China reported last week that its economy grew by 6.6% in 2018, its slowest rate of growth for almost three decades, yet that has not deterred Starbucks from maintaining its growth strategy for the country.

The US coffee shop chain retains a “firm belief” in China, according to John Culver, a group president at Starbucks who leads its retail growth and operations in 58 markets.

“Even with the [latest GDP] numbers, it’s one of the fastest growing economies in the world,” he said, while confirming to the Financial Times that the company intends to continue with its plans to open up to 600 new stores in China over the next year.

“We’re committed to the strategy we have in place,” he added, commenting that he had confidence in the business in China in the “short, middle and long term”.

He was speaking as Starbucks unveiled its Q1 fiscal 2019 results, which covered the final three months of December 2018 and showed total net revenues rose 9.2% from a year ago to $6.63bn.

However, the results revealed a mixed picture with like-for-like sales in its home US market growing 4% whereas sales in China, the other major market that Starbucks concentrates on, rose just 1% over the same quarter.

That was a significant decline from the 6% growth recorded a year ago, although the opening of 560 new cafés helped total revenues in China to almost double to $652m.

In part, the Financial Times noted, that is because the company’s dominance in China is being challenged by domestic rivals, most notably Luckin Coffee, which has built up at least 1,700 outlets in just 15 months.

According to a recent Bloomberg report, Luckin’s success has been attributed to its relentless focus on convenience and efficiency.

Whereas Starbucks has emphasised customer service and the pleasant décor of its stores, Luckin aims to appeal to a mass market by offering extremely competitive pricing.

Sourced from Financial Times, Bloomberg; additional content by WARC staff