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By Lucy Craymer and Heather Haddon
At a recent rally in Hong Kong, protesters smashed the glass front of a Starbucks cafe, dragged some of its chairs into the street and lounged around in them as they watched the demonstration unfold.
It was a targeted attack. Another Starbucks in a nearby shopping complex in the same outlying neighborhood of Tuen Mun was boarded up, its windows shattered. Stores around the two cafes were untouched.
The Seattle coffee chain has become a flashpoint for antigovernment activists in Hong Kong. While the company's scale has enmeshed it elsewhere in debates about everything from race relations to gun control, here the problem is with its local franchisee, Maxim's Group, which protesters say is an apologist for Beijing.
Across the city, Starbucks Corp. cafes have been spray painted with profanity and plastered over with posters. A small fire was lighted outside one outlet in a busy residential neighborhood. Protesters have called for a boycott. At the University of Hong Kong, a large poster spoofing the chain's logo by turning it red and proclaiming "Communists Coffee" was laid down in front of the entrance Friday to discourage people from going in.
"We don't hate Starbucks, we hate Maxim's," said Chris Chan, who in mid-September created a petition on Change.org demanding Starbucks withdraw the Hong Kong company's right to operate its franchise. The online petition has so far drawn more than 54,000 signatories. The 50-year-old, who works in the construction industry, said he also tried to contact Starbucks founder Howard Schultz and Chief Executive Kevin Johnson.
Starbucks declined to comment on the situation in Hong Kong.
Maxim's got in trouble for comments made by the founder's eldest daughter, 71-year-old Annie Wu Suk-ching, and another prominent Hong Konger in a speech at the United Nations Human Rights Council in Geneva.
The offending remarks: that protesters don't represent the city, and that the police have been justified in using rubber bullets and tear gas to control the crowds.
Maxim's has said the founder's daughter isn't an employee and hopes all parties will resolve their differences so the city can get back to normal. It wouldn't comment further.
The protesters' reaction highlights the risk companies face of falling on the wrong side of Hong Kong's sharpening political divide.
Executives across the city are bracing for the worst if one of their employees, managers or owners expresses an opinion that manages to offend either side in the standoff.
On the other side, companies face retribution if they seem insufficiently supportive of Beijing's interests. Hong Kong's flagship airline, Cathay Pacific Airways Ltd., replaced its CEO and chairman, and fired dozens of employees, after some staffers took part in protests and China reacted by threatening to bar access to its airspace.
Starbucks, an American brand that has supported liberal causes in the U.S., has been an unlikely target. There are about 200 Starbucks locations in Hong Kong and neighboring Macau, roughly double that of local rival Pacific Coffee.
All Starbucks outlets in Hong Kong are operated by Maxim's, a large food and beverage conglomerate that has been a key broker for U.S. restaurant chains looking to expand across Asia. Maxim's has had a relationship with Starbucks for 19 years and operates the coffee chain's franchise in parts of Southeast Asia. Starbucks, meanwhile, owns its 4,000 cafes in mainland China.
While Maxim's operates many other restaurant chains and bakeries in Hong Kong and is the local franchisee for American brands Shake Shack Inc. and Cheesecake Factory Inc., Starbucks has been a more prominent target.
"Starbucks-Maxim's is supporting China and not just doing business," said Mr. Chan, the person who started the petition, adding that Maxim's large presence in Hong Kong means it would be hard for protesters to make a significant dent in the group's revenue. Trying to get the attention of Starbucks's U.S. leadership and shareholders, on the other hand, seemed more achievable, he said.
In the U.S., Starbucks has publicly pushed voter registration and civic duty. It has also drawn controversy by taking public stands on whether customers can bring guns into its cafes and whether people can hang out there without buying anything.
Antigovernment protests in Hong Kong, triggered by opposition to a bill allowing extradition to mainland China, are now wrapping up their fourth month. The city's government formally pledged to scrap the bill in September, but protesters have four other demands, chief among them the establishment of a judge-led commission to investigate allegations of excessive use of force by the police.
Protesters have defaced and damaged the property of other companies seen as too close to Beijing. Chinese banks with branches in Hong Kong have been spray painted and papered over with anti-China fliers, and their ATMs have been battered. Meanwhile, the huge crowds of black-clad protesters move through expensive shopping districts and malls leaving most stores and displays of expensive goods like cosmetics and iPhones untouched.
The summer of strife has hit the city's retail sector hard. Stores are coping with a plunge in shoppers and tourists, subway disruptions, and early closures to make sure workers can get home safely before the inevitable weekend protests intensify.
This week, government data showed Hong Kong retail sales fell 23% in August from a year ago, the biggest monthly decline on record.
On Friday, the two Starbucks cafes that were damaged by protesters in the Tuen Mun neighborhood were boarded up, and workers could be seen sweeping up broken glass in one.
A Starbucks outlet at the University of Hong Kong was less busy than normal, according to patrons. Some people stopped to photograph the posters and graffiti at its entrance.
Hyunwoo Kim, a 21-year-old international student from South Korea, was sipping an iced Americano outside.
"I've been drinking coffee from Starbucks for five years," he said. "It's a habit. I can't just give it up."
University student Hugo, who asked his surname not be used, has bought a coffee maker online and intends to stick to coffee he brews at home or buys elsewhere on campus.
"It used to look cool if you were holding a Starbucks," the 21-year-old said, adding that he now considers rival chain Delifrance as his go-to coffee place. "What I taste from Starbucks is no longer status but shame."
Write to Lucy Craymer at Lucy.Craymer@wsj.com and Heather Haddon at firstname.lastname@example.org
(END) Dow Jones Newswires
October 04, 2019 08:39 ET (12:39 GMT)
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