Summary of the News
The Investment and Trade Fair, which opened in Xiamen in September, is the highest-level investment and trade event in China, open to the global community. Luckin Coffee has been the sole designated coffee brand for two consecutive years. This year, Luckin even collaborated with the official Brazilian export agency to establish a China-Brazil BRICS-themed pavilion, effectively bringing its global expansion strategy to a national-level economic and trade platform. The focus of the news is not just on showcasing coffee products but on illustrating a major trend through the development path of a well-known brand: the globalization of Chinese consumer companies has evolved significantly. In the past, Chinese companies either spent money on imported raw materials or sold domestically produced goods abroad for a profit margin. Now, they have moved to a new phase where they deeply integrate with global supply chains, control the entire supply process, and even export mature business models. Luckin Coffee is a prime example of this new trend.
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Popular Explanation of the News
1. Why a coffee brand is repeatedly featured at a national-level investment event?
Many may wonder why a coffee brand would be chosen as a “designated partner” for such a prestigious event, which typically focuses on large-scale foreign investment projects and cross-border industrial cooperation. The reason is that Luckin has tapped into the current need for more practical and tangible forms of economic cooperation between China and other countries. In the past, cooperation with Brazil mainly involved trading commodities like iron ore and soybeans. This time, Luckin used coffee, a product that everyone consumes daily, as a medium for collaboration. By placing large orders for coffee beans, Luckin provides long-term stability for Brazilian farmers and also promotes cultural exchanges through events and themed stores, creating a tangible example of BRICS cooperation that everyone can relate to. The event is no longer just about attracting investment but about presenting a new image of Chinese companies going global for mutual benefit.
2. Why does Luckin’s approach to buying coffee beans differ from that of traditional importers?
Traditional Chinese coffee brands have been passive buyers, relying on intermediaries and accepting whatever prices were offered, with little control over supply or quality. Luckin, however, takes a proactive approach. It places long-term, guaranteed-price orders, establishes offices and training centers in coffee-producing countries, and ensures that farmers produce high-quality beans that meet its standards. It even buys all the beans, eliminating the need for farmers to worry about sales. Data shows that Luckin accounts for half of the coffee beans exported from Brazil to China and 35% from Ethiopia. By doing so, Luckin has secured a strong position in the global coffee supply chain, gaining control over quality and pricing, and reducing its dependence on traders.
3. Why does Luckin invest billions in building domestic infrastructure for coffee?
Although Luckin’s low-price coffee strategy may seem reliant on marketing, its real advantage lies in its robust supply chain. Even if it could buy the best coffee beans from around the world, without its own processing, storage, and logistics network, it couldn’t maintain fast delivery, consistent quality, and affordable prices across thousands of stores. Luckin has chosen Xiamen, a major coffee import hub, to build a 60,000-square-meter coffee industrial park with an annual roasting capacity of 55,000 tons. It also has roasting facilities in Kunshan, Qingdao, and Pingnan, with a total annual roasting capacity of over 155,000 tons. Additionally, it has launched a dedicated railway line for transporting coffee beans, ensuring that the entire supply chain is under its control. This unique infrastructure is its competitive advantage.
4. How does Luckin’s global bean procurement benefit local farmers in China?
While some criticize Luckin for buying beans abroad, it actually benefits local farmers in China. In 2025, Luckin will purchase 33,400 tons of coffee beans from Yunnan, accounting for 38% of the province’s total output. This has significantly improved the situation for farmers, as they receive a fair price and better quality control. Luckin also helps to standardize production methods and has promoted the scale and quality of China’s coffee industry. Furthermore, it has exported its successful model to other countries, creating a mutually beneficial cycle that benefits both domestic and international stakeholders.
5. How does Luckin’s approach to globalization provide a new path for Chinese consumer companies?
In the past, Chinese consumer brands either invested heavily abroad to acquire resources or sold cheap domestic products for a profit margin, which was risky and limited. Luckin takes a different approach: it combines orders, technology, and cooperation with local producers to create value. It builds a strong domestic supply chain and uses its domestic market base to expand globally, controlling all key links in the supply chain. This model allows Chinese companies to integrate global resources and markets, benefiting both consumers and local producers, representing a new path to sustainable development.
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In summary, Luckin Coffee’s success illustrates a new path for Chinese consumer companies going global. It combines strategic partnerships with local producers, builds robust supply chains, and leverages domestic resources to create a sustainable and profitable model that benefits all stakeholders.