updated 2/14/2006 8:18:28 AM ET 2006-02-14T13:18:28

Starbucks Corp. on Tuesday announced a $1.5 million donation to train schoolteachers in China, raising its profile in what chairman Howard Schultz said is the gourmet coffee chain's No. 1 growth market.

The donation is the first from a $5 million fund announced earlier by Seattle-based Starbucks for charity projects in China. The company opened its first Chinese outlet in 1999 and now has 220 locations in 18 cities.

"No market to date potentially has the opportunities for us that China ultimately will," Schultz said after a ceremony at the Great Hall of the People, the seat of China's legislature, to announce the school donation.

"We have significantly moved China up to the No. 1 priority in our company," he said.

Schultz wouldn't give any details of expansion plans but said the company is still in an "embryonic state" in China. Its chief financial officer, Michael Casey, said this month that he expects China could one day have several thousand Starbucks.

Driven partly by its projected growth in China, Starbucks expects to maintain annual growth of 20 percent in revenues and 20 to 25 percent in earnings per share over the next three to five years, Schultz said.

Also at the donation ceremony were officials of China's legislature and the Soong Ching-ling Foundation, a Chinese children's charity that is Starbucks' partner in the school-training program.

The program is to train 3,000 schoolteachers from China's poor west and to provide books and computers for their schools.

It adds to a string of charitable gifts in China in recent years by companies that want to polish their public image and mollify nationalistic frustration at a massive influx of bigger, richer foreign competitors into long-closed Chinese markets.

Schultz, who repeatedly stressed Starbucks' desire to show respect for Chinese customers and employees, said the gift was an effort to "enter China in the right way."

Schultz said that after some early unease about opening in a society known for drinking tea, Starbucks has been even more successful in China than it hoped.

But Starbucks is clearly aimed at the urban upper and middle classes, as its coffee _ at up to $6 a cup _ costs more than the average Chinese worker makes in a day.

Still, the success of Starbucks outlets in provincial cities such as Chengdu in the southwest and Dalian in the northeast shows "we have an opportunity well beyond the major cities," Schultz said.

Starbucks' success in China has prompted a flock of imitators, some of which the company accuses of pirating its brand name and logo.

The company won a round in December, when a Shanghai court ordered a local coffee house to stop using the name Xingbake. Xing means star, and bake, pronounced "bah kuh," sounds like "bucks."

The company is pursuing cases against other copycats, said Wang Jinlong, the president of Starbucks Greater China. He said there were "many" but wouldn't give any details.

As courts crack down, he said, "we're confident there will be less and less in the future."

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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