Chinese Change: Corkage Fee Outcry
The issue of corkage fees has been popping in and out of the headlines these past few months, spotlighting a practice that many Chinese consumers feel is unfair even though it’s quite common in the west. The issue is quite straightforward, with restaurants charging an extra fee to customers who drink their own wine or other beverage with their meal. Such fees are often quite high, and are meant to encourage people to purchase drinks from the menu.
Consumers argue they should be able to bring their own drinks into restaurants that often charge much higher prices for the same product. Restaurant owners say their higher prices are part of the cost of dining out, and are necessary for them to stay in business.
As a westerner who comes from a country where corkage fees are quite common, I can understand both sides of the issue. I often feel unhappy when I have to pay $5 for a Coke in a US restaurant when I could buy the same product at a local convenience store for $1. At the same time, I also realize that going to any restaurant is my choice, and I can go somewhere else if I don’t like the prices.
More broadly speaking the corkage issue also reflects a broader Chinese mentality that I often find hard to understand. Many Chinese, especially from the older generation, believe that private places like restaurants, coffee shops and stores should be open to everyone even if visitors have no intention of buying anything. The reality is that these places open their doors to everyone, since they rely on sales to stay in business.
But at the same time, these shops and restaurants should have the right to set conditions for visitors. If a visitor doesn’t like those conditions, then he always has the right to go somewhere else. If that person insists on violating those conditions, then the shop owner should also have the right to ask him to leave.
The corkage fee debate first bubbled into the headlines last year when China was updating its old consumer protection law. A clause in the new law was aimed at protecting consumers from hidden fees, such as minimum spending requirements that some restaurants charge for large groups. Many believe that corkage fees fall into the same category, since most restaurants usually don’t publicize such charges.
Earlier this year, China’s highest court spoke up on the matter, saying diners could appeal to local courts if they felt they were unfairly charged with a corkage fee. Earlier this month, a court in Chengdu even ordered a hot pot restaurant to return an 80 yuan corkage fee to a customer who bought her own wine.
As a westerner living in China, I find these consumers’ reasoning hard to swallow. After all, the woman at the Chengdu restaurant could easily have gone somewhere else, as there are many other hot pot restaurants in the city that don’t charge corkage fees. The fact that she went to that restaurant was her choice, and was probably because she liked the restaurant’s dining environment.
Things like high-quality furnishings, attractive decorations and rent for a good location all cost lots of money. The owner paid a premium for all those things because he knew he could then charge higher prices than less attractive, inconvenient restaurants. People could then have a choice: They could either pay a bit more to eat at the nicer restaurant, or go somewhere less comfortable and pay a bit less.
And yet many Chinese consumers don’t seem to understand this concept. They think it’s their right to go to any restaurant they want, and bring their own food and drinks if they think prices are too high. Even in a big city like Shanghai, it’s not uncommon for people to bring their own drinks into coffee shops like Starbucks, and then sit down and enjoy the atmosphere without ever spending anything.
I often feel like asking these people if they think the shop could stay survive if everyone behaved like that. In the one or two cases where I’ve seen shop owners ask people to leave when they don’t buy anything, the reaction is often one of indignation or refusal to go.
My guess is that this behavior is a remnant of the socialist era, when everything was owned by the state and making a profit wasn’t important. But in the current era of market economics, consumers should realize that companies need to earn profits to survive and don’t simply open stores as a public service.
Accordingly, people should accept charges like corkage fees, though restaurants should also openly disclose such charges. That means people might have to pay a little more to go to their favorite restaurants, and some restaurants could see their business drop if consumers don’t like the extra charges. But at the end of the day, consumers should accept that restaurants and other private businesses have the right to set their own rules for customers.
