At noon in Beijing today, Starbucks’ first store in China served its last drink. China’s harsh real-estate landscape might make it hard for Starbucks to keep its pledge to have 1,000 stores in China by the end of the year. Most of its stores now are in major cities like Beijing, where authorities are paying less attention to bringing down commercial property prices. Commercial property in Beijing grew 23% in May, compared to 15.2% in residential real estate. Regardless of where Starbucks moves in Beijing, it might have trouble making rent.

China’s Starbucks chain has been driving forward without a stop in the Chinese market. However, it has started to slow down due to labor cost and renting fees. In June 21, 2013, the first Starbucks China closed because they could not afford high rent fees. Even with the financial support from Starbucks China. I believe that without long term financial stability, the stores will fail to succeed and thus discontinue. I think Starbucks need to open in smaller cities where costs are slightly lower because the coffee consumption in China is growing rapidly so they have enough supplier to sell their products in other cities too.

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