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I want to add some context here. I’ve noticed that few in the media ever clearly explain the origins and evolution of these concepts such as “DTC” and “New Consumer Brand” within China context.

In China, “DTC” and the “New Consumer Brand” concept appeared almost simultaneously, around 2018. DTC was a concept created in the US and introduced into China around that time, while the local “New Consumer Brand” concept emerged almost in the same period. Definitions of a New Consumer Brand vary, but the broad consensus is: new demographics, new marketing, new design, new products — basically everything is new. Here, DTC is primarily about model innovation, whereas the New Consumer Brand implies a more comprehensive brand upgrade.

This kind of terminology game always lags behind. The earliest group of consumer-focused investors and founders were already thinking deeply about consumer issues around 2015 — though, of course, that was already many years after the DTC wave in the US.

Today, the New Consumer Brand concept has essentially run its course, because China has gone through a full awakening of brand consciousness. While absorbing Western brand theory, local companies have also figured out their own playbook.( I will talk more about it the near future)

Moreover, many brands that have been seriously learning how to build a true brand have been at it for nearly a decade now — they are no longer “new.”

However, the concept of DTC is still alive; it has always existed within organizations, merely manifesting in different forms and holding varying strategic weight depending on the brand stage.

For startups, it is still a tactical weapon for digital arbitrage — maybe mainstream e-commerce traffic has become very expensive, but social commerce still presents many opportunities — anyway, there are always pockets of low-cost traffic. While for established corporations, it has evolved into either a strategic imperative to stay close to the consumer — building powerful offline spaces and community marketing is, in essence, a closer and better way to communicate with consumers — or a revolutionary model for end-to-end digital integration, breaking down the silos between supply chains and user data.

Think about it: no one can completely detach from a DTC perspective when looking at problems; after all, in a market of oversupply, understanding and meeting consumer needs is the top priority.

NIKE

Nike China will terminate all online sales authorizations next year

It is said that Nike has completely terminated all online sales authorizations for its distributors in the China market next year. That means its entire online business is now under unified control, and the DTC share is estimated to surge to around 50%, roughly on par with Anta’s main brand.

Topsports, Nike’s distribution partner, soon began liquidating inventory at a discount and its stock price tanked. Pou Sheng, another distributor, was also forced to restructure its business.

Nike officially says it’s to avoid channel fragmentation; distributors guess it’s for price control — and honestly, both make sense. When channels are fragmented and pricing gets chaotic, it really hurts a brand’s ability to stay premium.

But, much like LV, this argument gets zero support in the court of public opinion. You talk about controlling prices, but customers just think your prices aren’t worth it in the first place — so what exactly are you controlling?

In fact — Topsports was using its offline wholesale agreements to run online stores, and never had a formal online distribution authorization from Nike headquarters. In the early days, Nike turned a blind eye. It’s only in the last couple of years that they’ve started to clamp down.

What can I say? I've been lucky enough to work with the marketing teams at Nike, Adidas, and other major sportswear brands numerous times, and Nike's organizational culture is my favorite — simple, professional, and straightforward. So, I don't believe Nike has any malicious intent. Business is business.

But here’s the brutal truth: Nike’s product in China is now a real problem — just like Starbucks and the NBA. When the ideological halo fades ( This not only means that US universal values have a very limited market, but they may even face skepticism and criticism ), local brands are catching up, it’s painfully clear that their products are simply not as appealing as they used to be. IMO — Even if they successfully take back control of online operations, it will likely do very little to address the broader issue of product competitiveness in the short term.

Further Reading 👇

Moutai

Moutai’s late push into DTC won’t be smooth sailing.

Moutai’s DTC share currently sits around 40-45%, which puts it in a league of its own in the baijiu industry, where Wuliangye and Luzhou Laojiao are still languishing in the 20-30% range.

