-Caveat Lector- >From Reuters Monday January 11 6:37 AM ET Starbucks Brings Coffee Culture To China By Christiaan Virant BEIJING (Reuters) - U.S. coffee giant Starbucks Corp (Nasdaq:SBUX - news) opened its first retail outlet in China Monday, bringing its lucrative blend of American convenience and designer java to a growing market of cash-rich consumers. Amid the pomp of a traditional lion dance and the pounding beat of Chinese drums, a cross-cultural team of U.S.-trained, locally-hired Starbucks employees gave Beijing residents their first taste of the company's trademark espresso-based drinks. Starbucks executives visiting Beijing for the opening said they believed their coffee would be a strong sell in China, despite the country's affection for copious glass jars of tea. ``Per capita consumption of coffee in China is very small,'' admitted Howard Behar, president of Starbucks Coffee International. ``But what you have is a tremendous amount of people, so the market will grow.'' Behar said China's cash-flush youth were expected to make up Starbucks' consumer core. ``You don't take a 60 year-old that is not used to drinking coffee and have them change,'' he said, adding that rising incomes in China's developing cities was expected to fuel greater coffee awareness among the 18-45 age group. ``The one common thread throughout history is that as disposable income grows, coffee consumption grows,'' he said. Seattle-based Starbucks' long march to China began more than four years ago when joint venture partner Beijing Meida Coffee Co. Ltd began selling roasted coffee beans to major hotels. At that time espresso was a rare treat for the wealthy elite. Rising incomes spawned a local coffee culture in China's capital, which is now home to several small brewing and roasting ventures. But prices remained high, keeping the coffee experience beyond the means of the masses. Starbucks aims for a broader market and has priced accordingly, charging only 18 yuan ($2.17) for a 12 ounce cappuccino and 21 yuan for a chocolate-flavored caffe mocha, far below the going prices in Beijing. ``We want to reach the broadest population that we can,'' said David Sun, president and chief executive officer of Meida. ''We don't want to create a barrier through pricing.'' Starbucks' low prices sparked immediate response from home-grown competition, with at least one store promising to slash its coffee prices in half. ``Our prices will be cut to be even lower than theirs,'' said the counter attendant at The Daily Grind, a locally-invested coffee shop in the same hotel complex as the new Starbucks. Although all the coffee beans used in Starbucks' beverages are now imported into China, Behar said the company would eventually like to use some domestic beans in its blend of premium roasts. China's subtropical southwestern province of Yunnan produces 3,500 tons of dried coffee beans annually and hopes to boost production to 15,000 tons by the year 2000. Maxwell House and Nestle have both signed contracts with the province for beans and the government is adding thousands of hectares to its plantations to meet demand, officials said. For now, Starbucks will concentrate on expanding its market presence in Beijing and plans to open at least seven more retail outlets in the next 12 months. The company is also eying locations in Tianjin, Shanghai and Guangzhou. ``We have two other stores under construction in Beijing and we are negotiating with landlords for four more,'' Sun said. 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