Statistics state that both Starbucks coffee and cups are much cheaper in the US than in China. By considering all the costs of the production, though the transportation fees and tariffs in China is higher than those in the US, the cost of every cup of coffee would only increase a few pennies. Research state that 90 percent of the total production cost is for raw material, labor costs and rental fees. However,The price of coffee beans now is 30 percent less than it was in 2011. In addition, the labour cost in China is lower than that in the US because the lower average income level in China. As a result, there is no reason for Starbucks to charge such high prices of their products in China.

In my opinion, the reason for the high price of Starbucks is Chinese consumers’ blind faith in foreign brands. This is really unfair for other Chinese domestic coffee companies because they do not have competitive advantages in their products even they can provide higher quality coffee with lower prices. Government should take actions to tackle this problem in order to offer better furthers for its domestic coffee companies.

Links:

http://www.cbc.ca/news/world/starbucks-defends-higher-pricing-in-china-1.2158908

http://www.reuters.com/article/2013/10/21/us-starbucks-china-pricing-idUSBRE99K03P20131021

http://online.wsj.com/news/articles/SB10001424052702303902404579148871471212170

http://usa.chinadaily.com.cn/business/2013-10/15/content_17032843.htm