China’s central TV CCTV tried to strike a popular chord by going after the high prices of the lattes at Starbucks. But the action kicked back, as the audience made jokes about CCTV. Business analyst Shaun Rein explains in NBC why CCTV went after the wrong company.
Shaun Rein, the founder and managing director of Chinese Market Research Group, a strategic market intelligence firm in China, told NBC News that the motivation behind CCTV’s report is to protect Chinese brands and domestic consumers – but it chose the wrong company and wrong product this time around.
“It doesn’t make sense to target Starbucks,” Rein said. “Starbucks is a luxury product in China. For [Chinese customers], this is a lifestyle experience. Its main customers in China are women their 20s, who see it as a fashionable place to go. They go to Starbucks once a week and spent several hours there at a time. “
“If it’s too cheap, consumers will doubt its quality,” Rein said. “For Chinese, in terms of food, expensive means safety.”
Rein also cited taxes, employee training and logistics in China as key costs that drive up the price of coffee in chains like Starbucks.
CCTV’s report on Starbucks has caused an Internet sensation. Sina Weibo alone had over 4 million posts on the subject by Tuesday afternoon – most of them criticizing CCTV for going after Starbucks.
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