Friday, October 25, 2013

Have You Ever Googled "Evil Starbucks"?





Well I have. And if you haven't, I highly suggest that you do and then look at the images that Google fetches back to you (stop trying to make fetch happen?). Because there are a lot of awesome pictures out there. I've included some of my favorites here.


I was just curious because I recently read this article about how Starbucks is charging customers in China about 30% more than they would at a Starbucks in Chicago. "Starbucks has been able to enjoy high prices in China, mainly because of the blind faith of local consumers in Starbucks and other Western brands," Wang Zhendong, director of the Coffee Association of Shanghai, told CCTV.


 I had a couple of thoughts here. True, China's profit margins are at about 32% compared to about 21% in the US, but let's be honest, Starbucks is just one of a line of big, American companies that have recently come under fire by the Chinese government. The fact of the matter is, even if the profit margins differentials weren't that big, the Chinese government (which controls a lot of the industry and production in the country) has it in their best interests to shut down the big (foreign, mostly American) companies that are coming in and stealing their market share. The problem that they're going to run into is that, increasingly, Chinese citizens don't trust the quality of food products in China (the number one thing that my relatives ask for when my family goes to visit are American vitamins from Costco, because they know that our FDA is much more strict than China's) and that American products are increasingly seen as a status symbol.

The consumer fear can be dampened (and is decreasing) as China's government begins to crack down on unhealthy or unsafe production practices. However, the second part, the increasingly popular perspective than anything American is awesome and a clear status symbol of how you're tiny, shoebox apartment is better than your neighbor's, is a harder battle to wage. (That's right, I've read all the GoT Books. I know how this lingo goes.) So, for those who think this is an unjust thing of epic proportions, nay! I say unto you. And this is why:

  • They compare the price differential to a coffee in Chicago. Seriously people, in Chicago you can still get a nice, luxury apartment for less than two grand a month. Can you do that in San Francisco? Conversely, have you ever tried to buy a coffee in San Francisco? I'd like to see those differentials before I'm convinced that the American government is trying to subvert the Chinese government through coffee
  • Starbucks is a luxury brand. Even in the United States. We have Dunkin Donuts and McDonalds that also serves completely safe, equally caffeinated (though maybe not) coffee but people like Starbucks because it offers that intangible feel (cafe spaces, free wifi, a "experience") that they like. Even compared to other coffees in the states, Starbucks is expensive. Luxury brands are expensive. More expensive than other brands. That's why they're called luxury brands. This happens regardless of country. Okay, horse beaten to death
  •  If the demand wasn't there, they wouldn't price it like that. This is just economics people. I didn't need to go to school for this. The more people want it, the higher the price goes until there is an equilibrium where each increase in cost (and therefore profit) does not positively impact demand (okay that equilibrium part I needed to go to school for). But the point stands

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