efficient coffee manufacturing plant worldwide.

Narasimhan praised the visionary thinking of the China team, expressing his immense pride. He emphasized that China is Starbucks' largest and swiftly expanding international market, stating their intention to further invest and solidify their unwavering long-term dedication to the Chinese market.