How much coffee should Starbucks sell?

Looking at China's import brand market, Starbucks is not the only one whose price rises sharply as soon as it enters China. Cosmetics, clothing, cars, these areas of imported brands price rise phenomenon is common. Foreign brands have come to China to upgrade from mass consumer goods to "luxury goods".

50 ml of Estee Lauder Special Moisturizing Lotion, the official website price of the United States is equivalent to about 550 yuan, but the counter price in China is 940 yuan. A basic iPad 2 tablet costs $488 in China and $399 in the U.S. A standard Cadillac Escalade 6.0 hybrid sells for $229,000 in China and just over $73,000 in the United States.

Starbucks has issued a statement on pricing saying that in the Chinese market, its operating costs and market drivers are completely different. Starbucks 'pricing strategies in various countries around the world are long-term and evaluated and formulated according to the specific conditions of different products and different markets. Starbucks pricing is based on a comprehensive consideration of various operating costs such as raw materials and equipment, infrastructure investment, logistics and transportation, employee compensation and benefits, rent and exchange rate.

A Wall Street Journal investigative report points out that price differentials have been largely caused by government taxes and import duties in the first place. According to the data published in the Yearbook of Government Finance Statistics of the International Monetary Fund a few years ago, if the total amount of tax collected by the state is 1000 yuan, excluding the influence of other factors, the tax amount directly included in the commodity price as one of the price components is 700 yuan in China, 168 yuan in the United States, 186 yuan in Japan and 300 yuan in 15 EU countries. Chinese commodity prices contain higher taxes than many developed countries. China's tax revenue accounts for 64% of consumer goods prices, while the proportion of commodities themselves is only 36%. Unlike the United States, Chinese goods are subject to in-price taxes. Consumers can only see the final price, but not the tax implicit in the price, and the price of goods in the United States tends to indicate additional taxes.

At the same time, circulation costs are also an important factor pushing up domestic prices. According to the Wall Street Journal, a kilogram of goods shipped by road from Shanghai to Guizhou costs 6 yuan to 8 yuan, while shipping from Shanghai to New York costs only 1.5 yuan. On the other hand, the proportion of channel expenses is larger. Generally, imported goods from overseas to domestic retail terminals often have to go through multiple links including general agents in China, provincial distributors and even district and county distributors. The reason why many places abroad are cheap is because the circulation link is simple. Some people estimate that if the value chain of these consumer goods is compared to 100%, these four layers of channels have been removed by at least 50%. Prices also tend to reflect the efficiency of a market. Typically, opening a retail store in China can take months to test and obtain permits. The administrative approval process in this process costs money, all of which is passed on to consumers in the form of commodity prices.

Once upon a time, to foreigners, China seemed to be "stupid and rich." Now, China's growing middle class seems increasingly willing to pay more for better goods, especially imports. Companies have found that high prices help create a quality halo effect that psychologically wins customers over.