(Yicai) Jan. 29 -- Starbucks’ China business posted 11 percent year-on-year revenue growth in the first fiscal quarter ended December, after the American coffee chain brought in Chinese private equity firm Boyu Capital Investment Management as a strategic partner to respond to intensifying competition in the local market.

The growth came as Starbucks China generated net revenue of USD823.4 million in the three months ended Dec. 28, with comparable store sales rising 7 percent year on year, including a 5 percent increase in transaction volume and a 2 percent rise in average ticket size, the Seattle-based company announced yesterday. The total number of stores increased 4 percent to exceed 8,010.

Globally, Starbucks’ revenue rose 6 percent year on year to USD9.9 billion during the same period, while net profit plunged 62 percent to USD293.3 million, mainly due to higher costs driven by rising coffee bean prices and tariffs, according to the company’s latest earnings report.

In November last year, Starbucks entered into a strategic partnership with Boyu Capital to jointly operate its retail business in China through the establishment of a joint venture. Under the agreement, Boyu Capital will invest USD4 billion to acquire a 60 percent stake in the JV, while Starbucks will retain the remaining 40 percent stake, along with brand licensing and intellectual property rights.

The transaction is expected to be completed this spring, pending regulatory approval, Starbucks said in the report released yesterday. The deal will help Starbucks China reduce depreciation and amortization expenses as well as store operating costs, it added.

With Boyu Capital’s involvement, Starbucks China plans to accelerate the expansion of its store network, adopt market strategies better aligned with local conditions, and strengthen supply chain integration, Zhu Danpeng, a food industry analyst, previously told Yicai.

According to the agreement, Starbucks aims to gradually expand its total number of stores in China to 20,000 in the future, surpassing North America to become its largest market globally by store count.

Even with the backing of Chinese capital, Starbucks continues to face intense competition in China. As of the end of the third quarter last year, local rival Luckin Coffee operated more than 29,000 stores, with quarterly revenue reaching CNY15.3 billion (USD2.2 billion), significantly outpacing Starbucks China.

Editors: Emmi Laine, Dou Shicong