Starbucks is expensive, and young Chinese don’t care


Bloomberg News

What did Starbucks Corp. ever do to the Chinese Communist Party?

That’s the question China’s latte-sipping set is asking in the wake of a now-notorious investigation, first aired on national television last week, that revealed — among other examples of allegedly shameless profiteering — that a tall latte costs about 45 cents more at a Starbucks in Beijing than it does at one in London, and that Starbucks’s profit margins in the Asia-Pacific region exceed those of any other in which the company operates.

The story has dominated China, with major international news media outlets subsequently picking up on it. The global interest is understandable: Starbucks claims to have more than 1,000 stores in China, and the company’s chief executive officer expects China to one day be Starbucks’s second-largest market.

To some, the attack is nothing short of absurd. “Is Starbucks coffee expensive?” a Shenzhen-based wine merchant asked Monday on Sina Weibo, China’s most popular microblogging service. “Everyone has his own opinion. However, when does a TV station have the right to interfere in a company’s pricing policies?”

The investigation, conducted and broadcast by the Communist Party-owned and -operated China Central Television network, was never really about prices. (After all, it’s not unusual to find Chinese-owned cafes charging as much as $10 for a small cup of coffee in the country’s airports, a point that has been noted by Chinese and Western microbloggers.) Rather, it was an inquiry into foreign corporations, meant to project the appearance – if not the reality – that the Chinese state has its eye on them. The programming was seeped in the Communist Party’s historic self-perception as a liberator against meddling foreign powers.

This kind of rhetoric may resonate with older Chinese, as well as some Communist Party cadres, but young, wired Chinese aren’t buying it. The segment has generated near universal derision on Chinese microblogs. “It’s just a cup of coffee,” a young Beijing economist tweeted Monday. “Don’t buy it if it’s expensive.”

CCTV’s targeting of Starbucks is hardly a one-off effort to establish the network’s credentials as a critic of foreign companies (nor is the criticism of CCTV generated by the program anything new). For decades, the network has held an annual Consumer Rights Gala, a much-anticipated (and loathed) program in which CCTV journalists expose companies that don’t treat Chinese consumers right. Inadequate customer-service policies, unhealthy sanitary conditions and poor-quality products are typical targets. Though the gala examines both Chinese and foreign companies, most of the pre-broadcast anticipation (and post-broadcast coverage, at least in recent years) is focused on which foreign company will take the biggest beating.

In 2012, it was McDonald’s Corp. This year, Apple Inc. came out on the receiving end of a brutal, arguably justified, expose of its warranty practices in China (which were less favorable than those in the United States, for example). An official apology from Apple ensued, as did a revised set of return and warranty policies. Still, despite widespread belief that Apple was partly in the wrong, in China there remained loud, notable voices calling into question CCTV’s motives, methods and ill- intentioned populism.

The well-known writer Li Chengpeng, responding to CCTV’s Apple investigation, cited low-quality Chinese knockoffs — which CCTV did not investigate — in his widely circulated defense of Apple posted on his blog in March (as translated by the China Media Project): “Of course you can criticise Apple, but you cannot let all of these domestically manufactured fraudulent goods off the hook when you could so easily investigate them, then turn a harsh and uncompromising eye on a mobile brand that leads the world in overall quality — even making it out to be something of great concern to the people, a form of national discrimination.”

Li isn’t a figure who enjoys much support from China’s state-owned press. He’s too closely associated with political reform and a highly networked Web intelligentsia that’s very much out of favor with the Communist Party. Nonetheless, his objection to CCTV’s investigation has echoed loudly in the criticism of the less substantial Starbucks expose — which includes a couple of surprising instances in local, but still state-owned, media that didn’t (yet) feel pressure to follow the lead of national media.

On Monday, the state-owned Qianjiang Evening News in Hangzhou published a commentary from Liu Xuesong that also invoked misguided populism as a means of criticizing the CCTV broadcast. “The state media compares the price of coffee in London, Chicago, Bombay and Beijing, trying to trigger indignation at being discriminated against, all the while exposing irrational consumer behavior,” he wrote. “However, this emotional approach has damaged the credibility of the press.”

This may be overstating matters a bit. The state-owned press suffers from a credibility gap that predates investigations into Starbucks and Apple, and even the widespread criticism it’s received since the advent of Chinese microblogs. Undoubtedly, there are those in China who like CCTV’s broadcasts, though they don’t appear to spend much time online commenting about them. That’s particularly ironic given that some of the country’s most popular microbloggers probably enjoy larger audiences than many of its state-owned outlets do.

Whoever and wherever CCTV’s staunch fans are, they probably care — a lot — about the alleged 30-percent premium that Chinese must pay for a Starbucks stainless steel mug compared with what those in the United States pay. And so China is left with a divide between the state-owned media that reflexively invokes age-old propaganda devices in the name of entertainment and a young, digital and irritated audience that has no interest in watching it anymore. This gap — between Communist Party institutions inextricably linked to China’s past and a new, market-oriented generation — has become one of the country’s most critical social dynamics, and one that will have a profound effect on its future.

“In the era of the Internet, the public is too smart to be fooled,” tweeted a characteristically fed-up microblogger in Nanjing on Monday. “Targeting a coffee company that has nothing to do with the national interest or the people’s livelihood only demonstrates the shamelessness, ignorance and stupidity of CCTV.”

Adam Minter, the Shanghai correspondent for the World View blog, is the author of “Junkyard Planet,” a book on the global recycling industry that will be published in November.

(c)2013, Bloomberg News

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