STARBUCK'S NEW PROBLEM: CHINA ACCUSES THE BREWING GIANT OF OVERCHARGING ITS CITIZENS

 

The news that Starbuck was to be allowed to open a shop inside the compound of the Forbidden City in Beijing a few years ago was a surprise to many, who thought that the storied monument should not be cheapened by the presence of a franchise, but the Chinese okay'd it. 

Now comes the backlash.  The media, which in China can easily inflame the sentiments of the population, is aiming its guns at the American franchise.  

The drumbeat comes only a few days after a very serious statement on the part of Chinese officials that the world should be de-Americanized, following the backlash and possible world economy shakeup caused by the ill fated shutdown of the US Congress. 

The media, in fact, are printing that Starbucks is 'overcharging' its citizens, and cite the fact that with the currency being adjusted, the latte in Beijing costs more than London, a city notorious for its high cost of living. 

A latte in Beijing costs 4.4$, but 3.97$ in London, while only 2.39$ in Mumbai.  

The media are accusing Starbucks of 'profiteering', or illegally hiking prices.  One of the media outlet more vocal about this alleged overcharging was the China Daily, which asserted in no uncertain terms that Starbucks has no valid reason for its higher prices in China.  But in truth, the Starbuck outlets in China are sort of gathering places, not just takeaway stores, so that the initial investment is much, much larger, with some stores being two storey high and sumptuous, since the Chinese use the place to meet and socialize.

Another American company that suffered a similar fate was Apple, a company which gives work to many people in China through its partial manufacturing deals. Apple was accused of 'unparallelled arrogance' by Chinese media.  The backlash was so fierce that Apple's new CEO, Tim Cook had to proffer an apology. 

This constant barrage of accusation and otherwise negative press on foreign companies is sending a chilling effect with future investors.  In fact, some enterpreneurs have expressed concern that Chinese local authorities might be trying to squeeze out foreign competition in favor of the locally produced object, and that could have a very negative effect on foreign investors. 

Starbucks has nearly 1,000 locations in China, since it opened in 1999. China is going to become its largest market after the US, so this kind of negative press might put a damper on how the coffee giant sees doing business in the Chinese mainland in the future. 

Source : France 24/ 10.21.13