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Mina Choi Tenison

Life in a Comparative Economy

How much does a cup of coffee cost in Shanghai?

For those of us who live in Shanghai, it is always interesting to have visitors from other countries come through our town. Inevitably, they point out things that we've all gotten used to and take for granted. What amazes many of them is how cheap things are here – which comes as no surprise. But what really shocks them is how expensive many other things are.

Newspapers and economists the world over often quote the Big Mac index—the cost of a single Big Mac at a local McDonald’s – to compare the cost of living in each of the international cities, but for many of us, it’s not the cost of a Big Mac but the cost of a bottle of beer or a cup of coffee, that tells us what that city might cost for a day-to-day living.

Coffee, or how much it costs in Shanghai, is often a shock to many Western visitors, particularly Americans. They walk into Starbucks in China and find that a cup of coffee at Starbucks in China is pretty much the same price (converted into RMB) as it would be in the U.S. They often ask me, “How can the locals afford it?” Of course, many of the locals cannot afford it, not least the unskilled laborers who often account for the very low cost of goods that makes manufacturing cheap in China. But many of the locals CAN afford it and furthermore, think that it’s a good deal.

What these American visitors don’t realize is that until Starbucks and a few other coffee chains arrived, having a cup of coffee in Shanghai was actually even more expensive. What might now cost 15 RMB for a small cup of coffee at Starbucks used to be, and still are at many places, at least 25RMB or more, often for very dismal-quality coffee. For most people who have been living in Asia, this comes as no surprise; any routine visit through Tokyo or Seoul will demonstrate that a cup of coffee, often of questionable quality, is always priced at a certain point high above the comfort zone. In fact, if anything, the appearance of Starbucks and certain other chain stores has placed a downward price pressure on the cost of coffee in Shanghai.

In many of the metropolitan cities in Asia, a café culture exists, but of a different variety than in the west. It’s not a bohemian culture, but rather an upscale, white-collar culture. Cafes have not been a place to just grab a quick cup of coffee, but a special place that couples, the young or even the elderly go for a meeting or a date. Consequently, spending five dollars, 30RMB, or 500 yen, a cup is not a huge cost for sitting at a cozy, high-end place. Yet it is often because it is so expensive that a cup of coffee has become a prized treat in Asia, and a respectable destination to take a date or take a client for a meeting.

Another item that my visiting friends often express dismay is at the cost of a pint of ice cream at Häagen-Dazs in Shanghai. As soon as they look at the price, they take a deep breath and say: “Seventy-five RMB for a pint of ice cream? That’s almost eleven dollars!” It’s the kind of price that posh New Yorkers might pay for an imported gelato from Italy. Yet Häagen-Dazs is incredibly popular in Shanghai, and even more popular with the locals, and has stamped its mark in Shanghai’s psyche as a destination for an exquisite treat.

Last time I went back to Los Angeles, I saw a stack of Häagen-Dazs at the local grocery store. The pints were on sale, and it cost about $3 a pint. I happily grabbed the two pints — so cheap! for my children. I took it home, feeling triumphant that I could offer my children a treat that we rarely allow in Shanghai. My children and I happily dug into the two pints of ice cream, but discovered after a few minutes, that although the taste was pretty much the same, the occasion just didn’t feel "special."

Maybe for us, the "special" feeling of that trip to Häagen-Dazs lay in that 75RMB price tag. And just as more for others, the enjoyment of that cup of coffee came from knowing that it cost more than a boxed lunch. Perhaps a price of a certain thing doesn’t necessarily reflect its material costs, but rather how much people will pay for it, and thus value it.

ORIENTAL OUTLOOK (DONGFANG ZHOUKAN) November 17th 2009 Print Edition

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