Yesterday China’s official TV station spent 20 minutes attacking Starbucks for its high prices, saying Chinese consumers are getting charged up to 50% more for coffee than customers in the U.S., UK, and India. The country is on its way to becoming Starbucks’s second-biggest market, and its profit margin across the region was 32% in its second quarter, compared to 21% in the Americas and 2% in Europe, Middle East, and Africa, according to the report.
Starbucks has had varying responses to the criticism, which has been repeated across state-run media. In a statement to the Wall Street Journal, it said the numbers quoted pertained to the whole region, including affluent urban centers like Singapore, not to China alone. It told Reuters that prices in China are tied to local operating costs. Previously, a Starbucks spokesperson said real estate costs in China are higher because Chinese customers prefer to relax in more spacious coffee shops. The coffee giant is only the latest prominent foreign company to come under media fire for what is seen as unfair treatment of Chinese consumers. Foreign and especially luxury goods can carry 20% to 100% markups within the country. Previous targets included Apple, Walmart, and Volkswagen.AK