In North American countries, Starbuck is a cup coffee which everyone can afford. But in China, Starbuck is advertised as a luxury coffee which is especially for the high class, as its price is 40 percent higher than the price in other countries. What behind the high price of Starbuck in China is the high operating margin. The operating margin in China is far more than it in the United States, even 16 times more than Europe and other regions. The high operating margin supported the rapid expansion of Starbucks in China. Why do Chinese have a lower income but pay more for a simple cup of coffee?

One of the reasons is the company advertise the Starbuck as a luxury brand for the high profit. It kind of represent the high living standard in China. So some people buy it only to show his social status . Another reason is the high cost of transportation in China rise the price. It cost too much in the process transporting the raw material from a harbor to a store. Even though Chinese government have spent bunch of money to improve the infrastructure at the harbor, the tax, shipping costs and agency fees raise the cost.