Starbucks' founder spoke at Tsinghua last night. Besides that bowl of "dream" chicken soup, what else was there?

吴羚玮 · · English translation

All part of the playbook?

All part of the playbook?

Howard Schultz never lets a public occasion go by without telling the story of his dream and preaching his values — love your employees, love your customers. A performance on this scale is not his first in China.

What was new is that this was the first time he had appeared in China without being Starbucks' CEO, which made the evening's theme — "A Story About Dreams and Responsibility" — sound purer. On December 1 last year, the man who built the Starbucks coffee empire announced he would formally step down as CEO on April 3 this year. The poster still carried the title "Starbucks executive chairman," next to a conspicuous Starbucks logo.

The poster outside the Weilun Building at Tsinghua University's School of Economics and Management

The poster, with Schultz's trademark smile on it, stood outside the Weilun Building at Tsinghua's School of Economics and Management and ran on the big LED screen above the entrance. The school's WeChat official account and its website were also the first channels to announce the talk, and nearly all the students we stopped at random had heard about it there.

Next to the portrait leaned another poster carrying six oversized black QR codes, though almost nobody in the audience was going to scan them. Starbucks had lined up ifeng.com, Tencent, Sina, Yicai, Wenhui New Media and Kankan News to stream the talk — "a simultaneous global livestream on six major platforms," as the PR copy put it — and Starbucks China's PR staff had already forwarded the news through their WeChat Moments several times over. In the hours before Schultz went on, Starbucks China's WeChat official account and its Weibo posted it too.

One thing did go wrong. The PR team, shepherding 29 media outlets brought in from around the country, was stopped at Tsinghua's southwest gate. "We don't know about any such event," one guard said. "And even if there is one, if the people over at the Weilun Building didn't pass it on to our security office, it still doesn't work." The PR staff got frantic enough to argue with the guards. They were let through five minutes before the talk began.

At 7 p.m. it started. The 400-seat hall was packed — the press seats taken, the entrance too jammed to push through. Nearly a hundred people stood behind the last row for the whole hour and a half.

More than 500 people showed up; not a seat was left in the Weilun Building at Tsinghua University's School of Economics and Management.

The Weilun Building carries some weight. It went up in 1997 at Premier Zhu Rongji's instruction, and besides the business heavyweights who speak at each year's graduation, the school invites guests for regular talks. The past three graduations brought Jack Ma, Facebook chief operating officer Sheryl Sandberg and former New York mayor Michael Bloomberg. Last year IBM chairman, president and chief executive Ginni Rometty was invited to speak there too.

The real point of Schultz's talk was to sell Starbucks' corporate culture. The theme gave it away.

Predictably, he told again the story from his memoir Pour Your Heart Into It: when he was a boy, his father broke an ankle and lost his job. With no health insurance and no social relief to fall back on, his mother went out to work as a domestic helper to keep the family going. Having watched the unfairness and the disrespect his father met, he decided to build a company humane and decent enough to be different. That company was Starbucks.

He also taught the room a word from southern Africa, "ubuntu" — it means "I am because of you" — treated as a traditional African idea of loyalty and connection. After the story of how his first years in the Chinese market failed and he refused to quit, and the story of Jews sharing blankets for warmth before being sent into the concentration camps in the Second World War, he repeated, each time without fail, "I am because of you."

"Love," "kindness" and "empathy" were the keywords of the evening. More than once he said many Starbucks decisions were not made because they were good for the bottom line.

"Over the years we have kept asking ourselves what our core purpose is, and why we exist. Is it to open stores and make a profit? Is it to return value to our shareholders? That is part of our job, of course. But the responsibility and the goal we care about more is striking a balance between commercial profit and social morality."

Anyone who knows a little about Schultz and Starbucks will find all of this familiar. He says the same things every year at the Starbucks Partner and Family Forum in China and at the company's annual global shareholders' meeting in the United States. It is how Starbucks became the business most identified with social causes.

Schultz is good at using events to enlarge the emotional claims he makes for his company, and good at doing things that have little to do with selling coffee but plenty to do with public policy. Rebuilding after Hurricane Katrina; announcing, after President Donald Trump's immigration ban, that Starbucks would hire 10,000 refugees as employees — all of a piece. In 2014, the former war correspondent Rajiv Chandrasekaran co-wrote with Schultz For Love of Country, a book thick with patriotic feeling; a later project by Schultz and Chandrasekaran, once a reporter at the Washington Post, again took up social questions — racial conflict, the rights of disabled people.

The six official streaming partners claimed more than 30 million viewers between them. Suspiciously, ifeng.com's stream, which had zero comments, still showed more than 3 million people watching two hours after the talk ended. On Bilibili, which was not an official partner, the scrolling comments were pitifully sparse. One of them read: "I knew old Huo came to ladle out chicken soup."

In the hall, though, plenty of people were moved by the soup. An alumna taking an executive course at the School of Economics and Management said Schultz told a lot of stories from ordinary life, and praised Starbucks — "a company that sells coffee" — for leading on employee benefits.

Schultz comes to China often; he has joked that he may be the multinational CEO who visits most. One alumnus of the School of Economics and Management, walking out afterwards, guessed that Tsinghua was only a stop he was fitting in along the way.

The Starbucks Reserve store at Beijing's 798

On the morning of the talk he had in fact been at 798 in Beijing with Belinda Wong, promoted to president of Starbucks China last October, inside a Reserve store that had not yet opened. Reserve is Starbucks' high-end line.

