Starbucks announced on Wednesday that Howard Schultz would step down immediately from the Board of Directors as part of a “planned” transition process. Earlier this year at the company’s annual meeting, National Legal and Policy Center called upon its fellow shareholders in the coffee giant to vote against Schultz’s reelection to the firm’s board. He did gain a majority of the vote, but now he departs only six months later, and former Alibaba executive Wei Zhang will take his place. According to CNBC:
Her experience with the Chinese e-commerce giant could aid Starbucks as it tries to help its Chinese business bounce back. China is Starbucks’ second-largest market, and some trends there, such as mobile ordering, have inspired changes to the company’s U.S. business.
Many firms are reconsidering their growth plans in China amid geopolitical tensions and human rights abuses, as NLPC reported earlier this week. But almost in defiance of the shift in the prevailing corporate sentiment, Starbucks instead is doubling down on its business in the communist nation.
In March, Corporate Integrity Project Director Paul Chesser presented a “Communist China Audit” proposal at Starbucks‘s annual meeting, which asked the company to produce a report that addresses its vulnerabilities related to its business and ambitious expansion plans in the communist country. NLPC also filed a proxy memorandum with the Securities and Exchange Commission to support its proposal:
China poses a unique challenge given its size, strength, and track record of restricting the freedom of its people and abusing their human rights.
Against this backdrop, it’s unrealistic and irresponsible for Starbucks to contend that doing business with China is comparable to other business risks disclosed in existing reports and filings – especially given the company’s dependence on China for revenue and supply.
Starbucks’s continued reliance on the the Chinese economy for growth leaves shareholders exposed to tremendous operational, ethical, and reputational risks from conducting business there. Now the departing Schultz, who already sought aggressive expansion in China, is being replaced by a director with even deeper ties in China.
