• Starbucks sells a 60% stake in its China business to Boyu Capital for $4 billion.
• This deal aims to enhance Starbucks' growth and operations in China, a market it struggles with.
• Starbucks retains a 40% stake and will continue to own its brand and intellectual property.
• The partnership with Boyu signals a strategy shift amidst increasing competition from local coffee brands.
• The company plans to expand its locations from 8,000 to 20,000 across China.

Starbucks Corp. has agreed to sell a 60% stake in its China operations to private equity firm Boyu Capital for $4 billion. This strategic move is intended to bolster the coffee giant's growth in a market that has proven challenging due to increasing competition and changing consumer behavior, as Starbucks looks to strengthen its foothold in the region, a crucial market outside the US, according to Bloomberg, Reuters, and South China Morning Post.

Under the terms of the agreement, the companies will establish a joint venture where Boyu holds the majority interest. Starbucks will maintain a 40% stake and continue to hold the brand's ownership and licensing rights. This partnership has been deemed a "significant milestone" for Starbucks as it seeks to overcome recent declines in market share in China, according to BBC and Channel News Asia.

Starbucks entered the Chinese market in 1999 and has experienced fluctuations in its market presence, recently facing fierce competition from local brands such as Luckin Coffee and Cotti Coffee, which have captured a larger share of the market through aggressive pricing strategies. Starbucks' market share dropped to 14% last year from 34% in 2019, reflecting the challenges the company faces in adapting to local preferences and pricing realities, according to Reuters and Al Jazeera.

To tackle these challenges and foster its competitive edge, Starbucks plans to double its outlets from 8,000 to 20,000 across China, leveraging Boyu Capital's expertise in the local market. The partnership will not only provide financial support but will also assist in logistics and managing commercial properties as Starbucks aims to penetrate deeper into regional markets, according to BBC and Channel News Asia.