Starbucks coffee 75% costlier in China

By Zhang Fang
0 Comment(s)Print E-mail, November 2, 2012
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Starbucks, one of the most successful foreign coffee brands in China's market, sells its regular coffee in China at a 75 percent premium compared to its home country, China Business News reported on Friday.

Starbucks, sells its regular coffee in China at a 75 percent premium compared to the U.S.. [File photo]

Starbucks sells its regular coffee in China at a 75 percent premium compared to the U.S.. [File photo]

A regular-size café Americano from the global coffee chain sells for 21 yuan (US$3.20) at its China outlets, whereas the same item would only cost US$1.80, or 12 yuan, in a US store.

It's not uncommon for foreign brands, particularly luxury ones, to sell their goods at higher prices in China compared to at home. For example, a Jeep Grand Cherokee sport-utility vehicle sells for about 540,000 yuan (US$84,000) in China but only costs about US$30,000 in America.

Zhou Ting, dean of the Research Institute for Fortune Character, said taxes are the main reason causing the price difference.

Auto companies have to pay tariffs, consumption tax, and value added tax to sell their products in China; these taxes plus logistics and marketing costs make up a big proportion of the retail price for foreign goods, she was quoted as saying in a media report. Moreover, she said, Chinese consumers' increased purchasing power has ingrained a preference for foreign brands in their spending habits.

Chinese officials' awareness of double standards between foreign products sold in China compared to other markets is growing. China recently slapped Nike with a 4.87 million yuan (US$779,000) fine for ‘misleading customers' by selling sneakers "at a higher price and lower standard", Beijing Evening News reported.

According to the Beijing Administration for Industry and Commerce, Nike "set the price for one of its basketball sneakers, which it advertised with double air cushions inside, at 1,299 yuan in China, more than 500 yuan higher than the same one in other countries. It was later discovered the company misled customers with an advertisement as the footwear only contained one air cushion," the report said.

Lou Xiangpeng, CEO of Fly Brand & Marketing Consultants, said a case like Nike's is sign that "Chinese have increased their consciousness of their rights and law enforcement and will pay more attention to price differences and double standards."

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