Data from Nanfang Metropolis Daily shows that the total market scale of Chinese tea industry is about 200 billion yuan [US$32.1 billion] and the agricultural outputs are 72.9 billion yuan [US$11.7 billion]. There are over 100 million practitioners involving in Chinese tea industry, in which about 80 million are tea growers. Besides, the surface of Chinese tea plantations is 30 million Mu (1 Mu = 66.67 m2).

However, the brand of Chinese tea, the commercial level of Chinese tea industry, the scale of Chinese tea companies are still wandering in the periphery of the mainstream modern business circle, said Ouyang Dao, general manager of Heinan Xinyang International Commerce Center.

“At present, there are only a small number of Chinese tea addicts; while most people don’t regard Chinese tea as a daily necessity. Instead, they prefer coffee or Lipton teas,” said an insider.

China, with long history of tea culture is a major tea consumption country. However, as tea planting has high demands for soil and climate conditions, most tea producers located in Jiangsu, Zhejiang, Fujian and Yunnan are still families or individual workshops that no strong tea companies owning price dominant power has appeared in China, which decides the low effectiveness of tea planting.

Moreover, people working in this industry are most old practitioners that young people won’t join in, which makes the modern marketing and financing operations fall behind, said a tea distributor. It is a fact that traditional Chinese tea is not very popular among young generation consumers. However, tea drinks after further processing are more welcomed.

According to data from China Venture’s CVSource, 6 tea drinks companies running Chinese business have obtained $113 million financing since 2007, accounting for 47.8% of the total $236 million financed by the total 23 major Chinese tea companies. In comparison, the investment into Chinese tea planting sector is only $2.22 million, accounting for less than 1%.

The tea drinks with further processing don’t have strict demands for the quality of the raw teas. Moreover, the low prices and high sales of tea drinks are the main attractions to investing institutions.

Source: Morning Whistle Dec 2012

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