Many industry leaders credit the birth of Chinese coffee culture to Nestl's intensive marketing of its Nescaf brand when it pioneered the market in the mid-1980s. Then, the company introduced Chinese to soluble, or instant coffee, which today accounts for about 90 percent of retail sales, according to the ICO.

"(Soluble coffee) is preferred for in-home consumption, as it is easier to prepare and more akin to tea making," said ICO executive director Nstor Osorio.

With its first-mover advantage Nestl has maintained its grip on the soluble coffee industry and today accounts for 45 percent of retail sales. Its main competitors are Kraft's Maxwell House brand and Sara Lee; together, these three companies account for 70 percent of the market, according to the ICO.

Starbucks introduced the coffee shop to China when it entered the market in 1998. Today, the company has 450 stores in Greater China, with more than 200 stores in 21 cities on the mainland the region undergoing the fastest growth.

"We believe that China will eventually be the largest international market for Starbucks outside of the United States," said Starbucks' Greater China vice-president Eden Woon. "Traditionally a stronghold of jasmine, oolong, green, black and myriads of other fragrant kinds of tea, the Chinese mainland is becoming more attuned to the rich flavor of the coffee bean, driven by a wealthy middle class that is more receptive to Western choices and tastes."

And therein lies the question, which has been spotlighted by the recent controversy surrounding Starbucks' presence in the Forbidden City: Is the development of China's coffee culture motivated by a desire to embrace all things Western, or is it a culture that the Chinese have adopted from outside but made their own?

1

2

3

4

(For more biz stories, please visit Industry Updates)