Question

What is the primary reason why coffee shops are flocking to China?

Multiple Choice

There is more supplier availability.

It’s a new market

. It's easier to avoid tariffs and import quotas.

Labor costs are lower.

Financial capital is easier to obtain.

Answer 1

China is a new coffee market. The consumer base is expanding fast and purchasing power is increasing rapidly, which is driving the coffee market growth. Hence (b) is the correct option

Option(a) is incorrect - more supplier availability is the effect and not cause

Option (c) is incorrect - tariffs and import quotas are applicable on the commodity - coffee - and not coffee shops.

Option (d) is incorrect since coffee shops are not labor intensive and hence labor is not key determinant

Option (e) is incorrect since it is very generic and may be applicable to any business and not specific to coffee shops. Moreover, coffee shops are not capital intensive