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Starbucks to Make Big Tech Investments in China

By Jennifer Saibil – Apr 27, 2020 at 11:12AM

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The coffee king is teaming up with Sequoia Capital to increase its muscle in one of its fastest-growing markets.

Starbucks (SBUX -0.63%) announced that it's partnering with venture capital firm Sequoia Capital to invest in Chinese tech companies in the food and retail industries.

Taking coffee to the next level

Starbucks has invested in data-driven technologies in the U.S. in its efforts to remain No. 1 in its industry and continue to provide an unparalleled experience for its customers. Some of those technologies include the ability to predict what customers want in different locations, its mobile order and pay apps, and digital menu offerings at its drive-thrus based on previous customer preferences.

The exterior of a flagship Starbucks location in China.

Image source: Starbucks.

Making it work in China

China is one of Starbucks' biggest markets. The company previously partnered with tech company Alibaba to bring voice ordering and delivery services to customers in that region.

Some of the benefits Starbucks might see from these new tech ventures include bringing digital more acutely into its operations, integrating inventory management solutions, and optimizing retail operations. The partnerships will work both ways, with Starbucks gaining better technologies and its partners benefitting from being able to tap into Starbucks' retail and business expertise. 

"China's vibrant environment is a rich ground for entrepreneurship that has seen the emergence of many local innovators that we hugely admire," Belinda Wong, CEO of Starbucks China, said in a statement. "The partnership enables Starbucks to tap into the most dynamic Chinese technology entrepreneurs."

Starbucks has reopened its stores in China that were closed during the height of the COVID-19 pandemic there.

In March, Starbucks announced that it planned to develop a Coffee Innovation Park in China to expand its roasting network and fuel further growth there. It will house the company's largest roasting facility outside of the U.S. 

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd. and Starbucks. The Motley Fool has a disclosure policy.

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