More should be done to spread tea aroma

Diversity, stringent quality standards hold key for exporters

Tea is China's traditional export commodity. After the Chinese government abolished the tea export quota and further liberalized tea export management rights, more domestic businesses in tea production and distribution have entered the international market. In a short time they have occupied the low-end overseas tea market, which has led the European Union and Japan to impose restrictions on Chinese tea imports.

China exported 310,000 tons of tea last year, down 3 percent from the previous year, due to falling demand in the EU and Japan, two important overseas markets. However, those sales were worth $1.05 billion, 8 percent higher than in the previous year.

Major tea importing countries such as the UK, France and the Netherlands are economically developed countries with strong purchasing power and higher sales prices, but the EU's stringent testing standards have constrained the expansion of China's tea exports. Over the years, tea sales in Europe have been monopolized by India, Kenya and Sri Lanka, and Chinese tea has not been widely accepted by EU governments, mainly because of pesticide residues and other indicators not up to EU standards.

In February, the EU announced it would strengthen supervision of Chinese imports of five types of non-animal source food, namely dried pasta, fresh grapefruit, frozen strawberries, kale and tea. The tea checks focus on detecting several kinds of pesticides.

Increasingly stringent EU testing methods have increased the cost risks for Chinese tea companies. The cost of testing a batch of tea or one specific kind tends to be higher than the goods themselves. For example, checking a box of tea costs about 230 euros ($310), but the value of a box of low-end tea is less than that.

Chinese tea is also subject to technical barriers set by the EU and Japan. Since 2011 the EU has adopted new inspection measures, and Chinese tea must go through designated ports, official laboratories at the port must rigorously inspect it, checks that were random have become mandatory, and the Chinese company must shoulder the inspection costs.

From a global perspective, tea production outstrips demand, meaning the importing country has the upper hand. China's tea pesticide residue standard is similar to that of India and Sri Lanka, which have all adopted the same principle, one that is relatively loose. I suggest that the Chinese authorities take exports into consideration when they next revise the national tea standard.

Chinese businesses are still not shifting their focus from the European market to emerging new markets such as Central Asia, Russia and the Middle East because tea in Europe, especially the UK, France and Ireland, is drunk in great volumes. Tea drinking per capita in the UK is three times that of China and India. The 2.2 kg of tea consumption per person annually is highly attractive to Chinese enterprises.

As China's tea exports are mostly raw products, more profits have gone to foreign brands such as Lipton, Twinings and other large companies, because Chinese tea businesses are limited in deep-processing, so technological content and added value are low, resulting in the export business being subject to foreign importers.

Although the US and Europe do not grow tea, their tea deep-processing industry is well developed, with first-class equipment and technology. At the same time, these countries attach great importance to developing new tea products. Over the past five years the proportion of teabag consumption has risen from 10 percent to 75 percent.

In comparison, Chinese tea has widened the gap with regard to technological innovation. For example, in the application of biotechnology in breeding research, China has significantly lagged behind Japan and Kenya; as for diversifying tea products, China is behind Sri Lanka. This makes it imperative for export businesses to do more research.

To increase exports to the EU and to have more heft in the competition with countries such as India and Kenya, many companies in China's Fujian, Zhejiang and Jiangxi provinces have started to adapt EU standards for planting and harvesting tea. And they have optimized their industrial chain to meet increasingly demanding EU requirements. Last year, Zhejiang province set up 12 hectares of organic tea plantations and pollution-free tea plantations, and increasing investment is injected to improve their overseas marketing model.

China's tea exports need to be diversifed more. It is the only country that can mass produce various types of tea. But the international tea market is dominated by black tea, and Chinese tea exports face competition from India, Kenya and Sri Lanka. The population of Oolong tea in the domestic market has not translated into international market advantages. Fruit tea and health tea should be China's breakthrough.

Chinese tea businesses do not have strong brand awareness, so there are only a few well-known Chinese brands in the international market.

The author is a researcher at the Chinese Academy of Agricultural Sciences in Beijing.