(Source: AJU Vision)
What are the chances of Bai Zhongyuan Coffee returning to China?
Paik's Coffee, a budget chain coffee brand founded by South Korean celebrity chef Bai Zhongyuan, is about to once again open the door to the Chinese market. According to industry sources, Paik's Coffee's first store in China will be located in the "Seoul Night Market" on Hongquan Road in Minhang District, Shanghai in August, marking the brand's repositioning in the Chinese market after several years.
This is not the first time Paik's Coffee has entered China. In the early years, Paik's Coffee opened a store in the Wanda Plaza near Wuzhong Road in Minhang District, Shanghai. However, due to changes in the market environment and business factors, the store eventually closed and the brand withdrew from the Chinese market for a period of time. Choosing to enter China for the second time now not only reflects the brand's optimism about the long-term potential of the Chinese consumer market, but also reflects the new changes that the South Korean coffee industry is experiencing.
South Korea is known as the "Coffee Republic" and currently has over 100000 coffee shops nationwide. Affordable brands such as Mega MGC Coffee, Compose Coffee, Paik's Coffee, etc. all have thousands of stores, and the addition of new stores is no longer sufficient to support the sustained high-speed growth of enterprises. More and more chain coffee brands are beginning to pin their growth hopes on overseas markets.
Mega MGC Coffee, with Mongolia as its first overseas destination, has opened multiple stores in Ulaanbaatar and established a Japanese legal entity. It is actively researching entering the Japanese and American markets, while also promoting the construction of stores in Cambodia. Composite Coffee has been deployed in Singapore and Taiwan, China, China, and plans to further enter the Philippine market.
In contrast, Paik's Coffee is more cautious in its overseas layout and is still in the stage of evaluating development opportunities in markets such as China, Japan, and the United States.
Compared to emerging markets such as the Philippines and Mongolia, China undoubtedly has a larger consumer base. In recent years, coffee consumption in China has maintained rapid growth, and although the per capita coffee consumption is still in South Korea, there is enormous potential. The expanding young consumer group and the sustained release of demand in third – and fourth tier cities have made China one of the most promising coffee markets in the world.
As a well-known catering entrepreneur in South Korea, Bai Zhongyuan frequently appears on variety shows and has a high level of popularity in China. His personal IP can bring a certain topic effect to the brand.
However, compared to entering China for the first time, the coffee market ecology in China has undergone earth shattering changes. If a few years ago the Chinese coffee market was still a 'blue ocean', then now it has entered the era of stock competition.
In addition to foreign brands represented by Starbucks still occupying the high-end market, the emergence of local brands is very impressive. After several years of rapid expansion, Luckin Coffee has become one of the top stores in the industry, relying on digital operations, supply chain management, and continuous launch of popular products to firmly occupy the mass consumer market.
In addition, Kudi Coffee Manner、M Stand、 Lucky Coffee and a large number of regional brands also occupy the boutique coffee, community coffee, and sinking markets respectively.
The biggest advantage of Paik's Coffee, the 'cheap bowl', may not necessarily constitute a competitive advantage in China. Brands such as Luckin Coffee, Kudi, and Lucky Coffee have already lowered their prices to 9.9 yuan or even lower, and high-capacity drinks have become a common feature in the industry.
The business model that Paik's Coffee relied on for its success in Korea is no longer uncommon in China. Compared to price competition, the true determinant of a brand's success may be its localization ability.
The super large cup American coffee favored by Korean consumers is not absolutely mainstream in China. In recent years, coffee consumption in China has shown a clear trend towards beverages, with consumers preferring innovative products such as milk coffee, raw coconut, fruit flavored coffee, and tea coffee blends, rather than traditional coffee such as American style or latte.
The MZ generation in China has extremely high requirements for the speed of new product updates. Taking Luckin Coffee as an example, it launches new products almost every month and collaborates with various popular IPs, with dazzling marketing tactics. If Paik's Coffee continues to directly replicate its product system from the Korean market to China, it will be difficult to continue attracting consumers.
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In addition, Chinese consumers have much higher requirements for digital operations than overseas markets. Membership points, mini program ordering, instant delivery, social media marketing, live streaming sales, and internet celebrity store exploration have become the "standard" for coffee brand management, while Korean brands rely relatively on offline stores and brand reputation. Whether Paik's Coffee can establish sufficient digital operation capabilities to attract consumers is still unknown.
Store location selection strategy is also extremely important. When Paik's Coffee first entered the Chinese market, it chose to open stores in large shopping centers, but now the commercial real estate landscape in China has changed. Office buildings, community businesses, subway districts, and university neighborhoods often have more stable consumer flow than traditional shopping centers. How to develop differentiated layouts based on different cities and consumer groups will become an important issue that brands need to face.
Paik's Coffee's return to China this time is more like a're entrepreneurship '. Compared to the first attempt, the brand now has more overseas operational experience and has caught up with the new wave of internationalization of Korean catering brands. But at the same time, the intensity of competition in the Chinese market is beyond imagination.
If you want to truly establish a foothold in the Chinese market, relying solely on Bai Zhongyuan's personal IP or labels such as "cheap big bowl" is far from enough. Whether we can deeply understand the needs of Chinese consumers, create a product system that meets local tastes, establish mature digital operation capabilities, and form unique values that distinguish us from local brands will be the key to success or failure.