Passing on the Bucks

Pissing on American profligacy, her brinksmanship and even her unwillingness to fix what is obviously broken seems to be quite acceptable for a nation that holds $1.3 of a national debt. But when that criticism rises to trashing an icon of our national morning wake-up drink, someone has got to draw the line! Chinese government TV, CCTV to the rest of us, has taken up the high cost of coffee at the local PRC Starbucks plethora of outlets.

It’s an exposé, Chinese-style, and they think that the Seattle-based company is stealing local consumers blind, charging much more for the same product that is available in other countries for less. Oooooh, the ignominy of it all!

“The criticism from the state-run broadcaster CCTV and other outlets centers on the fact that Starbucks is disproportionately pricier in China. In a report [on October 20^th], CCTV compared the price of a tall latte in Beijing (27 renminbi, or $4.42) with the price in Chicago (19.98 renminbi, or $3.26), London (24.25 renminbi, or $3.97) and Mumbai (just 14.6 renminbi, or $2.39). The report said the cost of the ingredients of such a drink should run less than 5 renminbi, or $0.82, in China. ‘What in Western countries is an average cup of coffee has in China become a coffee ‘luxury product,’’ CCTV said.

“The broadcaster noted that Starbucks’s profit margin for China and the Asia-Pacific region in the second quarter of this year was 32 percent, versus 21.1 percent for the Americas and 1.9 percent for Europe, the Middle East and Africa. [您现在看到的这份就是星巴克公司最新一期的财报，统计的时间是2013年第二财季。其中最让人关注的是在各个地区的利润率，我们也是根据财报上的数据做了一个示意图，星巴克把全球销售区域划分为了美洲大区、欧洲中东及非洲大区、中国及亚太大区一共三个大区，这三个大区的利润率分别是21.1%、1.9%、32%.]

“Starbucks responded that it was wrong to draw conclusions based on prices in China compared with those in other markets. ‘Our pricing strategy is based on local market costs, including infrastructure investment, labor, commodity costs, currency valuation, real estate and other costs of doing business,’ the company said in a statement. The profit margin figure for Asia-Pacific was for 14 markets, not just China, it added.” New York Times, October 21^st.

Is the military mustering, are the police arresting and raiding? How is China reacting to this horrific raping of the Chinese economy by nasty Americans? Mostly, you are seeing yawns and shrugs from just about everybody. People like the product and just don’t care about the prices. In showy towns, being pricey isn’t even much of a disadvantage these days, but the reaction even in official circles seems to support the company against what is seen as a pretty stupid commentary… rather than a noble cause célèbre against American tyranny!

“In a piece titled ‘Is Starbucks Discriminating Against Chinese Consumers?,’ The Chengdu Commercial News came down on the side of the company. ‘If Starbucks wants to set their prices high, they can set them high. If they can sell coffee for 1,000 renminbi a cup, that’s their own business,’ the newspaper wrote. ‘Of course, Starbucks isn’t that stupid, because in this amply competitive marketplace, potential competitors are eyeing it watchfully.’” NY Times.

 “Quite rightly, the report has already come in for a fair bit of mockery within China itself, even as the foreign media worries whether this is yet another campaign to protect Chinese consumers from predatory foreign pricing.  Xinhua, China’s state news agency, published this riposte, with the subtitle ‘Online friends: If you want cheap, go drink Nestlé.’” TheDiplomat.com, October 22^nd. But doesn’t Nestlé make the very best choooooocolate?!

I’m Peter Dekom, and sometimes you just have to ask yourself, “What were they thinking?”