Chinese coffee brands need more than low prices to compete with global players: analysts

A Luckin Coffee outlet in Manhattan, New York.

Photo: Getty Images/AFP With Chinese coffee brands eyeing overseas expansion, analysts said those seeking to succeed as global players must move beyond low-price strategies and a narrow focus on operational efficiency. “Overseas consumers have long associated Chinese brands mainly with cost performance,” said Fu Yifu, a special research fellow at Su Merchants Bank in Nanjing, in the eastern Jiangsu province. “To succeed globally, the core is to build a presence rooted in China’s operational efficiency while blending into local cultures.” Luckin Coffee, mainland China’s biggest coffee chain by store count, has been rapidly expanding in Hong Kong and overseas markets including Singapore, Malaysia and the US.

According to its annual reports, its store count in mainland China was more than 6,000 by the end of 2021 – eclipsing that of Starbucks.

On Monday, the chain, which is known for its budget drinks, announced that it now had more than 50 stores in Hong Kong.

Since entering the Hong Kong market in 2024, it has set up outlets in core business districts, at tourist attractions and in residential areas.

Locations include MTR stations, Terminal 2 at Hong Kong International Airport and Ocean Park Hong Kong.

Luckin said Hong Kong’s coffee culture was vibrant and market demand was diverse, and it would continue to explore localised operations that integrated Hong Kong cultural elements.

A Luckin Coffee shop in Manhattan.

Luckin must go beyond efficiency to compete with Starbucks in the US, according to an analyst.

Photo: AFP In November, co-founder and CEO Jinyi Guo said the company was planning to relist in the US.

It was delisted from Nasdaq in 2020 over a US$310 million revenue fraud case.

Centurium Capital, Luckin’s largest shareholder, injected fresh capital to help cover legal costs and fines.

Earlier this month, the private equity firm agreed to acquire US premium chain Blue Bottle Coffee’s global physical store assets from Nestlé for under US$400 million, Bloomberg reported.

Luckin declined to comment on its shareholder’s move.

Fu said the acquisition aimed to address relative weaknesses in premium coffee and brand positioning. “Whether it can integrate the brand and build a unique overseas identity remains to be seen,” he said.

He added that to compete with Starbucks globally, Luckin must go beyond efficiency and build stronger brand storytelling and consumer experience – a long-term, resource-

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