Starbucks CEO Responds to China Coffee Price Complaints

When China Central Television claimed that Starbucks charges more for coffee in China than in other countries, it wasn’t just a passing news item — it tapped into a broader frustration among consumers over perceived price differences for everyday goods. For coffee drinkers, especially those in urban centres like Shanghai or Beijing, this isn’t about a single cup: it’s about why the same brand costs noticeably more overseas.

In short: yes, Starbucks coffee is more expensive in China, but the company says that’s due to higher local costs — not higher profits. In fact, Schultz stated that the higher prices reflect China’s unique operational expenses and investments, not a pricing gap driven by greed.

What did Starbucks CEO Howard Schultz say?

On October 23, Howard Schultz, then CEO of Starbucks, responded to the criticism during an interview with CBS News. He expressed “shock” that Chinese media would accuse the company of overcharging. Schultz emphasized that Starbucks operates 1,000 stores in China, and that the business is built on transparency, consumer trust, and government confidence. He pointed out that the report’s claims were based on a misunderstanding, adding, “I think this issue is behind us.”

Why are Starbucks prices higher in China?

According to a statement released by Starbucks on October 22, the idea that the company earns higher profits in China is false. The statement outlined several cost factors that contribute to the higher retail price:

• Higher costs for local staff training
• Greater expenses for sourcing and supplying materials in China
• Differences in consumer behavior compared to Western markets

Notably, the company highlighted that Chinese customers often stay in cafes for extended periods, using the space much like a lounge, whereas in the U.S. and Europe, customers typically purchase coffee for takeaway. This difference influences store design, staffing, and real estate use — all of which add to operational costs in China.

How does Starbucks justify its pricing strategy?

Schultz and the official statement both pointed to the significant investment Starbucks has made in the Chinese market. The company doesn’t just pay more for rent or labour — it also builds and equips stores to fit local expectations, provides localized training for thousands of employees, and sources materials through China-based supply chains. These factors, they argue, justify a slightly higher price point.

The statement also refuted the claim that Starbucks has unusually high profit margins in China. Instead, the pricing reflects cost structures, not inflated earnings.

Frequently Asked Questions

Is Starbucks really more expensive in China than in the U.S.?

Yes, according to multiple reports including those cited by China Central Television, Starbucks menu prices in China are higher than in the United States. However, Starbucks states that this is not due to higher profit margins in China, but rather because of local cost differences.

Does Starbucks make more profit in China than elsewhere?

No. In its October 22 statement, Starbucks explicitly denied that it has higher profit margins in China. The company said the pricing differences are due to higher costs for labour, training, and real estate in the Chinese market, not because it earns more per cup sold there.

What are the main reasons for higher coffee prices in China?

Starbucks cites higher costs for local employee training, material sourcing, and store operations. Additionally, Chinese consumers often spend more time in cafés, which affects how stores are designed and staffed, further increasing costs compared to Western markets.

How many Starbucks stores are there in China?

As of the time of Schultz’s comments, Starbucks operated more than 1,000 stores in China. The company has positioned the country as a major growth market and continues to invest heavily in local operations.

Will Starbucks lower prices in China in the future?

The article does not indicate any plans for Starbucks to reduce prices in China. The company maintains that current pricing reflects necessary investments and local cost structures, and Schultz dismissed the pricing controversy as based on misunderstandings.

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