China’s Ridiculous War on Starbucks Lattes
Runaway real estate prices. Skyrocketing healthcare expenses. Brazen land seizures. And China's state TV does an exposé on the cost of a cup of coffee?
There are worse things in the world than an overpriced latte. That's the message that thousands of Chinese web users are sending China Central Television (CCTV), a state-owned media behemoth that ran an Oct. 20 segment accusing the Seattle-based company of overcharging Chinese consumers.
There are worse things in the world than an overpriced latte. That’s the message that thousands of Chinese web users are sending China Central Television (CCTV), a state-owned media behemoth that ran an Oct. 20 segment accusing the Seattle-based company of overcharging Chinese consumers.
CCTV reported that a tall latte costs $4.43 in a Starbucks in Beijing, $3.98 in London, $3.26 in Chicago, and $2.40 in Mumbai. The broadcaster grandiosely called the seven-minute segment "an investigation from CCTV correspondents stationed around the globe," though ascertaining the price of a Starbucks drink entails no investigation beyond a glance at the menu. The segment also featured a few of Starbucks’ Beijing consumers complaining about the price. "How can I afford to live, if I drank a cup every day?" exclaimed one young woman.
The implication of the CCTV segment seems to be that foreign companies like Starbucks are fleecing Chinese consumers out of their hard-earned renminbi by charging more in China than they do elsewhere. But Chinese people already know Starbucks is expensive — and now they are wondering aloud why CCTV has made pricey lattes an investigative focus, rather than the issues that matter to grassroots citizens.
On CCTV’s official account on Sina Weibo, China’s Twitter, the post on Starbucks’ alleged profiteering practices had over 63,000 retweets and over 28,000 comments, most decrying CCTV’s coverage as unfair and unnecessary. "If you buy the goods it means that you have the ability and will to pay the price, and you think that the price for Starbucks coffee is right," wrote one Weibo user from the wealthy city of Qingdao. "No one forced you to buy it. A poor guy like me would be very content with a cup of Nestle that costs $0.30!"
What really riled observers is that CCTV grossly underestimated Chinese people’s ability to distinguish real injustice from the manufactured variety. Users complained that CCTV would be performing more of a service to Chinese by focusing on the issues affecting their daily lives: the high costs of necessities like housing, healthcare, gasoline, and telecommunications.
To Li Jinping, a verified Weibo user who claims to be an assistant professor at the People’s Public Security University of China, an elite Chinese police academy, CCTV’s episode fits into a larger pattern in which CCTV turns its ire on foreign firms — like KFC, McDonald’s, and Apple — while downplaying larger problems. "Why doesn’t CCTV question whether it’s reasonable to delay when average people can begin to collect retirement benefits?" he wrote. "Why doesn’t it report on whether it’s illegal to force the demolition of people’s homes everywhere and take their land? "
This doesn’t mean Starbucks should take CCTV’s criticism lightly. In March 2013, a CCTV investigative report claimed that Apple discriminated against Chinese consumers. The report invited a serious anti-CCTV backlash in social media as well; but nonetheless, two weeks later, Apple issued an unusual public apology. (So far, Starbucks has not apologized, instead arguing in an Oct. 21 statement that "each Starbucks market is unique and has different operating costs, so it would be inaccurate to draw conclusions about one market based on the prices in a different market.")
Starbucks is no stranger to controversy in China. In 2007, the nationalist CCTV anchor Rui Chenggang lashed out against Starbucks’ longstanding outpost in Beijing’s Forbidden City, the erstwhile home of Chinese emperors. Rui claimed that Starbucks’ brand was "low-class" and its very presence there "obscene," representing an affront to Chinese civilization. In 2012, a Starbucks opening next to the historical Lingyin Buddhist Temple in Hanghzou invited another round of fierce discussion of "foreign invasion" and "crass commercialization" of cherished Chinese cultural symbols.
These attacks yielded mixed outcomes. The Forbidden City evicted Starbucks in 2007 under pressure from nationalists, with the company saying it "respectfully decided" to end its lease agreement. And while Starbucks emphasized its deep respect for Chinese culture in a September 2012 statement, the Lingyin shop appears to still be open, a testament to Starbucks’ rapid expansion and increasing acceptance in China. According to its website, Starbucks now operates more than 1,000 stores in over 60 cities in China, compared to more than 700 stories in 2012, and predicts that China will become its second-largest market after the United States in 2014.
Despite Starbucks’ increasingly large footprint in China, its prices simply do not enter the daily calculus of most people there. Ding Laifeng, who has worked in media and public relations, took to Weibo to sketch a widely shared picture of daily life: "I don’t have to drink coffee, but I have to live in an apartment. Can’t CCTV criticize local governments for selling land at a high price instead?"
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