Its instrument is the “i Moutai” self-operated platform. I remember back then they launched and promoted it very quietly since 2022, cutting traditional distributor quotas year after year, imperceptibly, while holding all the incremental supply firmly in their own hands. The objective was crystal clear: the MSRP of a bottle of Feitian Moutai cannot remain a decorative number forever.

The massive revenue in the channel are not what Moutai is truly worried about. Just like Nike, what concerns them is pricing power. I think I’ve mentioned this in one of my earlier posts: since when does a premium brand have to operate and pricing based on the mood of its distributors? What a joke.

Beyond online DTC, restructuring offline distributor channels, especially the multi-layer sellers, is essential to regaining price control — and unsurprisingly, Moutai’s greatest hurdle is corruption. The web of ties between top executives and distributors is complex that reform is brutally hard.

Further Reading 👇

Luckin

Beyond the TikTok-style algorithm, this is essentially the SHEIN model applied to the broader physical world.

I used to see Luckin as very similar to TikTok. Now, I increasingly see it as SHEIN.

SHEIN’s playbook is well known: data-driven small-batch rapid response, massive SKU testing, vertically integrated supply chain, and turning upstream suppliers into “cloud factories” that obey algorithms entirely. The brand doesn’t rely on any buyers or distributors; it talks to consumers directly using only its own data and algorithms. This is DTC in fast fashion taken to its ultimate form.

And Luckin has simply moved that exact same logic into offline coffee retail. SHEIN’s online storefront is replaced by Luckin’s physical stores, but the core is identical — brand, supply chain, product, pricing, data are highly controlled by the brand; the terminal is only responsible for execution.

The store structure is 65% directly operated and 35% partnership stores.

On the surface, there seems to be a portion of “franchisees,” but in reality, beyond site selection and handing over authorized fees partners have very few authority. No cash, all data is collected by the HQ, no decision power of any product promotion and pricing — basically, everything is digitally managed. Headquarters’ control goes down to the pores. To put it bluntly, a partner is just a hired hand wearing a “co-owner” coat.

Moreover, Luckin’s grip on the value chain is the same as Starbucks’, or even more extreme. From coffee bean cultivation (with its own bases in Yunnan and Africa) to roasting, warehousing, logistics, all the way to in-store fulfillment and user data flowing back — they grab hold of everything. This highly digitized, algorithm-driven new product launch, fully self-controlled supply chain model is exactly what SHEIN does in fashion.

SHEIN proved you can dominate a market without relying on any external channels. Luckin is proving you can do the same, even when you have to open tens of thousands of physical stores.

Further Reading 👇

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In May, the fast‑fashion giant stunned the industry by buying the U.S. sustainable‑fashion benchmark Everlane from L Catterton (an LVMH‑affiliated private equity fund) for roughly $100 million.

Then on July 10, China’s securities regulator approved SHEIN to issue up to 342 million overseas ordinary shares for a Hong Kong listing, with a target valuation in the $40–50 billion range.

Hurun’s 2026 Global Unicorn list still ranks SHEIN ninth worldwide at about RMB 456 billion, but its IPO valuation would be far below the $100 billion peak seen in 2022 — roughly cut in half.

Those few events have pulled this controversial brand back into the limelight. Much has been said—and argued—about SHEIN’s “small‑batch quick‑turn” supply chain, its labor and environmental record, the Xinjiang cotton allegations, not to mention its roller‑coaster valuation and geopolitical headwinds. I have no intention of rehashing those discussions here.

Rather, I want to revive a question that has been shelved for too long: Who is the next Shein?

That question was one of the hottest topics in China’s consumer‑goods investment circles between 2019 and 2022. It was the peak of consumer investment: dollar funds and RMB funds hunting for the “Chinese ZARA” or the “next SHEIN.”

Money poured in, valuations soared — it felt like everything was on fire.

Then the tide went out. Consumer investment cooled, trade frictions intensified, Western regulators tightened oversight, and cross‑border small‑parcel tariff policies changed.

For a while, the question went quiet. No one was asking about the “next SHEIN” anymore — because even SHEIN’s own fate seemed far from certain — tied to China’s own fortunes — overwhelmed by political issues.

