Why Is All the Tea in China Going Cheap?

By staff reporter LUO YUANJUN

Lipton tea bags draw customers in supermarket.

YUAN Keding has been growing tea on the "roof of Hunan," or Huping Mountain, for more than 30 years. This year was a bumper harvest, but experience has taught him to check purchasing tea prices before celebrating, as if they drop it is not a matter for rejoicing but more trouble.

Price trends leave Yuan perplexed. He has observed the tea dealers wander into nearby villages to purchase tea from growers. They are very smart, just wait for the lowest price.

Yuan Keding's son works for a foreign company in Beijing. He usually drinks tea made from Lipton tea bags. When asked why he sticks to this brand, he says that Lipton is a world-renowned and therefore trustworthy brand.

According to Wu Mengzhao, president of the Guangzhou Society for the Promotion of Tea Culture, as the country where tea was first discovered and cultivated China's tea output accounts for one-fourth of the world total, and its export volume for one-sixth of the world's total tea trade. Yet China has few internationally recognized tea brands.

Most of China's tea exports on the international market are of raw rather than branded tea, and competition is confined to price. China's tea exports have dropped from first to the fourth place. According to a CMMS (China Marketing Media Study) survey taken in 30 cities on 71,849 tea drinkers aged 15-64, the British Lipton brand dominates the Chinese tea bag market. Among drinkers who drink three or more times per week, 29.4 percent use Lipton tea bags, and 13.8 percent drink Tuo tea. Other brands occupy minimal shares.

In April 2004, Lipton tea entered China's green tea market. Two months later its green tea and jasmine tea entered the East China and Beijing markets on a trial basis, and Lipton advanced into China's 30-odd provincial capitals and major cities, backed by advertising valued at 10 million yuan a month.

An idle sales assistant awaiting customers at the tea counter of a shopping mall.

Yuan Keding is contemptuous of tea packed in bags, it being little more than powder. To him, a large part of tea drinking pleasure is in observing how the leaves expand as they brew. He is confused by the concept of labels, mistaking Longjing (Dragon Well) and Biluochun (Green Snail Spring) as brands when they are actually tea varieties. When his son explained to him that a famous brand commodity fetches the highest prices, he was indignant, seeing it as an unfair ploy.

There are more than ten brands of tea cultivated in the Huping Mountain area -- too many to constitute a concerted force. In an effort to bring the district up to date, in 2000 the Hunan Provincial Bureau of Technological Supervision issued its "Comprehensive Technological Standards for Shimen Yinfeng Tea," the aim being to encourage tea farmers to guarantee quality and create widely recognized tea brands. Unfortunately, tea farmers in the region are able to do no more than guarantee the quality of a particular tea variety.

Specialists say that the local government should play a more decisive role in establishing tea brand names, but Yuan Li does not agree. "Establishing local brands calls for financial commitment. Despite seeing others reap effortless benefits as a result of this move, none is willing to invest in establishing a brand name."

Huang Jianzhang, vice-president and secretary-general of the Guangdong Provincial Tea Culture Research Institute, says that a marketable tea brand name should meet accepted standards of fine quality, standardization, mass-production, commercialization, and tasteful packaging.

Yuan Li, who grew up on a tea plantation, adds that promotion is also a key factor. There are few advertisements for tea in the media, which gives the impression that Chinese tea dealers are either insufficiently successful or that they begrudge the financial outlay necessary for large-scale advertising.

Xu Yongcheng, a research fellow of the Shanghai Tea Society, says that the Chinese tea industry may be summarized under headings of too many and too few. There are too many tea varieties, factories, and styles of packaging and too few registered trademarks and known domestic and international brands. No brand name means no market, let alone reputation or consumer loyalty. Beneath the superficially prosperous Chinese tea industry there lurks a nagging insecurity over its dearth of brand names.

Despite his bewilderment over brand names Yuan Keding has gained certain benefits from them. In recent years, several brands of Huping Mountain tea have started to enjoy a measure of fame. Tea dealers come to Huping Mountain from all over the country, and he has few worries about selling his tea. Tea prices might fluctuate but in general they rise, so when tea dealers express ostensible reluctance to purchase from his tea, he is confident enough to wait. If, however, he knew that everything about Lipton tea bags other than the brand name was from China, including the processing, he would be less equable.