(Yicai) Nov. 4 -- Starbucks Coffee has agreed to sell a 60 percent stake in its China business to Boyu Capital, a leading Chinese private equity firm, for about USD4 billion.

The US coffee shop chain and Boyu will form a joint venture to manage retail operations in China, the Seattle-based company announced today. Starbucks will own 40 percent of the JV and will continue to own and license its brand and intellectual property to the new company.

The move, revealed soon after Starbucks released its earnings report for fiscal year 2025, marks a strategic pivot for Starbucks in its second-largest market, tapping local capital and market insight in the face of intensifying competition from homegrown players such as Luckin Coffee and Manner Coffee.

“Boyu's deep local knowledge and expertise will help accelerate our growth in China, especially as we expand into smaller cities and new regions,” said Starbucks Chairman and Chief Executive Officer Brian Niccol. “Together we will write the next chapter of Starbucks’ storied history in China.”

Starbucks said the deal values its China business at USD13 billion, reflecting the proceeds from the stake sale, the value of its retained ownership in the JV, and the net present value of ongoing licensing fees payable over the next decade and beyond.

Reports that Starbucks was exploring a potential sale of its China business started to appear late last year, with estimates of its value ranging from USD5 billion to as much as USD10 billion.

Headquartered in Shanghai, the JV will own and operate Starbucks’ 8,000 stores in China, with plans to expand to as many as 20,000 locations over time. The deal is expected to be finalized in the second quarter of fiscal year 2026, pending regulatory approvals.

Starbucks will continue to directly operate non-retail assets, including the China Coffee Innovation Park in Kunshan, Jiangsu province, and the Farmer Support Center in Pu'er, Yunnan province, according to an internal company letter sent to employees.

“This partnership marks a new chapter in Starbucks' over 26-year journey in China, combining its globally recognized brand and coffee expertise with Boyu's depth of understanding of Chinese consumers,” Starbucks said.

“The two companies will elevate the Starbucks customer experience, accelerating innovation in beverage and digital platforms, expanding into new cities and regions, and deepening connections with customers through meaningful local relevance,” it added.

“This partnership reflects a shared belief in the enduring strength of that brand and the opportunity to bring even greater innovation and local relevance to customers across China,” said Alex Wong, a partner at Boyu Capital.

“Together, we aim to combine Starbucks' global coffee leadership with Boyu's deep market insights and expertise to accelerate growth and create exceptional experiences for millions of customers,” Wong said.

Starbucks' first-mover advantage has been eroded significantly in recent years. Luckin Coffee now has over 21,000 stores, while newcomer Cotti Coffee has opened in 6,000 locations in just two years, and staples like Manner Coffee and M Stand have captured younger consumers.

“Building on our positive business momentum, our partnership with Boyu will enable Starbucks China to fully unlock the vast market opportunity,” said Molly Liu, executive vice president and CEO of Starbucks China. “This collaboration is a powerful commitment to our next chapter of growth.”

Starbucks' revenue from China increased for the fourth straight quarter in the fourth fiscal quarter, rising 6 percent from a year earlier to USD831.6 million. For the year ended Sept. 28, China revenue expanded 5 percent to USD3.1 billion.

On the company’s earnings conference call, Niccol said that Starbucks received very strong interest from "multiple high-quality partners, all of whom see significant value in the Starbucks brand and team. “We expect to retain a meaningful stake in Starbucks China and remain confident in the long-term growth potential in the region.”

Founded in 2011, Boyu Capital is a major investment firm focused on China's technology, consumer retail, and healthcare sectors. Its high-profile investments include ice cream and bubble tea brand Mixue Group, express delivery firm J&T Express, and the SKP mall in Beijing.

China's coffee market grew 18 percent to more than CNY313.3 billion (USD43.6 billion) last year, with delivery orders accounting for CNY5.5 billion (USD773.4 million), according to the 2025 China Urban Coffee Development Report released in April by Meituan, Ele.me, Taobao-Tmall Group, and others.

Editor: Futura Costaglione