Now that SHEIN is finally moving toward a Hong Kong IPO — is the party really starting up again? I’m not sure. But it does feel like the right moment to reopen the question: after SHEIN, who’s still in the race? At the very least, we can check in on those would‑be contenders — like friends catching up — to see how they’ve been doing.

Cider: probably the most similar successor

Among the candidates people talk about as “the next SHEIN,” Cider is probably the closest in spirit.

Founded in 2020, Cider’s founder Wang Zhan (Wang Chen / Michael Wang in some sources) worked in several big internet firms. The company raised four rounds quickly, totaling over $130 million in early years.

Cider entered Gen‑Z women’s fashion with a “Pick a Mood” approach, used a TikTok multi‑account funnel to drive traffic to its standalone site, reached a $1 billion valuation within two years, reported annual revenues in the hundreds of millions, and had over 15 million registered users. On the supply‑chain side, Cider also runs a “small‑batch quick‑turn” model, compressing new‑product cycles to about seven days.

But Cider has deliberately differentiated itself from SHEIN from the start. SHEIN chases rock‑bottom prices; Cider prices most items at $15–$50, clearly above SHEIN’s $5–$20 range. SHEIN organizes by category; Cider organizes by “mood” — people buy more than clothes, they buy identity and emotional resonance. SHEIN is broad across age groups; Cider targets Gen‑Z precisely (about 70% of users are 18–24), leaning into Y2K and vintage aesthetics.

In April 2026, Cider opened its first global flagship in Los Angeles, about 7,800 sq ft, with a store layout built around six emotional style pillars like “elegant,” “cool,” “sweet,” and “free.” It runs weekly “Cider Sundays” community events, and a second store in San Jose was announced for summer.

Clearly, Cider is shifting from being an online sprinter to building long‑term omnichannel retail capability — it’s not trying to be a cheaper SHEIN; it aims to be a more stylish Cider

Urbanic: a model sidesteps competition by expanding into regions its rivals struggle in

If Cider is confronting SHEIN head‑on in Western markets, Urbanic chose a different path.

Founded in 2019, headquartered in London with operations in Hangzhou, Urbanic’s founder Xue Chi previously worked at Google and cofounder Deng Qiulin came from Alibaba’s strategy team.

Rather than fighting SHEIN in the US and Europe, Urbanic targeted markets SHEIN had been pushed out of — notably India — and emerging markets like Brazil and Mexico.

This is a very smart “dislocation” strategy.

After the 2017–2018 China‑India border tensions, the Indian government banned dozens of Chinese apps, including SHEIN. SHEIN left a massive market with hundreds of millions under age 25.

Urbanic entered under a “London brand” identity and quickly became India’s leading DTC fast‑fashion player.

By July 2025 it had delivered over 30 million orders in India and was profitable. Annual revenue rose from RMB 2 billion in 2024 to RMB 2.8 billion in 2025. In November 2023 it closed a $150 million Series C, bringing total funding above $200 million.

Urbanic’s core is a data‑driven supply chain. It aims not just for “small‑batch quick‑turn” but for something near “zero inventory” — using AI and psychographic data to predict demand and treating each week like a micro‑season, with algorithms deciding what to produce and where to store it. It also uses AIGC tools to systemically generate designs and claims it can hold inventory waste to under 1%.

And, Urbanic’s next moves show bigger ambitions.

In June 2025 it launched Savana in India, a sub‑brand targeting Gen‑Z women with lower price points (mostly under INR 1,000, about $12), trendier styles, and faster turn. The Gurgaon warehouse processes 600k–1M items weekly.

Seemingly — Urbanic aims to cover both SHEIN’s price band and Cider’s aesthetic in the regional market: “SHEIN’s efficiency + Cider’s style” at the same time.

However, the brand’s largest risk isn’t competition but geopolitics.

How long can its “London brand” cover last, given political sensitivities?

