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Originally published Wednesday, January 14, 2009 at 12:12 PM

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Starbucks thrives in China, attacked in Beirut, London

Seattle coffee company celebrates 10 years in China. Company denies supporting Israeli military.

Seattle Times business reporter

Starbucks has seen no drop-off in its China business, its top international executive told Reuters.

The good news comes as the Seattle coffee company struggles in the U.S. and other foreign markets. It closed most of its Australia stores last year and reported flat same-store sales in Canada and the United Kingdom during its fourth quarter ended Sept. 28.

Following a 97 percent drop in fourth-quarter profit, Starbucks scaled back expansion plans for fiscal 2009 to include 700 new international stores, down from 900. It has more than 5,100 stores outside the U.S.

But in China, where it has just over 350 stores, business is strong.

"We have not seen a drop-off at all in the demand for Starbucks in China," Martin Coles, president of Starbucks Coffee International, told Reuters at an event marking the firm's first 10 years in China. "We have seen an acceleration in our (China) business."

Coles said it will take less than 10 years to open the next 350 stores in China.

In honor of the anniversary, Starbucks introduced its first blend including Chinese coffee to stores there until mid-February. It also will sign cooperation agreements in the next couple days with local governments in southern Yunnan province aimed at helping farmers increase coffee yields and improve quality.

A Starbucks spokeswoman declined to confirm Coles' positive comments, saying it is company policy not to breakout individual market performance except for the U.S.

The news came as Starbucks was forced to close a store in Beirut on Tuesday because of about 100 demonstrators shouting anti-Israel slogans and causing customers to flee, The Associated Press reported.

Earlier this week, a Starbucks shop in London took the brunt of vandalism by pro-Palestinian demonstrators who ripped out fittings and equipment after clashes with riot police, according to the Evening Standard in London.

Protesters in Beirut told AP that they targeted Starbucks because they claim Chairman and CEO Howard Schultz donates money to the Israeli military.

They hung several banners on the shop's window and used white tape to paste a Star of David over the green-and-white Starbucks sign, AP reported. They also distributed a letter saying Schultz "is one of the pillars of the American Jewish lobby and the owner of the Starbucks," which they said donates money to the Israeli military.

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Starbucks spokeswoman Deb Trevino pointed to its Web site for a comment it has used before to address attacks and rumors regarding Starbucks, Schultz and Israel.

It reads in part, "Rumors that Starbucks Coffee Company and its management support Israel are unequivocally false. ... Starbucks is a nonpolitical organization and does not support political causes. Further, political preferences of a Starbucks partner [employee] at any level have absolutely no bearing on Starbucks company policies."

Starbucks has been operating in Lebanon for several years and has 16 branches around the country, AP reported.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Copyright © 2009 The Seattle Times Company

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