This Labor Day, the global coffee giant Starbucks encountered an unprecedented "darkest hour."

On May 1st local time, Starbucks' stock price experienced a shocking plunge, plummeting nearly 18%, with its market value eroding by over 15 billion USD, equivalent to approximately 115 billion RMB.

At the same time, Starbucks' store sales in China saw a year-on-year decrease of 11 percentage points, which is far worse than the expected decline of 1.64%.

Faced with the chilling financial report, many netizens exclaimed, "Is Starbucks completely unsaleable in China now?"

After all, the development of the coffee shop market in China in recent years has been quite rapid.

Starbucks' sudden downturn is entirely due to a loss in its development strategy, colliding with the rivalry between Luckin and Kudi, which ironically caused this "old-timer" to stumble.

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The first Starbucks was established in 1971 by three Seattle residents, and it was later acquired by its former marketing director in 1988, officially embarking on the path of a coffee shop chain.

Thus, Starbucks can be considered a veteran over half a century old, while Luckin and Kudi are new brands that have only emerged in recent years, embodying the youthful state of the industry.

Youth is always full of vitality, and the story of Luckin and Kudi's "squabble" needs no deliberate retelling; their price war, with one offering at 9.9 yuan and the other at 8.8 yuan, has already spoken volumes.

After all, the two companies have deep roots, with a significant overlap in the founding teams of Kudi and Luckin. In 2020, after Luckin self-disclosed financial fraud, Chairman Lu Zhengyao resigned in disgrace.Two years later, Lu Zhengyao and Qian Zhiya led the original core team of Luckin Coffee to create a brand-new coffee chain brand—Kudi Coffee.

Kudi seems like a clone of Luckin, with development strategies that are strikingly similar:

In the early stages, they paved the way by burning money, opening a large number of stores across the country almost at a cost-neglecting state, and then used promotional policies with discount subsidies to break into the market.

In this way, the two "brother" brands went to opposite sides, competing with each other for market share by offering low-price promotions.

After they started competing, Starbucks, which originally planned to stay on the sidelines, seemed to be affected as well.

After all, the taste of coffee is more or less the same for most people, but the price difference between Starbucks and other brands is too significant.

It's hard to say whether the competition between Luckin and Kudi won't steal some of Starbucks' audience.

Although it doesn't matter if unstable users are taken away, it seems even more unfair to those loyal customers who firmly choose Starbucks if they don't follow the trend and give some feedback.

As a result, Starbucks, which appears uninterested in price wars on the surface, has gradually released quite a few policies with real money and silver, such as discounts on specific flavors, more buy more discount, and live broadcast coupons.

Starbucks' move has been mocked by many people for saying one thing and doing another, on one hand, they raise the big flag and say they won't participate in price wars, on the other hand, they quietly carry out activities to reduce prices.But Starbucks does not admit to engaging in a price war, only stating that it is "encouraging consumer purchase frequency."

In fact, Starbucks' denial of a price war is not entirely baseless.

After all, compared to the bottom price of 9.9 yuan offered by Luckin and Kudi, Starbucks is merely conducting some promotions, with the single cup price still being about twice as much as those two young brands, which is why people often say "experience still counts."

Starbucks relies on its experience accumulated over more than twenty years in China and its understanding of Chinese consumer habits to conduct its business:

On one hand, it lowers prices to "attract" people on the borderline of consumption, while on the other hand, it maintains its "high-end" and "yuppie" market positioning.

The courage for Starbucks to play this game comes entirely from its successful experience in China over the past decade or so.

Before entering the Chinese market, Starbucks was already a publicly traded company, and the money-burning strategy that Luckin and Kudi are currently employing are tactics that Starbucks has already left behind.

Within just two years after being taken over by Schultz, Starbucks expanded its store count to 46 and successfully went public with its own stock in 1992.

Seeing the increasing momentum of its domestic development, Schultz began to open branches overseas four years after going public.

It was not until 1999 that Wang Jinlong, the global vice president of Starbucks responsible for overseas business expansion, chose to open a Starbucks in his hometown—Beijing.As an imported brand, Starbucks had a tough time when it first entered China. In the Chinese dietary habits, tea is the main beverage, and the perception of coffee was still at the stage of Nestle instant coffee. Starbucks' store-based model of drinking on the spot was difficult to integrate into Chinese culture. For the first 9 years, Starbucks was in a loss-making state in China, which caused dissatisfaction among many shareholders. However, Wang Jinlong always believed that the Chinese market had great potential, but it was necessary to cultivate consumers' coffee habits. This may have seemed absurd at the time, but now it seems that Starbucks has obviously won the bet. When Starbucks just started in China, the first store was chosen in Beijing, and then the stores were gradually opened to economically developed cities such as Shanghai and Hong Kong. Until around 2008, under the influence of economic globalization, China still maintained the growth of the national CPI and GDP, and Starbucks finally saw the huge potential of the Chinese market. Therefore, Starbucks decided to increase its investment in the Chinese market, close more than 600 stores in the country, and open more than 80 stores in China. In that year, the number of Starbucks stores in China broke through to more than 400 in one year. Although it seems insignificant compared to the current total of more than 7,000 stores, it was definitely a remarkable number at the time. After additional investment, Starbucks' business in China began to gradually turn from loss to profit, and has maintained a growth state for 9 consecutive years.Only in the third quarter report of the fiscal year 2018 did a slight decline become apparent, with a 2% drop in same-store sales in the China region. At that time, Luckin Coffee was in its infancy, completing the layout of 525 stores in just over half a year and securing two rounds of financing within a year, showing a formidable momentum.

