Sunday, January 17, 2010

A Chinese perspective

This is the Chinese reply to the  tea article in the Financial Times (15 Sept 09) written by Tom Millar.  (see the article in my blog 30 Oct 09). 

This reply was written by Mei Xinyu and was published in the on 24 Dec 09, entitled  'The truth about Chinese tea: the best is sold at home to connoisseurs.'

"Although being a home of tea, China rarely has any tea brands that can compete with foreign competitors, said the article "Why Foreigners are Beating China's Tea-makers on Their Home Turf" published by the Financial Times in October.

 Even "in China, Unilever's Lipton brand has a market-leading share three times that of its closest local rival," it added. Moreover, by mentioning that the average price of Chinese tea on international markets is even lower than those of Indian tea and Sri Lankan leaves, the article implies that China's tea export industry should follow the development path of that of such countries as India.

 Poor argument

 The suggestion is not well-founded, although there are aspects that Chinese tea exporters should learn from other countries, such as quality control. In fact, it is wrong to draw the conclusion that the overall price and quality of Chinese tea is lower than that of Indian tea or Sri Lankan tea simply by comparing the three countries' average price of tea sold on international markets.

 Unlike tea from those countries whose tea industry is mainly export-oriented, most Chinese tea is sold domestically.

Ever since the tea industry in countries like India, Sri Lanka and Kenya came into existence over 100 years ago, most of their tea has been exported.

Besides, as the consumption mode of their domestic consumers is almost the same as that of foreign consumers, there is barely any difference between the kinds of tea sold domestically and those exported.

Therefore, the average tea price of those countries on international markets is representative of the average price of all tea produced in those countries. But this is not the case with China, whose tea industry is mainly domestic-oriented. As most tea connoisseurs are within China, the best (of course most expensive) teas produced in China are sold domestically rather than exported.

 That is to say, the Chinese tea sold on international markets is not representative of overall Chinese tea quality.

 There is another important reason why it is impossible for China to further industrialize its tea industry as India, Sri Lanka or Kenya has done.

 Looking back into history, the export-oriented tea industry in India, Sri Lanka and Kenya was created by English colonists to meet the demand of Western consumers.

 One feature of the industry is highly industrialized large tea plantations. Such tea plantations resulted from English colonists' pillaging the land from local farmers and herdsmen. As most of such tea plantations had already existed for more than three generations when those countries finally got their independence, the owners of the plantations at that time could do little but to accept the plantations as a legacy.

 Such practice is surely impossible in China. Given China's vast population and limited farmland, the large-scale tea plantation business model is impracticable in most areas in the country.

 Despite this, there is great potential in China's tea industry. China boasts numerous famous kinds of tea, including Longjing tea, Dongding oolong tea, Pu'er tea, and so on, the quality of which is far above that of fast-food styled Lipton.

 Better choice

 And it is like reducing Versace to Jeanswest if the business model of selling Longjing tea, Dongding oolong tea, Pu'er tea is to follow that of Lipton.

 To me, even certain successful tea products that are tailored to Westerners do not taste as good as many kinds of traditional Chinese tea that are sold at lower prices in China.

 It is senseless for China to industrialize its tea industry as some other countries do.

 A better alternative is for China to further promote its traditional tea culture so as to win more overseas consumers to appreciate Chinese tea.

 (The author is a senior researcher under the Ministry of Commerce. The views are his own. He can be reached at”  

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