SHEIN’s ban in India is a clear warning — any renewed border friction could wipe out Urbanic and Savana’s investments in an instant. The deeper Savana goes in India, the larger the political exposure. This is a structural problem, not just a commercial one.

PatPat, Halara and Cupshe — Vertical specialists

Another path is deep focus on a single vertical and squeezing supply‑chain efficiency there.

PatPat, founded in 2014, is a mother‑and‑baby DTC brand focused on 0–6 year apparel. It raised a $510 million C round in 2021 and reached a RMB 21 billion valuation in 2025. But the mother‑and‑baby category has a natural ceiling: short user lifecycles force constant high‑cost customer acquisition. Online sales fell 20–50% year‑over‑year in 2025, and the company is still navigating a tough transition.

Halara, founded in 2021, is an athleisure brand known for “high‑value yoga pants.” — rival of lululemon. Its omnichannel revenue hit about $313 million in 2024, and GMV surpassed $1 billion. Founder Zhang Xiaopei graduated from Tsinghua in computer science and was formerly VP at Hulu. But Halara’s supply‑chain depth is far shallower than SHEIN’s — fewer SKUs, slower replenishment. It looks more like a content‑savvy DTC brand than a supply‑chain driven fast‑fashion company.

Cupshe succeeded by making a decisive move—subtracting rather than adding. Founded in 2015, it initially tried to follow SHEIN's full‑category fast‑fashion playbook, but after a full year of going nowhere, it made a drastic pivot in 2016: it cut every category and went all‑in on swimwear. That decision proved to be a masterstroke.

By 2017, Cupshe had become the No.1 online swimwear brand in North America. Today, its own‑site annual sales stand at roughly $220 million, with total online GMV estimated at around $420 million.

Well, even though the vertical model works, the ceiling is clear. SHEIN diluted customer‑acquisition costs across many categories; vertical brands must finely balance lifetime value against acquisition cost.

Zaful — A Great Beginning, a Bitter Ending

You can’t talk about “the next SHEIN” without mentioning Zaful — once paired with SHEIN as a poster child for cross‑border fashion, today it stands as a bankruptcy caution.

Zaful launched in 2014 under a cross‑border group and rose alongside SHEIN. By 2018 it reported over RMB 2 billion in revenue and was seen as a strong competitor. But around 2020 the paths diverged. SHEIN double‑downed on supply‑chain and data systems; Zaful pursued a “capital‑fueled” strategy: heavy ad spending, big celebrity endorsements, week control over the supply chain and broad category expansion.

When the 2021 Amazon “account suspension wave” hit, Zaful’s standalone site traffic and conversion collapsed. It sold brand assets in 2023 and was declared bankrupt in January 2026 with liabilities of RMB 813 million and negative net assets of RMB 735 million.

Zaful’s story is a brutal footnote: capital can buy traffic but not supply‑chain moats; you can buy exposure but not customer loyalty. When the money leaves, those without underlying operational strength are exposed.

In the end, maybe the question itself needs to be rethought

The question “Who is the next SHEIN?” assumes something that may be wrong — that SHEIN’s model is meaningfully replicable.

But the world doesn’t need a second SHEIN.

(Even if they wanted to, other brands can’t fully copy Shein — Shein was founded nearly a decade earlier over them, and that deep accumulation makes it almost impossible for later entrants to replicate.)

Cider’s “emotion space” stores, Urbanic’s Savana in India, and PatPat’s persistence in mother‑and‑baby — these moves aren’t about producing a SHEIN clone. They show different routes.

The “next” after SHEIN may not be a single brand that looks like SHEIN; it may be a cluster of brands that go overseas in different ways, across different categories — beauty, home, consumer electronics — and into different markets — Southeast Asia, Latin America, the Middle East — using different and even more creative models.

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For years, China’s freshly made tea and coffee markets were treated as separate worlds — different price points, different consumers, different operating rhythms. That boundary has dissolved.

