Around Asia: Chinese media attacks Starbucks for high prices

In Other News - October 22nd, 2013
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Chinese state media launched a barrage against Starbucks, saying the cafe chain was milking consumers in China for a cup of coffee.

State-owned China Central Television and China Daily newspaper accused the company of charging higher prices in China than elsewhere, including the United States.

CCTV, in a 20-minue broadcast called “Starbucks: Expensive in China,” said the company’s coffee products cost as much as 50% more in China. A medium size latte costs 27 yuan or $4.40 in China, compared with $3.20 in Chicago and about $4 in London.

The report also said a Starbucks coffee mug—which is made in China—has a price tag of $18 in the country, while it only costs $10–14 in the US.

The Seattle-based coffee chain is enjoying strong sales in China and the Pacific region, with a profit margin as high as 32%. That figure is larger than it is in the US (21%) and Europe, and Middle East and Africa (1.9%). The company doesn’t break out its financial information by country.

Ren Jing, an official of the Chinese Consumers’ Association, said the company was profiting from Chinese consumers’ “blind pursuit” of foreign brands.

Just last month, Starbucks raised its prices in China by two yuan, the second time they have increased this year.

The company “understands the concerns raised by recent Chinese media,” Starbucks said.

It added its prices vary by market because of different costs, such as for labor, commodities, real estate and infrastructure investment, Wall Street Journal reports.

The swipe at Starbucks is the latest in a wave of criticism by state media of Western companies’ business operations in China.

Apple drew flak for its poor warranty standards and customer services in China. CCTV reported that Apple was using refurbished parts to repair products in China, and limiting some warranties to one year.

By Maesie Bertumen

Image: Jasmin/Flickr