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Starbucks Has the Smarts to Win China

This column was originally published on RealMoney on Nov. 21 at 9:25 a.m. EST. It's being republished as a bonus for readers.

The carcasses of those who have invested in China and lost line the halls of every bourse in the world. Why, oh, why, should Starbucks (SBUX - Get Report) be different? Why should we believe that founder, chairman and chief global strategist Howard Schultz and his team can pull it off? Why do we believe that when he says that China is his single greatest opportunity, he is not blowing smoke, he is not just saying something that everybody from General Motors to Dollar General has said or thought?

I believe Starbucks can, because it approaches things culturally, not capitalistically. I know that at one time the U.S. was the greatest capitalist nation on earth -- I genuinely believe that some of the central European and Asian and even Latin countries, OK, country, Chile -- are beginning to pass us. But I believe we have become too jaded, cynical, lawyered and polarized to make as much headway in China as other countries.

Not Starbucks. This is a company, like few others -- maybe Whole Foods (WFMI) -- that benefited from having no ties to the legacy of the days of labor vs. capital that seems to shroud all but tech in our country. It is a company that has thought more about workers and workspace and trying to make both the customer and the employee happy in a way that I haven't seen done on a mass scale anywhere else.

Plus, its stores are exciting, its merchandising -- music? -- unique. Everything it does seems, well, smarter than what everybody else does.

That's what it is going to take to win China: You have to be smarter than everyone else, and Starbucks just is.

Now, this stock has had a prolonged run since the low $20s as its comparison numbers improved. But I am urging you to consider that the comp numbers, going forward, are not what you should judge this company by. You have to consider this stock to be like Yum! Brands (YUM - Get Report) was two years ago, when it was saying, like Schultz did on "Mad Money" last Friday -- check out the interview -- that China was the single best opportunity out there. Now, as everyone knows, the move in Yum! has been made and the stock is starting to stagnate, mostly because of bird flu but also because of saturation.
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