In fiscal 2005, Starbucks Coffee Company says it increased the number of stores in China to 209 from 152 at fiscal year end 2004, and opened new company-operated stores in three cities in mainland China: Qingdao, Dalian, and Chengdu.

"Many factors will contribute to the success of the Starbucks brand in China, including our standards of service, the Third Place environment and our continued focus on local community events and corporate social responsibility," said Christine Day, president, Starbucks Asia Pacific Group. "Changing demographics in China, such as increasing sophistication in consumer trends, affinity for western brands and aspirational engagement like the Starbucks Experience, which our partners deliver to our customers worldwide every day, will also have an impact on our success."

As of January 29, 2006, there were 386 locations in 18 cities in mainland China, as well as Taiwan and Hong Kong. Expansion within China continues to present the greatest growth opportunity in the Company's international footprint.

In September 2005, at Tsinghua University in Beijing, Starbucks introduced the China Education Fund, which represents a US$5 million commitment by the Company to provide funding to increase access to education in China. Starbucks will introduce the second phase of this project later this month.