As a big regular consumer of (green) tea, I find this post from an FT blog quite a fascinating read:
“Why is Lipton more powerful than 70,000 Chinese tea companies?” lamented a recent article in a Beijing newspaper.
The challenges facing China’s tea industry are the same as those facing a host of Chinese industries: product quality issues; excessive competition in the domestic market; low prices and meagre earnings abroad; and weak branding.
The root cause of these weaknesses is simple: extreme market fragmentation.
The problem begins on the tea plantations. Around 8m farmers work on plantations across the tea-growing areas of central, southern and western China, mostly tending tiny household plots. Consolidation of the land into larger plantations is constrained by China’s land laws, which prevent farmers from owning – and therefore selling – their land.
The result is that China’s tea industry is far less industrialised than in less economically developed countries such as Kenya or India. In Zhejiang, one of China’s largest tea-growing and richest provinces, there are over 1m smallholdings, each averaging less than 0.2 hectares.
Continue reading here.
Actually I’m not sure why I’m surprised. I don’t really have any Chinese brand in mind that leads a specific market. The only thing I know is that they’re cheap.