Tea firms set to explore high-end int'l market

BEIJING - Even as some Chinese companies are reducing prices to boost exports, other producers such as Lin Rongxi are looking to make inroads in the high-end luxury market with gourmet tea products.

"Right now everyone is talking about the rise of China. In my opinion, Chinese tea should be the symbol of that rise, much as Louis Vuitton bags and Porsche or Ferrari sports cars are," said Lin, deputy general manager of Eight Horses Tea Co Ltd.

The company, along with four other tea producers from Anxi county in Fujian province, will soon open its first marketing center for Oolong tea in Saint-Germain-des-Pres, an area in the 6th arrondissement in Paris.

"With the launch of the marketing center, we plan to enter the core area of the high-end market in Europe and build up our networks and regional influences," said Lin.

In April, Eight Horses and its partners entered into an agreement as a group with a European partner, Leblond Gre'gory. According to this agreement, the five companies will operate the center jointly with the brand name Anxi Tieguanyin, aiming to provide tea as a luxury product for the European premium market.

Tieguanyin, or Iron Goddess of Mercy, is a renowned variety of Chinese Oolong. According to legend, an iron statue of Guanyin, or the Goddess of Mercy, gave a farmer the tea and helped the poor to prosper. The grateful farmer named the tea Tieguanyin.

"The European market is the symbolic spot for Chinese tea companies to go global, especially Paris, which hosts many luxury brands," said Wang Wenli, head of the Anxi Tieguanyin Tea Association.

"Through this marketing center, we would like to promote Tieguanyin as a luxury product and look for a broader international market," Wang said.

Every year, China exports about 20,000 tons of Oolong at a price of between $2 and $3 a kilogram (kg). In Lin's opinion, the current export price is not consistent with the value of the product. "Tea is a good and fine product, not just some raw material for industrial processing of bottled drinks."

The company has more than 800 stores across China, with annual domestic sales of 1,000 tons. It exported 2,000 tons of Oolong in 2010, accounting for 15 percent of China's annual export of the tea.

The first container of Tieguanyin has already been shipped to Paris, and is likely to be priced at a range between 50 euros ($64.6) and 500 euros a kg.

The center will be ready by Chinese Spring Festival in late January and the five companies will together invest about 30 million yuan ($4.76 million) for the initial construction, management and promotion.

Lin, however, does not expect huge profits or record sales in the short term.

"Chinese tea used to be a prized possession among the upper classes in Europe some 300 years ago for its health benefits," he said. "What's more important is that we are back in the high-end market, and promoting the Anxi Tieguanyin brand."

The center will be spread over 100 square meters and divided into a sales zone and a tasting zone. It will also host various cultural activities to promote tea culture.

Lin said that the main barrier to the promotion of Tieguanyin in Europe is the lack of Chinese tea culture.

"Previously our products were mainly sold overseas in bulk. Now we want to sell packaged tea at a much higher price. Western consumers may need time to accept the fact that tea can be really expensive.

"The second issue is the tea-making process. Europeans are used to drinking the beverage with tea bags. But traditionally, Chinese tea needs to be treated with more complicated procedures. Also, tea tasting requires a certain understanding of the Chinese tea culture."

Besides tea sales, tea-making performances and training courses will be held on a regular basis for consumers.

Lin hopes that the new marketing center will provide a template for local producers to change their strategy in international markets.

"We want to raise another round of Chinese tea mania in Europe," Lin said.

He expects Tieguanyin to be popular in the European Union within five years. "It is our aim, but it all depends on our long-term efforts."

Shen Qing, CEO of King Building, a Beijing-based company that specializes in industry planning and marketing, said that Chinese companies should figure out a way to make the best tea at the lowest possible price, just as Lipton's Teas - owned by Unilever PLC - does. That is the only way for domestic producers to make a successful return to the global market, Shen said.

China Daily

(China Daily 01/07/2012 page10)