US coffee chain Starbucks Corporation said it will open its first global coffee bean farm in China's Yunnan province, aiming to deepen its presence in the country, after signing a cooperation agreement with Yunnan government on Friday.

US chain hopes to tap potential of province's high-quality coffee beans

KUNMING - US coffee chain Starbucks Corporation said it will open its first global coffee bean farm in China's Yunnan province, aiming to deepen its presence in the country, after signing a cooperation agreement with Yunnan government on Friday.

"The Chinese market reflected the most significant growth in coffee sales of our company last year and we chose Yunnan as the first place where we grow coffee as we see a big potential for coffee business here," Howard Schultz, chairman, president and chief executive officer of Starbucks Corporation, told China Daily.

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Starbucks didn't reveal the size of its investment in Yunnan.

Apart from the base farm, Starbucks will also establish a coffee development center, coffee farmer support center and coffee processing facilities with the local government.

According to Schultz, China is Starbucks' second largest market in the world, following the United States. The Seattle-based company now has more than 800 stores in 31 cities around China.

Schultz said that the number of Starbucks stores in China will soon increase to more than 1,000.

"Yunnan coffee is one of the highest quality categories in the world and we plan to deliver the Yunnan taste, not just in China, but to all customers in the world including Starbucks fans in Paris, Brazil and Tokyo," Schultz said.

The Yunnan provincial government also plans to invest 3 billion yuan ($452 million) in expanding coffee bean volume from the current 38,000 tons to 200,000 tons by 2020. Additionally, it will increase coffee acreage from the current 26,700 hectares to 100,000 hectares within the same period.

"The cooperation with Starbucks will accelerate our steps to develop Pu'er into a top-quality coffee growing region in the world," Yang Yalin, vice-mayor of Pu'er, said.

Starbucks' purchase of Arabica coffee in Yunnan has increased approximately 20 times since 2007.

The company will introduce Starbucks coffee and planting technology, which have helped farmers achieve improvements in coffee quality evaluation scores. The cooperation will increase yield for every hectare by 25 percent and reduce costs by more than $200 per hectare on average.

Yunnan is China's biggest coffee growing area, comprising more than 90 percent of the whole country's annual output.

Other global food giants also see big potential for the coffee business in China's Yunnan province. According to the Coffee Association of Yunnan, Nestle SA plans to invest 3.3 billion yuan on coffee production, part of which will be used to improve its coffee cropping in Yuannan over the next 10 years,

So far Nestle has invested more than 50 million yuan in Yunnan in technical support for coffee cropping.