In October, CCTV ran an 18-minute investigative report accusing Starbucks of overcharging its customers in China to earn big profit margins. The segment was deemed trivial by Chinese netizens and attracted criticism from economic experts who said that the network ‘failed to grasp the concept of supply and demand’. Now, it appears that the report has struck discord within the network as CCTV insiders and then-employees are saying in a Reuters report that ‘it was very silly’.
The original report featured CCTV reporters in Beijing, Chicago and Mumbai asking people on the street what they thought about the price of Starbucks’ “luxury” coffee. The reporters overseas were told to ask the passersby questions like “Is it reasonable to sell at such an expensive price in a low-income country? In the U.S., does this violate any principle?” according to memos obtained by Reuters.
In China, a customer will pay 4.42 USD for a tall latte, while the price in the US for the same drink is 3 USD.
The report also criticized the company for earning “fat” profit margins by charging high prices in China when the operating costs were lower in the country, saying that Starbucks was taking advantage of China’s lax regulatory environment.
When the report aired, Internet users chided the network for tackling a minor issue compared to China’s many challenges. Economists said CCTV had failed to grasp the concept of supply and demand, noting it was normal for a company to charge different prices for its products in different countries.
“Of course Starbucks has the right to charge premium prices – if that’s what consumers want, that’s what they’ll go to,” said Mark Tanner, managing director of China Skinny, a marketing, online and research agency.
The “Starbucks Pricing Controversy” became a trending topic on Weibo, with the third most popular post by the official CCTV account receiving over 11 thousand reposts, around eight thousand comments, and over two thousand upvotes.
“I couldn’t find you a single person at CCTV who genuinely agreed with that report. Everybody thought it was very silly,” said one source with direct knowledge of how the segment was put together. “There wasn’t a single person before the broadcast who was brave enough to stand up and say this report is problematic and we can’t do it like this,” the person said.
The controversy shined light on the ways in which reporters in China often target overseas companies. “Criticizing foreign companies is very safe,” a journalism professor at a Beijing university said to Reuters.
For some, the backlash served as cautionary warning:
After the widespread criticism of the report, it was raised quietly as a cautionary tale in low-level editorial meetings, said the former CCTV employee, who left the network for personal reasons and who also declined to be identified.
She said a senior producer who did not work in the economics department told reporters after the Starbucks report aired that they should use discretion and judgment in choosing topics to avoid a viewer backlash, including from social media.