For U.S. Brands, There's No Middle in China's Middle Class

A barista prepares a coffee drink at a Starbucks Corp. store in Beijing, China Photograph by Nelson Ching/Bloomberg

In China, a trip to Starbucks isn’t just about grabbing a tall latte in a cardboard cup. Most American products are priced higher in China than in the U.S., which gives the Seattle company’s shops a patina of luxury and self-indulgence that they don’t have back home. Many Chinese consumers go to Starbucks with friends, family, or business partners for the lifestyle experience, rather than to drink the coffee. Starbucks has understood how to tap into the demand for premium experiences by tweaking its marketing to go upscale in China, rather than transferring the same mass-market image it has in America. The formula is working: The company’s Asia-Pacific boss, John Culver, on April 1 told Bloomberg News about plans to triple the number of Chinese outlets to 1,500 by 2015, making China Starbucks’s largest market outside of the United States.

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