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article imageStarbucks coffee costs more in China than the U.S.

By Tim Sandle     Nov 2, 2013 in Business
Starbucks products are sold at much lower prices in the US than in China, even with tariffs and transportation costs added. This is despite the coffee cups being made in China and sent to the U.S.
The price of things such as a hamburger or an espresso is an interesting indicator of global economics and regional variations. In focusing on one area, a CBN report has looked at the relative prices for a cup of coffee in China and the U.S., through an analysis of the Starbucks chain.
Starbucks sells other products other than coffee. It also sells it sown branded merchandise. One of these items is the coffee cup with the Starbucks logo (the image of a "twin-tailed mermaid"). These cups are made in China and shipped to the U.S. On this basis, it might be expected that the cost of the cups would be cheaper, or at least the same price, as in the U.S. Not exactly.
The coffee mug is $10 to $14 (equivalent to about 61 to 85.6 yuan) in the U.S., while it is sold for 95 to 110 yuan in China. Another product, Starbucks stainless steel cups in the U..S cost about $16 to $20 (about 98 to 122 yuan), while the domestic price is higher at 220 to 350 yuan.
In the CBN Daily report, Starbucks said that pricing of its products is based on various factors: raw materials, equipment, infrastructure investment, logistics and transport fees, staff salaries, rent, exchange rates, import tariffs and other operating costs. In the case of the coffee mugs, Starbucks have said that the transportation fees across China, due to additional tariffs, are than exporting to the U.S.
However, according to China Daily, Wang Zhengdong, director of the Coffee Industry Association of Shanghai Food Association, has said that the cost of every cup of coffee would only be pennies more with added transportation fees and tariffs.
Starbucks has responded, as the South China Morning Post has reported, by arguing that the Chinese market remains at an early stage of development, and there are a lot of investments needed in infrastructure, which pushes the prices up.
Whichever argument is correct, the difference global costs are interesting and indicative of how corporations are ready to adapt to different marketplaces.
More about China, Starbucks, Coffee, Economics, Yuan
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