Coincidentally, Starbucks began to shift its development focus to third and fourth-tier cities in those years, while Luckin's strategy was to prioritize second and third-tier cities, resulting in an overlap between the two.

Fortunately, the impact of the minor performance dip was not significant, as Starbucks had a deep foundation in the Chinese market and was not easily shaken.

Up until the fiscal year 2023, Starbucks still achieved a new high in annual net revenue of $36 billion, with a 11% increase in revenue in the China region for the full year, totaling $3 billion.

Although the financial report was eye-catching in various ways, it also exposed problems. Therefore, based on the financial report of the previous fiscal year, Starbucks lowered its target for the fiscal year 2024.

However, it was clear that there was still a deviation in the estimates. When the financial report for the second quarter of the fiscal year 2024 was announced, Starbucks was severely slapped in the face: revenue declined, stock prices plummeted, and market value evaporated by more than $15 billion.

Now, Starbucks' situation in China is clearly becoming increasingly difficult, but it will not easily withdraw.

As a foreign brand that has taken root in China for 25 years, Starbucks has made many contributions to the domestic coffee market that many young brands today do not have, and the market will remember its efforts.

Starbucks has made many efforts to adapt to the Chinese market, not only stimulating the overall development of China's coffee market but also bringing many unexpected benefits to China's economic development.Once invited to set up shop in the Forbidden City, Starbucks faced public discontent and subsequently reduced its store presence, eventually leading to the closure of the location.

It is impossible to determine the exact correlation between the current coffee consumption habits of the Chinese people and Starbucks, but Starbucks China, with over 7,000 stores and involving more than 60,000 employees, has provided a significant number of job opportunities for Chinese citizens.

Additionally, Starbucks refers to its employees as "partners," offering not only the benefits mandated by the state but also many additional perks. For instance, when a new store opens in an employee's hometown, they can apply for a transfer to work there.

As early as 2012, Starbucks invested in a factory in Yunnan, supporting local coffee growers, purchasing coffee beans that meet their standards, and promoting Yunnan coffee to the world.

Starbucks is striving to adapt to China and gain recognition, while also promoting the development of China's coffee economy.

However, for some Chinese people, Starbucks' sincerity in wanting to develop in the Chinese market is insufficient.

They take pride in their "third place" concept, which is the idea that coffee shops can serve as a place for work and socializing, allowing customers to sit in the store for extended periods after making a purchase as part of their marketing strategy, thus attributing work and social attributes to coffee shops.

These concepts were simplistically and crudely understood by early Chinese consumers as "pretentious," and even in 2010, many people studied how to appear more sophisticated in Starbucks.

It can be said that Starbucks not only provides space and services to customers but also offers emotional value and a certain status symbol.

However, these services are already factored into the price of each cup of coffee. Even if customers do not need to use the space, they still have to pay a corresponding premium. Compared to other cheaper brands, there is no significant difference in coffee taste.During the economic boom, most people could still accept such a premium. Nowadays, with the economic situation being tense, everyone has started to advocate for thrift and saving money. The image of a petty bourgeoisie and light luxury that Starbucks can create is also gradually diminishing in the hearts of consumers, and the advantage of the "third place" is no longer so obvious. Coupled with the impact of previous negative news about Starbucks' cup sizes and incidents of driving people away, many people's impression of Starbucks has been greatly discounted. Although Starbucks' mid-to-high-end market positioning is not a problem, in the current trend of the Chinese market, a brand premium that is too high can easily be abandoned by everyone. After all, once the decorative "face" is given up, there are many affordable alternatives. Starbucks has been in the Chinese market for 25 years and has long understood the consumption habits of Chinese people. After realizing that the advantage of the "third place" is weakening, it began to focus on research and development, successively launching new products such as "Golden Roast Espresso" and "Coffee + Olive Oil". "Face" is very important to Chinese people, but "inside" is equally important. Starbucks must always be worthy of the evaluation of one price for one product, so as not to let its customers be seen as fools by others. In the future, if Starbucks wants to continue to expand the market, its current positioning and pricing strategy will definitely not work, because in the lower market, it is the cost performance that is competed. When the answer to whether old users or potential users choose is exactly the same, Starbucks needs to make a choice between pleasing one side or the other. Of course, all of this is based on the premise that Starbucks can survive this difficult period.Please provide the text you would like translated into English.