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Starbucks will form a joint venture with Boyu Capital to operate the company's locations in China.
The announcement on Monday comes after the coffee giant conducted a months-long review of strategic options that included strategic partnerships or a joint venture. CEO Brian Niccol told CNBC's Jim Cramer last month that the company valued its China business at more than $10 billion.
Starbucks opened its first store in China in 1999. By 2015, it had grown to become the company's second-largest market, trailing only the United States.
But in recent years, Starbucks has seen its sales in China plummet, first due to the pandemic and related government restrictions and later caused by increased competition. Rival Luckin Coffee now has more stores in China than Starbucks and has won over customers with lower-priced drinks than the U.S. coffee chain.
While Starbucks executives have continually expressed optimism about the company's long-term prospects in China, its weak performance in the country has weighed on Starbucks' overall financial results.
For decades, China's massive population and fast-growing economy have made it an attractive market for U.S. companies. But in recent years, an economic slowdown and greater competition from home-grown brands have made some companies rethink their strategies.
Earlier this year, Burger King's parent company Restaurant Brands bought its struggling China business from TFI Asia Holdings with the goal of selling it to another operator. On the other hand, McDonald's increased its minority stake in its China business from 20% to 48% two years ago, aiming to benefit from the market's growth.