Going upmarket has been Starbucks' theme for the past half-year and more, and it is the business Schultz will run once he leaves the CEO job. Unlike most of the dark-toned Reserve stores in China, the 798 store uses warm wood on the ground floor and a lot of the concrete and brass now in fashion on its walls and stairs. Walk in and you can still faintly smell the paint.

Yesterday morning Schultz signed a wall on the store's third floor, which Starbucks partners — the company's word for its employees — now treat proudly as a sight to see. He has staged the same kind of visit in four cities: Beijing, Shanghai, Guangzhou and Chengdu. At last year's Partner and Family Forum in Chengdu he went to the trouble of getting Jack Ma to appear alongside him.

This is the fifth year of the forum, and it came back to Beijing. With more than 100 partners and their families packed onto the third floor of the 798 store, the space was desperately tight, some partners left standing on the stairs to the second floor. In the front row, along with several Starbucks executives, sat a partner in Mongolian dress next to his mother, also in traditional clothes. Together they listened to five partners tell stories about their lives with Starbucks.

One was about Starbucks offering the best route to a career. One was about a partner meeting a spouse there. Several were about partners getting money when they needed it. The whole thing felt like a company storytelling night.

Then Wong announced what Schultz called a milestone: from June 1 this year, every full-time partner in China with two years' service whose parents are under 75 gets the "Parent Care Program" — full critical-illness insurance for their parents. Roughly 10,000-odd partners in China meet both conditions; Starbucks has close to 40,000 partners in the country.

Howard Schultz at the Starbucks Reserve store at Beijing's 798.

Howard Schultz at the Starbucks Reserve store at Beijing's 798.

Starbucks China president Belinda Wong at the Reserve store at Beijing's 798.

A passage from Schultz, delivered in an elder's register, framed the company's kindness as filial piety: "I am deeply grateful to all of you parents for trusting us with your children. We promise we will do everything we can to help them grow and develop, so that their parents can be proud of them."

He also said, half-joking, in the evening talk: "I admit Starbucks is bad at marketing. The brand was built through our stores and through word of mouth." A strategy like that pushes the partners who carry the culture out front. And the plan to open 5,000 stores in China in five years needs many more hands. Yu Hua, vice president of human resources at Starbucks China, said the number of partners there will double in five years, to nearly 80,000.

With more than 2,600 stores in 127 Chinese cities and a push into second- and third-tier cities underway, premium stores are how Starbucks sets itself apart. Besides the 798 Reserve store, which is not yet open to the public, reporters were taken yesterday morning to two others considered symbolic. They were built at different times and look different: one is the Reserve store at the China World Trade Center, the other the Starbucks flagship at the Kerry Centre. Neither wears the classic Starbucks green throughout; each has its own theme, and both make a point of showing work by local artists and designers.

The China World Reserve store is done as a Beijing hutong. A metal relief on one wall uses the wire-inlay technique behind Beijing cloisonné; another wall is laid in the openwork bricks common in the city. The Kerry Centre flagship has a facade covered with the wooden molds used to press mooncakes, and one whole wall dressed in the hemp rope that ships coffee, running from the ground floor to the second; the designer's signature is left on every wall. The 798 Reserve store hangs a piece of Suzhou embroidery made by a woman embroiderer in Suzhou.

The Beijing Kerry Centre flagship store

The Beijing Kerry Centre flagship store

The Beijing Kerry Centre flagship store

The second floor of the Beijing Kerry Centre flagship store

The China World Reserve store: one wall laid in openwork brick, another carrying a picture made with the wire-inlay technique.

The China World Reserve store is the ninth Reserve store in the country, opened on August 25 last year. It sits one street from the site of mainland China's first Starbucks and serves the same customers, so Starbucks moved the copper plaque commemorating that first store over to this one.

The premium turn was first read in the opening, at the end of 2014, of the world's largest Starbucks in Seattle — a specialty roasting and tasting room known as the Starbucks Roastery. It offers something above the standardized Starbucks experience: customers watch the roasting equipment up close and try experimental coffees in a heavily industrial space.

The format soon reached New York. Shanghai, third in the world by store count, gets its own: a 2,700-square-meter Starbucks Reserve Roastery that will roast coffee beans in front of customers, opening in May at HKRI Taikoo Hui.

Starbucks' first Reserve store in China opened in October 2014 at the Shanghai World Financial Center. The Chinese market now has more than 60 Reserve stores and four flagships; last May the company opened another Reserve store at Sinan Mansions in Shanghai.

In our year-end piece on Starbucks, we went through the problems the company faces: quarter after quarter it comes in under Wall Street's growth expectations, and profit growth leans on price increases. The first quarter of fiscal 2017 was no better — global same-store sales grew 3%, the weakest since 2009. China and Asia-Pacific held up, with revenue up 17.9% against 6.7% worldwide, and same-store sales up 5%.

With growth now pinned on premium stores, China is in a sense Starbucks' biggest bet.

"What worries you most about entering Italy next year, and how does that compare with what worried you about entering China in 1999?" a student asked from the floor.

"Italy has a very strong coffee tradition. I waited almost 50 years before deciding to go in. At the time I thought, 'If I can't get in, I'm dead.' Looking back, that anxiety, that nervousness, was actually quite healthy. Chinese people didn't drink coffee then; the China business lost money for its first few years, and people worried about national protectionism. The only way to succeed is to show that you will respect the local culture," Schultz answered. "This year we're opening the Roastery in Shanghai." It is, he offered, "the Disney of coffee."

Schultz must know perfectly well that China's coffee market today is nothing like the one he found 20 years ago.

Cover image from: Pexels

In-article images from: Starbucks, photographed on site

Translated from the original QDaily article. Original publication date retained.