CNBC's The China Connection newsletter: Starbucks enters Xinjiang in calculated geopolitical risk
Starbucks struck one of Asia's most closely watched deals last year. Now it is getting headaches over choices made by a partner that leans toward Beijing.
TL;DR
- Starbucks has opened two stores in Xinjiang, a region criticized for human-rights abuses, through its partner Boyu Capital, which holds a 60% stake in Starbucks' China operations.
- The U.S. House Select Committee on China condemned the decision, demanding store closures and calling it "shocking and morally bankrupt."
- China's Foreign Ministry denied accusations of genocide in Xinjiang, describing it as a region of "social stability, economic prosperity, ethnic unity and religious harmony."
- Boyu Capital, co-founded by Alvin Jiang, a grandson of former President Jiang Zemin, is believed to have close ties to China's political elite and prioritized the domestic commercial opportunity over potential U.S. backlash.
- The expansion into Xinjiang is seen by some as an attempt by Chinese authorities to showcase the region's stability and attract global brands.
- The decision tests the climate for American businesses in China, with potential implications for future deals and partnerships if Starbucks succumbs to U.S. pressure.