Good Brew: Happy Employees, Local Flair
By EMILY VEACH
"The most important part of my job is to build the platform for people to accept, to have to align their personal dream with the company mission.' Jinlong Wang, Starbucks president Asia Pacific.
Starbucks Corp. posted faster revenue growth in Asia than anywhere else in the latest quarter. Even though the region only made up about 5% of global sales in the period ended Jan. 1, the Seattle, Wash.-based coffee company just announced a partnership in India, a difficult market for foreign businesses.
"We think in the long term it's going to be another core engine for the enterprise, given India's potential and growth. It's like China," said Jinlong Wang, president Asia Pacific, who is involved with the company's India expansion and oversees 10 other markets: Australia, New Zealand, South Korea, Hong Kong, Taiwan, the Philippines, Singapore, Indonesia, Malaysia and Thailand.
Mr. Wang first joined Starbucks in 1992 and worked in international business development as well as the law and corporate affairs department until 2000. He then held executive roles in two other companies before returning as Greater China president in 2005. His career also includes teaching and a stint as a government official at the Ministry of Foreign Economic Relations and Trade in Beijing, before he left to study law at Columbia University.
China, where coffee shops have become a fixture on city street corners, is one of the company's great success stories. Yet Starbucks suffered from its own success last week when Chinese consumers reacted angrily to news of rising drink prices at Starbucks.
Mr. Wang spoke with Emily Veach in Hong Kong about the challenges of winning brand loyalty in Asia's varied markets as well as how he retains quality staff, no small task in the retail business.
WSJ: How do you keep good people?
Mr. Wang: We treat our partners with respect, creating an environment for them to excel. To really give the best of themselves, give the best to each other.
WSJ: Do you have management programs in place to groom rising leaders?
Mr. Wang: We want to promote our own people, to give them opportunities. We have store managers who stay on 10 to 15 years, which is very difficult, particularly in the retail business. But they love what they do. They want to see their people grow.
I'm working with two people in the mentoring program, a manager and an operational director. Mentoring is not how to teach, it's now how to shape, it's really how to facilitate and allow people to have someone they can talk to, someone they can rely on. You have to have their best interests in mind but nothing else.
WSJ: Where do you see the most potential in this region?
Mr. Wang: Korea. Our partner has done a tremendous job building the brand.
Otherwise, growth is a lot higher in emerging markets. China is growing at about 8% to 9%, the rest of the region maybe 4% to 6%. The coffee industry is double-digits. You're talking 10%, 20%, 25%, in certain places even 30% growth in this segment. There's tremendous potential.
WSJ: What do you make of the growth trajectory of China's middle class?
Mr. Wang: Our brand really resonates with the young people there. Among our core customers in China the average age is much younger than in the U.S.—10-15 years younger. As we continue to grow there, Chinese don't want to be Westernized. They want to be modernized.
Starbucks will play a leading role in elevating the whole coffee industry, environmental responsibility and enhancing coffee farmers' lives. We set up a coffee farmer support center, imported some of the best coffee seeds and set up demo farms. We've never done it before. Asian Pacific coffee provides a very unique taste and profile. One of best selling coffees is Sumatra, from Indonesia.
WSJ: What are the biggest challenges the markets you oversee?
Mr. Wang: For Starbucks, it's never been about what we sell. It's really about what we stand for.…We also have to see how to strike a delicate balance: How to balance the profitability and the social conscience. As we grow we have to keep doing that and not lose the sight for growth and making money. That's one piece.
The other piece is the people. We are going to hire tens of thousands of people. How do we continually attract and retain the people who have the same passion to serve?
WSJ: You have many competitors spread over a huge region. How do you cope?
Mr. Wang: Starbucks welcomes all the competition. They bring a lot to customers. They keep everyone on alert and see how to continue to stand out. We've already established ourselves as a market leader.
I'm also a lawyer; I break the company into three categories: rule makers, rule followers, and rule breakers. Starbucks operates as both a rule maker and a rule breaker.
Rule breakers work for the sake of innovation, new way of serving the market, new way of engaging customers. The other thing is, more importantly, a good company will satisfy consumer needs. A great company helps to lead and create. I think that's where we stand above the competitors in the industry.
We do (pay attention to competitors). We have a lot of copiers, or rule followers. I always treat it as a compliment. We also want to learn. Each company finds its own place and brings something unique to the market.
Overall I think we can elevate the industry, creating more jobs, creating more opportunities. One of the things I can see from the local competitors, we don't have a global or even regional competitor.
In every market they have the advantage of understanding the local culture. Sometimes they're nimble and fast as well.
WSJ: What lessons have you learned from those local companies?
Mr. Wang: We look for ways they connect with customers and how we can learn.
I think our competitors certainly pay a lot more closer attention to what Starbucks is doing and try to copy it. Whatever you call that, they have their place in the market.
The biggest competition is about the people, the talent. Our biggest competitor is ourselves. In our business we don't need rocket science, you need a passionate community partner, you need the people who take pride and pleasure and happiness in serving other people and making a difference.
WSJ: You've had an interesting career path. Why did you choose to leave the civil service in China, which is seen as a very stable career?
Mr. Wang: I always want to learn. I had opportunities to work in other international organizations, then this opportunity to study (law) and learn more.
My major was economics and trade in China, it had nothing to do with law. I always want to learn. It's the thing that keeps the fire under my belt every day, to learn something new.
But going to law school was a whole different story. They waived all the examinations, but I didn't understand a word in class when I got there. When you're young, you can do anything you want.
WSJ: Do you find there is a lot of environmental education involved with farmers in Asia?
Mr. Wang: Huge. Our goal is sustainable growth, through our cafe practice, farmer equity and environmental awareness, economic accountability and better bean count. We help them increase the yield by almost 20%. We also reduce chemical use.
WSJ: People in Asia are more aware of what's going into their food and water. How does that affect the way you educate these farmers?
Mr. Wang: It varies, but people are more and more conscious about that and becoming more environmentally friendly. Particularly for Asia, more than half the population is here while the resources are limited. We all have the same goal—how to be sustainable and promote growth.
We want to lead awareness and work with communities for the long term. That's where you can build a sustainable business. That's where you can really make a big difference. That's where Starbucks says, "how do we balance the profitability and social conscience?"