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Consumers, netizens back Starbucks following media scrutiny

Starbucks has been under fire by the media in China in the past week for its “exorbitant prices”, which climaxed when China’s state television broadcaster CCTV (China Central Television) joined in the assault, accusing it for profiteering in the Chinese market. However, the media attack proved counterproductive both online and off-line. Starbucks’ stock price went up 0.19% on October 21, finishing with a record high price of 79.46 dollars. And the Chinese swarmed into the shops in cities throughout China for a cup of the “overpriced” joe despite media criticism.

Starbucks Yangzhou Slender West Lake branch. Photo: weibo.com

Starbucks China responded to the media roast on its official website with a statement which says “The price difference between the China and the US market is not based on the same criteria, as the operating costs and market incentives in the Chinese market are entirely different from other countries and regions.” It also stressed that Starbucks carries out long-term pricing strategy that is formulated according to each individual product and market. At the end of the statement, Starbucks thanked the long-term support of the Chinese customers and vowed to provide them with better and wholesome “Starbucks experience”, as well as to give back to the local communities in China.

Many people posted pictures of long queues at Starbucks on Weibo following CCTV's Starbucks report. This photo is taken by Liu Chun, vice-president of Sohu.com, Inc., a Chinese Internet company. In his Weibo post Liu wrote sarcastically, "I can't believe I have to queue for Starbucks!" Photo: weibo.com

 

People queuing outside Starbucks in Changchun, capital of northeast China's Jilin province. Photo: club.kdnet.net

 

Starbucks Xi’an. Photo:club.kdnet.net

 

In Shanghai, a Starbucks shop is overcrowded with customers. Photo: club.kdnet.net

 

Queue for a cup of Starbucks joe in Guangzhou. Photo: club.kdnet.net

 

Starbucks posted this photo on its official Weibo which is interpreted by the Weibo users as a hidden message as the pronunciation of horse and pen put together is very similar to a popular Chinese swear word. “This is Starbucks’ counter attack!” wrote many in their comments. Photo: weibo.com

Interestingly, even Xinhua News Agency, China’s official press agency, took a 180 degree turn in its attitude. On October 18, Xinhua posted an article on its website which was originally published in Economic Information Daily, a newspaper it runs, which targeted Starbucks’ high profit rate in China. Three days later, Xinhua published another commentary which defended Starbucks.

“It isn’t just coffee that Starbucks is selling,” Xinhua’s official Weibo @新华视点 summed up the gist of the article in a Weibo post, adding that Starbucks is “witnessing the Chinese people’s acceptance of the coffee culture”. It reiterated that despite the cheap material and labor cost, Starbucks does face other costs such as storage, logistics, advertising and rent which are rather high in China. “A few months ago, the Starbucks CBD branch closed because of high rent,” the article pointed out. “Chastising Starbucks is not as meaningful as introspecting on why we don’t have a Chinese tea house chain that is as popular as Starbucks,” it suggested.

Weibo users, on the other hand, have different views. Some are rather nonchalant about the whole thing. Price should be determined by the market, one said, “People who think Starbucks is overpriced could just drink Nescafé.” Diehard fans rallied behind Starbucks, “With the price, I am buying not just coffee, but also their excellent service and environment,” one pointed out. Others lashed out at CCTV, “What’s the point? The price of a cup of coffee is no less than 30 yuan in other coffee houses, too. Why can’t CCTV investigate into something more important, like the housing price, food safety and air pollution? ”

Tan Songning, owner of Beijing’s Kaffa coffee house and barista training school, spoke on behalf of the individual café owners. “Rent is indeed very high in China. Starbucks is not the only business that is affected. In fact, Starbucks does price its coffee higher that it should, in an effort to maximize its profit. And thanks to its brand influence, most of the Starbucks shops are doing well.” Tan reckons, “But the high price is really hurting the individual coffee houses in China which are struggling to survive.”


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