The Preference for Premium

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China is important as a luxury market. Chinese consumers are willing to pay a premium for luxury. Many foreign goods are priced at a far higher price than in their home markets and for some goods, that is before the, at times, excessive VAT.
This phenomenon is not unique to China, however, with the average income in China at about $7500, a Starbucks latte’s costing almost a dollar more than it does in the US seems superfluous. Starbucks profits in China are at 32% compared with 21.1% in the US.
This phenomenon highlights the inequality between China’s rich and middle classes and the its poor. The rich can and will pay a premium for luxury. This set of priorities is what is helping China’s tastes and preferences to command luxury product design.

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