Today, tea brands are installing coffee machines by the thousand. Coffee chains are building non-coffee menus that rival their core offerings. They’re chasing the same customers, in the same delivery apps, across the same dayparts. So we’re now looking at a more integrated battleground — and the 2025 earnings offer the clearest snapshot yet of who’s holding up and who’s not.

Some more context: growth in both categories appears to be slowing.

Plus - even though the usage occasions, production processes, and supply chains of tea and coffee are not entirely identical, but they overlap more significantly over other categories.

Those two points may be few of the key reasons why the two categories have started to compete so directly.

With that backdrop, here’s how the listed players performed 👇.

Tea: Six Listed Companies, Four Profitable, Two in the Red

(2025FY Full-Year Base + 2026 Incremental)

• Mixue (蜜雪冰城)​ ✅ Solidly profitable, growth decelerating

  2025FY: Revenue RMB 29.75B (+20.5% YoY); adjusted net profit RMB 8.92B (+4.6% YoY)

  2026Q1: Pending August 2026 interim report

• Guming (古茗)​ ✅ Profitable, growth leading

  2025FY: Revenue RMB 12.91B (+46.9% YoY); adjusted net profit RMB 2.575B (+66.9% YoY)

  2026Q1: Pending August 2026 interim report; company guidance: same-store GMV -0.5% to -1.5% YoY (first post-IPO same-store decline)

• Chabaidao (茶百道)​ ⚠️ Thin profit, second year of revenue decline

  2025FY: Revenue RMB 6.33B (-5.7% YoY); adjusted net profit RMB 833M (+29% YoY); attributable net profit RMB 821M (+71% YoY)

  2026Q1: Pending August 2026 interim report

• Auntea Jenny (沪上阿姨)​ ⚠️ Thin profit tier

  2025FY: Revenue RMB 4.47B (+36.0% YoY); adjusted net profit RMB 570M (+36.4% YoY) (disclosed, not estimated)

  2026Q1: Pending August 2026 interim report

• Chagee (霸王茶姬)​ ❌ Q4 2025 operating loss; full-year profit halved

  2025FY: Revenue RMB 12.91B (+4% YoY); attributable net profit RMB 1.19B (-52.4% YoY); Q4 operating loss RMB 35.5M

  2026Q1 ✅: Revenue RMB 3.31B (+21.3% YoY); attributable net profit -33% YoY; domestic same-store sales -16% YoY (narrowed from -25.5% in Q4 2025); operating margin 1% → 17.1%

• Nayuki (奈雪的茶)​ ❌ Net loss RMB 241M

  2025FY: Revenue RMB 4.31B (-12% YoY); 152 net store closures; delivery accounts for 52.6% of directly-operated revenue; in-store dine-in <10%; bakery revenue share 10.7% → 8.1% (-33% YoY)

  2026Q1: Pending August 2026 interim report

The divergence between the profitable and loss-making names is fundamentally a story of two different operating models.

The profitable chains share a lighter, more resilient structure: they anchor themselves in lower price points to capture the largest customer base, control raw material costs through deep supply chain integration, iterate products rapidly, and deliver competitive overall value at their respective price tiers. In an oversupplied market, this model has proven far more resistant to pressure.

This pattern also holds true in the coffee sector — seen most clearly in Luckin's success and the wave of other coffee brands now imitating its small-store model.

On the loss-making side, Chagee and Nayuki face structurally similar challenges — premium positioning, larger stores, elevated operating costs, low table turnover, insufficient depth in product management and innovation, and an expansion of portfolios that quality control can’t keep up with.

These problems mirror the difficulties confronting Starbucks China: when spatial premium is diluted by delivery platforms and by rivals offering a sharper value proposition (lower price combined with higher perceived quality), sustaining both a premium price and healthy volume becomes exceedingly difficult.

