Luckin coffee, an emerging coffee shop operator in China, will soon file a monopoly lawsuit against Starbucks, luckin coffee Vice President Guo Jinyi said on Tuesday during a press conference in Beijing.
Customers sit inside a luckin coffee location on Tuesday, May 15, 2018 in Beijing, China. [Photo by Li Xiaohua / China.org.cn]
The Chinese coffee company released an open letter to Starbucks in which it accuses the American company of breaching China's anti-monopoly law.
According to the letter, Starbucks signed lease contracts with property owners which limit them from making rental agreements with potential competitors of Starbucks. These include dozens of coffee chain brands, stores that make over 30 percent of their revenue from coffee, and any store that includes the word "coffee" in its name.
Starbucks also allegedly pressured suppliers to pick sides, given that many of their equipment, packing and ingredient suppliers overlap with other companies'. Luckin coffee claims it has received notice from some of their suppliers that they will stop providing products, as required by Starbucks.
"Starbucks has damaged the fair competitive environment of the market and hindered the development of the Chinese coffee sector," Guo said.
Starbucks said China has a huge coffee market with vigorous competition and a rapid pace of development. "We have no intention of participating in the market hype of other brands. We welcome orderly competition, mutual promotion, constant innovation, continuously improving quality and service, and creating real value for Chinese consumers," Summer Gao, a representative from Starbucks China's communications department, said in an email to China.org.cn when asked to comment on luckin coffee's open letter.
Guo later posted a statement on the Chinese social media platform WeChat asking Starbucks to directly address the questions raised by luckin coffee. "Luckin coffee has substantial evidence and absolutely no interest in market hype," Guo wrote.
Statistics from Euromonitor International, an independent provider of strategic market research, show that Starbucks has seen its market share in China's chain coffee shop industry grow from 78.8 percent in 2016 to 80.7 percent in 2017.
Qian Zhiya, CEO of luckin coffee, told China News Service in November last year that her goal was to "beat Starbucks in China." So far, Luckin Coffee has opened 525 stores across China during the four months of its current trial run.