A sip of Starbucks takes foam out of the price furor

The cafe near my workplace charges prices similar to those of Starbucks, and it also has difficulty in retaining customers. It is run by a young couple who keep dogs and cats that mingle with customers and sleep in cages in a front corner of the caf. Many local cafes are invested in and run by budding entrepreneurs who pursue a leisurely working style that sometimes gets in the way of improving the quality of service.

China's coffee consumption market is reportedly expanding at an annual rate of 10 to 15 percent. Cafes are now ubiquitous in major cities thanks to the coffee culture spreading in the country. According to a foreign market research, the number of cafes doubled from 15,898 in 2007 to 31,783 in 2012, outpacing the growth of teahouses in this tea-drinking nation.

But most Chinese coffee shops are running at a loss or just break even because of management and service problems. In comparison, foreign coffee chains have boomed because they not only sell fine roasted coffee, but also provide a chic and relaxed experience. Starbucks' concept of a third place between work and home has expanded in China with larger stores to accommodate local consumer habits.

The accusations of profiteering based on the cost breakdown of coffee appear more ill-founded if we believe that some people are attracted more to the company's image and experience than to the coffee itself.

During the debate, many have urged the media and experts to learn basic economics in product pricing. Perhaps a more important takeaway is that they should make more efforts to help local brands to catch up.

The writer is editor-at-large of China Daily. dr.baiping@gmail.com

(China Daily 11/02/2013 page5)