Coffee: Two Profitable, Three in the Red — Even the Leaders Are Feeling Unit-Economic Strain

(2025FY Base + 2026 Incremental)

• Luckin (瑞幸)​ ✅ Profitable, but margin thinning

  2025FY: Total revenue RMB 49.29B (+43% YoY); stores 31,000

  2026Q1 ✅: Revenue RMB 12.00B (+35.3% YoY); GAAP operating margin 8.3% → 6.0%; net profit RMB 506M (-3.6% YoY); first negative same-store for company-operated: -0.1% YoY; delivery cost RMB 689M → 1.31B (+89.8%), 8% → 11% of revenue; delivery mix <40% (Q4) → ~30-35% (Q1)

• Starbucks China​ (post-Boyu: Boyu 60% / SBUX 40%, closed April 2 2026; deconsolidated from Q3 FY26) ✅ Profitable, carried by non-beverage channel

  FY2025: Revenue ~USD 3B; same-store 6 consecutive quarters negative

  FY26 Q2 (natural year March 2026) ✅: Revenue USD 799.8M (+8% YoY); same-store +0.5% (txn +2.1% / ticket -1.6%); stores 7,991 (20 net closures vs Q1); channel development (RTD + merch + licensing) op margin 40.5%; June 10 2026 non-coffee price cut -5 RMB, floor RMB 23; “Thousand Stores Thousand Faces” compact rollout (200–300㎡ → 10㎡ kiosk / pop-up)

• Tims China (THCH)​ ❌ Penny stock, chronic loss

  2024/25: Est. annual net loss RMB 200–300M (no standalone FY2025 audit); share price $1–2 post-SPAC

  2025 pilot: “Tims Go” 20–30㎡ compact format

• Cotti (库迪)​ ❌ Negative unit economics, closure wave

  Unlisted, no audited FY2025; est. cost ~RMB 11.1/cup at 9.9 price → ~RMB 1.2 loss/cup

  2026 updates ✅: June 30 canceled franchisee buyback guarantee → pre-deadline closures; forced coffee-machine upgrade on renewals; americano subsidy cut RMB 9.5+ → RMB 2.5–3.5 (franchisee take-home <RMB 6/cup); Mar–May 2026: 762 new / 722 closed (~zero net); third-party (GeoHai): 722 closures / 90 days (4.5% of 16,000 footprint)

• Seesaw​ ❌ Bankrupt 2026

  Unlisted; founder hit with consumption restriction order; tens of millions in wage & supplier arrears; peak 140+ stores → dozens remaining

The two profitable players represent the sector’s absolute leaders — Luckin standing for the small-format model, Starbucks for the large-format one.

Luckin’s earnings power requires little elaboration.

Starbucks China has managed to remain profitable, and even showed nascent signs of recovery, thanks to a series of forceful adjustments: recalibrating price points, optimizing store sizes, strengthening product innovation, stepping up promotions, and pushing deeper into lower-tier regions.

Remarkably, the roots of the losses at Tims, Cotti, and Seesaw are distinct.

Tims’ “beverage + food” portfolio appears elegant on paper but suffers from serious quality-control failures — its coffee, at the very least, falls dramatically short of reasonable expectations and comes across as even less honest than Starbucks. How such a poor product came to market is a question best directed at its management.

Cotti, the other brand founded by Luckin’s founder, has stubbornly pursued subsidy-driven growth, resulting in persistently inverted unit economics. Its founding motive seems to have been fueled, at least in part, by a sense of revenge — a narrative that has not translated into consumer appeal. Today, its brand perception lags well behind Luckin, which has already cemented itself as the go-to choice for affordable daily coffee. There may be a sense of inevitability here: once a mental moat is formed around a brand, it becomes exceedingly difficult to dislodge it with a similar playbook.

Seesaw’s failure — by consensus, it lies in its prolonged indecision between a specialty-coffee ethos and a scaled chain model, ultimately dragging itself into collapse (though I personally remain less convinced by this view).

Consolidated Observations on both Tea and Coffee Sector

On the “Consumption Downturn” Narrative

“Weakening consumer demand” is frequently invoked to explain the industry’s troubles, but it functions more as a shared backdrop than a specific cause of any single company’s losses.

