(Yicai) Sept. 20 -- The China Coffee Innovation Park of US coffee chain Starbucks has officially begun operation in Kunshan, southeastern Jiangsu province.

With a total investment of CNY1.5 billion (USD220 million), the CIP is Starbucks' biggest investment in any coffee manufacturing and distribution center outside the US, the Seattle-based company announced yesterday. The park is also Starbucks' most energy-efficient and sustainable coffee manufacturing and distribution center in the world.

Covering about 80,000 square meters, the CIP features a roasting plant, an integrated distribution center, and an immersive experience center, Starbucks noted, adding that the park will import Arabica coffee beans from over 30 countries and regions, including China, for roasting.

"The CIP holds important significance for Starbucks in China and globally," said Belinda Wong, chairwoman and chief executive officer of Starbucks China. "It not only showcases Starbucks' unrivaled coffee leadership, fulfilling our scaled vertical integration in China 'from bean-to-cup,' but also sets a new benchmark for sustainability in China's coffee industry."

"As one of the largest consumer markets in the world, China presents tremendous opportunities for Starbucks," CEO Laxman Narasimhan said. "The CIP highlights Starbucks' foresight in elevating the supply chain through digitalization and advancing our sustainability agenda, enhancing our unique competitive advantage as we accelerate our global growth."

Starbucks China aims to have 9,000 outlets in the country and raise its employee headcount to more than 90,000 from 60,000 by 2025, Narasimhan said in May. "9,000 stores is just a milestone, and we will not stop there," he noted.

Starbucks' market capacity in China is expanding, with the number of customers also increasing, Narasimhan pointed out, adding that the market has enormous potential as locals consume only 12 cups of coffee a year on average, way less than the hundreds of cups per head in developed countries.

The coffee chain has outlets in 250 Chinese cities and has entered 800 counties. As of the end of the fiscal third quarter of 2023, it had 6,480 stores.

The most significant advantage for Starbucks in developing in lower-tier city markets is controlling costs, said Zhu Danpeng, a Chinese food industry analyst. "A cup of Starbucks coffee is available for CNY30 (USD4.10) in both first- and fifth-tier cities, but there is a huge gap in store rents," Zhu noted, explaining that stores in lower-tier cities can be more profitable despite lower revenue.

Starbucks' performance in the Chinese market has been improving. The firm's net profit from the Chinese market widened 60 percent to USD821.9 million in the three months ended July 2 from a year earlier and 10 percent from the previous quarter.

Editors: Shi Yi, Futura Costaglione