Doris’s blog  about price discrimination in China raises my interest in seeking the reason that made Starbucks so expensive in China.

As Doris mentioned in her blog, she thinks such a huge price difference is caused by cultural divergence since traditionally Chinese did not prefer coffee.  I agree with her point since Chinese economy opened in the late 1970s and traditionally foreign products were always regarded to be better-made. However, there are more than one factor that made Starbucks beverage expensive.

Based on my analysis, the problem that caused the high price of Starbucks beverage is due to a high operating cost of a Starbucks store. On one hand, China’s labor is very cheap and this has caused inequity in salary as a barista in China is making much less than a barista in U.S.  Thus, increase the price of each beverage is a way to balance out the inequity. On the other hand, China doesn’t have much coffee production; thus adds the importing fee and taxes that causes the price to be high.

 Figure from:  http://cdn.theatlantic.com/newsroom/img/posts/wsjstarbucks.jpg

Commenting on Doris Wu’s blog

Reference

http://www.bloomberg.com/news/2013-10-22/starbucks-is-expensive-in-china-who-cares-.html