The new kid is the Coffee Beanery chain, which announced in Shanghai yesterday its intention to open 800 stores on China's mainland over the next five years.

The Chinese licensee of the Michigan-based company called the mainland market almost untapped and said now is the time for the coffee shop business to "boom" in China.

"In more developed cities, well-educated consumers have good knowledge about coffee and they are open to new thing in their lifestyle," said Xia Ling, president and chief executive officer of The Coffee Beanery (China). He cited a company survey that revealed positive consumer attitudes toward coffee culture.

However, he admitted that the business of its first two China stores, opened last year in Chengdu, capital of Sichuan Province, hadn't met the company's expectations.

For this reason the company wanted to try its luck in more developed and modern areas such as Shanghai and neighboring Zhejiang Province.

Yesterday the company signed franchise agreements with 17 partners from the two places.

A franchise costs US$10,000 or US$25,000, depending on store size.

The first two Shanghai outlets will open in the areas of Xinzhuang and Jinqiao.

Coffee giant Starbucks, which has 26 stores locally, welcomed the competition.

"The market needs more players. At the current stage the market is almost vacant and there are opportunities for everyone," said Kevin Lin, marketing director of Shanghai President Coffee Corp., Starbucks' local licensee.

He said the number of repeat customers in his shops was growing and monthly sales were maintaining double digit growth after three years of operation. Lin added there was no plan to open in rural areas yet.

Coffee Beanery operates more than 200 outlets in the United States, primarily in the eastern part of the country.

An English-language corner will be a feature of the China stores, the firm said.

(Shanghai Daily January 17, 2003)