Starbucks Corp has charged customers higher prices in China than in other markets, which has helped the company earn large profit margins, a report said from China Central Television.
The largest coffee chain in the world is the most recent foreign business to come under fire from CCTV the official Chinese media group, which targeted other prominent international companies such as Apple, Inc.
CCTV’s report, which aired Sunday, said the medium latte at the Starbucks in Beijing was $4.43 or over one third more expensive that in a Starbucks U.S. store in Chicago.
The pricing strategy by Starbucks in China, which company officials estimate will be its second largest market behind the U.S. before the end of 2014, is tied to cost of doing business including labor and other costs.
Imported products are often times more expensive in China due to the tax rates and import duties being so high. For example, coffee beans that are roasted draw a duty for importing of 15% and another 17% for sales tax.
The government of China is cracking down on different pricing markets from drugs to milk powder. The high premiums imported goods have are attracting a great deal of the ire from local media and watchdog groups.
Apple has been criticized for its high prices in China, while the company based in the U.S. was accused last year of treating consumers from China differently from other countries.
Retail coffee sales in China have grown over 90% just from 2007 to 2012 and reached $1.15 billion in 2013.
The café culture rise in China has helped the region of China-Asia-Pacific top the table for sales growth in Starbucks for 2012.
