BEIJING Dec 13 A China state television
investigative report accusing Starbucks of overcharging
local customers for coffee triggered enormous disquiet among
journalists at the network and even some soul-searching after it
The October segment - the brainchild of a network executive
who noticed Starbucks coffee cost more in China than in Britain
- was mocked by Chinese Internet users and criticised by
But the reaction inside China Central Television (CCTV),
which has targeted numerous foreign firms this year, was just as
harsh, said a person with direct knowledge of how the Starbucks
report came together, and a former employee who left weeks ago.
However, those misgivings were all expressed in private or
on a Chinese mobile phone chat application, illustrating how
journalists in China are still reluctant to challenge editors in
a system beholden to the ruling Communist Party.
"I couldn't find you a single person at CCTV who genuinely
agreed with that report. Everybody thought it was very silly,"
said the person with direct knowledge of the segment. "Of
course, during meetings, the higher-ups all said it was right to
do the report and no one disagreed." The person didn't want to
be named because of the sensitivity of the matter.
CCTV did not respond to requests for comment.
"DIGGING FOR GOLD"
The network has taken many foreign firms to task this year
over pricing, poor quality and shoddy customer service. They
include Apple, Samsung Electronics, the KFC
restaurants of Yum Brands Inc and British drugmaker
Last week, CCTV accused foreign carmakers of charging local
customers more for repairs than in other markets, singling out
Audi, Subaru, and Jaguar Land Rover
In some cases, the reports have won plaudits from viewers
and forced companies to change their practices. For example,
Apple apologised to Chinese consumers for poor communication
over its warranty policy and changed some of the terms.
The two sources said they were not aware of any government
directive to CCTV to target foreign firms. At the same time,
CCTV editors were praising reports focused on the rights of
Chinese consumers, they said. Chinese government bodies and
state-owned firms are usually too sensitive to investigate,
putting foreign companies in the firing line for hard-hitting
corporate stories, experts said.
"Criticising foreign companies is very safe," said Zhan
Jiang, a journalism professor at the Beijing Foreign Studies
University. "Leaders don't pay any attention to it, people will
support it, and it won't bring the network any trouble."
Indeed, notes summarising an editorial meeting before the
Starbucks report aired shows how much foreign firms are in the
cross-hairs. "It's not just coffee. At the same time, it's lots
of luxury goods, like cars, international brands, they've all
come to China to dig for gold," said the notes, taken by an
employee at the meeting and obtained by Reuters. "For most of
them, their prices in China are the highest in the world."
INTERNAL MEMO SET THE TONE
CCTV is China's state broadcaster. Its Chinese-language news
channel, CCTV 13, functions as a primary vehicle for government
propaganda as well as a platform for legitimate reporting,
including on crime, social issues and business, experts say.
The 18-minute Starbucks report, which appeared to use hidden
cameras, showed CCTV reporters in Beijing, Chicago and Mumbai
asking people on the street what they thought about the price
and value of Starbucks coffee. It criticised the Seattle-based
company for charging higher prices than in others markets, which
it said helped Starbucks earn "fat" profit margins given its
costs in China were not very high.
In an e-mailed statement, Starbucks said it understood the
concerns raised in the CCTV report, but that its prices are
based on local market costs including infrastructure, labour,
ingredients and rent, which are different in each market.
A separate internal CCTV memo describing the thinking behind
the report, also obtained by Reuters, shows staff believed
Starbucks was taking advantage of a lax Chinese regulatory
environment. "We need a lawyer to explain what punishment
Starbucks would receive in the U.S. if it just hiked its prices
as it pleased - this section should be as complete as possible,"
said the memo.
The broadcast report did not use any U.S. lawyers. In a
market economy like the United States, companies are free to
charge whatever they want for their products.
According to the memo, the CCTV reporters overseas were told
to ask passers-by outside Starbucks: "Is it reasonable to sell
at such an expensive price in a low-income country? In the U.S.,
does this violate any principle?"
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.
CCTV's expertise also came under scrutiny last month when it
said local property developers owed as much as 3.8 trillion yuan
($624 billion) in unpaid land taxes. The tax bureau, while not
naming CCTV, said the estimates were inaccurate and a misreading
of tax policy.
The person with direct knowledge of the Starbucks report
said many journalists thought it was a bad idea to begin with.
"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.
After it was broadcast, journalists lambasted the report
within the corridors of CCTV's headquarters in Beijing or in
groups on the popular WeChat app run by Tencent, a
Chinese Internet company, said the two sources.
The story idea was put forward by the network executive, who
both sources declined to identify. The project was given to
reporters in the economics editorial team, they said. According
to the internal memo, it became part of the team's push to
report on the "windfall profits by foreign brands".
"U.S. enterprises hike prices as they please in China, but
in the U.S., Chinese enterprises don't dare to do the same," the
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.
Still, senior editors see foreign firms as key targets for
"It was not a cohesive theme, but was suggested at general
meetings - the idea that we have to be vigilant against these
foreign companies that are short-changing Chinese people," said
the former employee.