Starbucks Coffee has become one of the biggest foreign success stories in the Chinese market. But as trade frictions grow between China and the US, what's the future outlook for the coffee giant here? Our reporter Hou Na explores the company's journey in China for an answer.

Drinking, chatting and relaxing. Back in the 90s, coffee wasn't a popular drink in China. But Starbucks slowly helped foster a so-called coffee lifestyle. Sipping on a caffeinated beverage soon become an "IT" thing for youngsters like Judy Lui.

JUDY LUI COFFEE ENTHUSIAST "I think Starbucks is definitely more than a place to get coffee, it's more like a place to socialize and hang out."

As the number of loyalty members has tripled over the past 4 years, reaching some 7 million people, the coffee giant plans to open an estimated 600 new stores annually across the Chinese mainland in the next 5 years. The goal is to double the market's store count from the end of 2017 to 6-thousand locations in 230 cities.

HOWARD SCHULTZ STARBUCKS FOUNDER "I was one of the early CEOs in America saying how bullish and excited I was about the Chinese opportunity for Starbucks and the China market."

HOU NA BEIJING "Today, Starbucks operates approximately 3,300 stores in 141 cities in China and employs 45,000 partners. With a new store opening every 15 hours, Starbucks inevitably faces challenges in the Chinese market."

In August, Starbucks announced a deep, strategic "New Retail" partnership with E-commerce giant Alibaba, which it says will transform the coffee industry in China.

This September, the delivery partnership between Starbucks and Alibaba will start with 150 Starbucks locations in Shanghai and Beijing. Eventually, the program will expand to 2,000 stores and 30 cities by the end of the year.

KEVIN JOHNSON STARBUCKS CEO "We did a delivery pilot a few years ago in the U.S., and the cost of delivery was higher to the point that it wasn't generating enough customer demand. So I think overtime delivery will catch on in the U.S. but right now in China, I think that's where the innovation and that's where delivery is becoming very popular. So I expect it to be a very good thing in China."

HOU NA BEIJING "Among Starbucks global portfolio, China is leading in terms of digital payment, with greater than 60-percent digital tender mix, and 80-percent cashless."

The United States is the largest market for Starbucks so far. As of October 2017, the country had nearly 14,000 stores. China ranked second ahead of Canada, which has a total of 1,460 locations.

HOU NA BEIJING "Starbucks is prioritizing store count expansion in China. It's been an effective strategy, though a recent acceleration in the pace of new store openings appears to have cannibalized some sales of existing stores, with Starbucks' China companies falling 2% in the third quarter. Management, however, remains confident that China represents a massive long-term growth opportunity."

In 2017, Starbucks generated 15.6 billion U.S. dollars in the U.S., with the rest of the world making a little over four billion dollars. Despite the large gap, Starbucks' founder sees a bright future AND some big changes.

HOWARD SCHULTZ STARBUCKS FOUNDER "I really have no doubt that Starbucks in China will be the largest market in the world and it will surpass the U.S."

But it's not all that easy in China, as competition is growing. Startup brand Luckin Coffee is widely considered the disrupter that threatens Starbucks. It holds a staggering 74.6 percent slice of the market share. By offering coffee at much lower prices, or even sometimes free of cost, and giving customers the convenience of ordering their coffee through a mobile app, Luckin has managed to sell more than 18 million cups of coffee to 3.5 million people within seven months of being established. In May, Luckin wrote an open letter, accusing Starbucks of monopolistic behavior. Starbucks called it a publicity stunt. But Professor Towson from Peking University says it's not about winning.

JEFFREY TOWSON, PROFESSOR OF INVESTMENT GUANGHUA SCHOOL OF MANAGEMENT, PEKING UNIVERSITY "The market is so big potentially that if they get any degree of traction in the mass market for retail coffee, they will be big and win big without touching Starbucks. Now, however, Chinese consumers are notoriously fickle in every industry just about you see market shares swing every year. It would not surprise me at all if we see 10 or 20 percent of Starbucks volume shift."

Indeed, scale is key in the retail business, as experts say location often trumps brand. It remains to be seen if Luckin's new retail model for coffee will work in China. Starbucks has announced plans to more than triple their revenues and double their operating income in China by the end of 2022.

HOWARD SCHULTZ STARBUCKS FOUNDER "I think it is in our collective interest to try and find ways to cooperate and I think the world at large needs China and the U.S. to be partners, to demonstrate that we have much more in common than we have in differences and for statesmanship to be elevated to the point where the current tension can be put aside and we can do the kind of things that are necessary for the world at large."

Starbucks digital flywheel in China is the foundation that will help elevate the customer experience in stores and drive loyalty. For people like Judy Lui, it's more than the lifestyle that's attracting her.

JUDY LUI COFFEE ENTHUSIAST "When I first encountered Starbucks, I noticed that there are policies in the store that encourages people to bring their reusable cups and getting discount when they do. This notion of recycling within this kind of corporate environment is admirable."

While the story of Starbucks China has largely been a story of China's burgeoning middle class, meeting the internet challenge as a brick-and-mortar chain could be a challenge in and of itself.

HOU NA, CGTN, BEIJING.