Starbucks (Nasdaq:SBUX) is expanding all over he world. Starbucks is pretty cool and has been reasonably clever with cultural issues. But they just stepped on a Chinese land mine. State owned media has criticized Starbucks for over charging compared to other prices for comparable products around the world.
Normally who cares? Charge what the market will bear. It is free choice.
China is not a free market. There are reactionary forces who are suspicious of globalism and western influences. Apparently they have some editorial influence in state media.
Starbucks may be guilty of the same mistake Google experienced in China. Not understanding the game properly. Starbucks is in a consumer business where PR and public perception is critical to short and long-term success.
Starbucks has walked into a Chinese buzz saw. They should have seen it coming. The question becomes how do they fix it? How fast can they fix it?
China is too big for Starbucks to abdicate.
George Gutowski writes from a caveat emptor perspective. Follow him on Twitter @financialskepti