Starbucks sees no slowdown in China

BEIJING (Reuters) - Starbucks Corp (SBUX.O) has not yet seen any impact from the global economic slowdown on its business in China, even as it closes stores in other markets racked by recession, it said on Tuesday. China accounts for over 350 of Starbucks' global portfolio of 17,000 stores, but is one of its fastest growing markets, Martin Coles, president of Starbucks Coffee International, told Reuters in an interview.

"We have not seen a drop-off at all in the demand for Starbucks in China," he said.

Coles did not give any growth forecast for China, saying only it would take less than 10 years to open the next 350 stores. "We have seen an acceleration in our (China) business," he said at an event marking the firm's first 10 years in China.

"International is the future engine for our company."

Coles's comments come as Starbucks has already closed 205 of the 600 stores scheduled for closure by the end of fiscal 2009, and also lowered its forecast for fiscal 2009 net new international stores to 700 from 900.

Coles said he was comfortable with the forecast for 700 net new stores this fiscal year, even as the global economy has been battered by huge layoffs, falling production and stock market volatility. Part of Starbucks' push into China includes increasing the currently small amount of coffee it sources from the mainland.

"This is about how we introduce China coffee to the world," said the executive, seated on a sofa at one of the coffee shop operator's newest stores in Beijing.

Starbucks will sign cooperation agreements in the next couple of days with local governments in southern Yunnan province aimed at helping farmers increase coffee yields and improve quality.

"Our ambition is to have a far greater presence in greater China," he said. The greater China region -- including Taiwan, Macau and Hong Kong -- could one day rival the United States, but that could be many years down the road, said Coles.

The U.S. accounts for well over half of Starbucks' global stable of stores.

The China outlook contrasts sharply with the company's recent results.

Net profit for the fiscal fourth quarter ended September 28 dropped 97 percent to $5.4 million, while comparable sales fell 5 percent in the U.S. during fiscal 2008, with results worsening throughout the year.