Thursday, October 24, 2013

Starbucks' Trouble Might Have Been Planted One Year Ago

In the past few days, Starbucks have been under heavy bombardment from the propaganda branch CCTV. The official national television station blamed Starbucks for charging higher price in China. The TV program claimed that Starbucks charge a high price of $4.5 for a cup of Latte while the cost of coffee and milk was only $0.80.

Starbucks quickly responded that the material cost only contributed 18% of the price, and that there were other cost involved. In particular, Starbuck said, customers in China used to stay in the coffee shop longer than those in the west, thus increased expenses in store lease.

Customers in China reacted overwhelmingly in favor of Starbuck. The next day, many Starbucks stores find long line of customers waiting for a cup of coffee, partially in support of the coffee store, partially as a public defiance to the Propaganda mouthpiece.

Professor Wang Ye of University of Pittsburgh at Bradford suggested that Starbucks' trouble might had been planted when their CEO Howard Schultz visited China in April 2012. It was believed former Chinese President Jiang's influences were severely diminished at the once-a-decade power transition in March. Jiang's successor Hu Jintao announced that he would withdraw from decision-making entirely to pass the power to new President Xi Jinping. It was viewed as a public humiliation to Jiang's effort to stay in power even after he stepped down from the top position in China in 2003.

Jiang reacted with a news of his meeting with the visiting Schultz to reassure his base that he was still around. The Starbucks was accidentally caught in a crossfire between Jiang and Xi, who understandably would have wished that Jiang had gone away forever and for real.

As professor Wang pointed out, unfortunately, Starbucks stood on the wrong side.

In the meanwhile, Xi Jinping praised Wal-Mart and Coca-Cola for their contributions to Chinese economy.

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