A more accurate explanation might be that a subdued consumer mood amplifies pre-existing model mismatches — where costs are allocated and whether the model is adapted to China’s structural realities (high delivery penetration, the blurring boundary between tea and coffee) matters far more than the macro climate alone.

On Delivery’s Role

Several disclosed figures reveal just how much delivery now dominates revenue.

At Nayuki, delivery accounted for 52.6% of direct sales; dine-in was below 10%. This means a significant portion of revenue does not depend on in-store consumption — an intrinsic contradiction for a large-format spatial model.

At Luckin, the delivery share was under 40% in Q4 2025 and approximately 30–35% in Q1 2026; Luckin appears to be deliberately lifting average ticket prices and even expanding its proportion of larger-format stores.

In short — the delivery war has never gone away, and it never will, because delivery has become a deeply embedded part of Chinese consumer behavior. For tea and coffee chains, balancing physical space with delivery economics may become one of the central strategic questions navigating the next phase.

On Differentiation

In a market defined by brutal homogenization, cross-category expansion, SKU proliferation, and experiential layering have become the default paths in search of differentiation. But when quality control and innovation fail to keep pace, new SKUs merely disperse supply-chain focus, turning into items that consumers regard as “not terrible, but not worth remembering.”

Meaning — the short-term revenue bump from superficially adding categories and simply piling on experiences rarely translates into durable repeat purchase.

This may be the best product-level explanation for why tea and coffee have so aggressively encroached on each other’s turf. As noted earlier, the usage occasions, production processes, and supply chains of tea and coffee are not entirely identical, but they overlap significantly — especially when it comes to creative drinks. The overlap is far greater than with categories like alcohol, desserts and bakery, or hot food, all of which require a heavier operational model. This shared foundation gives brands significantly more control over both quality and creativity.

On the Unlisted Blind Spot

The analysis above rests entirely on publicly disclosed financials from listed companies, except Seesaw. A considerable number of unlisted brands remain financially opaque, and independent shops are not captured here at all. Any conclusions drawn from current public data should therefore be treated as inherently limited and potentially unrepresentative of the full market picture.

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Once hailed as the cradle of China’s specialty-coffee talent — the unofficial academy that inspired an entire generation — the brand has exited the stage in brutally abrupt fashion, after years of breakneck expansion and internal turmoil.

The news ignited a firestorm. Almost overnight, a chorus of Monday-morning quarterbacks piled on, eager to dissect Seesaw’s “strategic missteps” and second-guess its “failed expansion.” History has always been merciless: when you’re winning, your every word sounds like genius; when you’re losing, your every move looks like a blunder.

Seesaw’s private struggles — the doubts, the regrets, the moments of confusion and anguish — along with all the twists and turns, the tangled resentments and what-ifs… how could any outsider ever truly grasp them through a few platitudes delivered with perfect hindsight?

Who was right, and who was wrong? It’s a question that can’t be reduced to a sound bite. The truth behind rarely matters; only the outcome does.

Cast your mind back to Seesaw’s original dream. It genuinely wanted to do something cool: to make being a barista an honorable profession. That dream was clear, pure, and radiant with idealistic conviction. But as the whole industry got swept up in the wave of venture capital, Seesaw was dragged onto the path of expansion.

Was this a contradiction? Absolutely. Was it an act of desperation? I am not sure. History doesn’t deal in what-ifs. No one can answer that.

On the flip side, Manner’s story plays out from a completely different script.

It is said that Manner’s founder originally tried, and failed, to launch the business in his hometown Nantong. He later went to Shanghai. In that crucible — the richest, most cutthroat coffee market in the country — Manner didn’t just survive; it grew into the powerhouse it is today.

Relentless chain-store DNA, lean staffing, uncompromising product quality, blistering operational speed — Manner operates like a quality precision-engineered machine, sweeping across the country with unstoppable momentum. You could even argue that its presence has raised the bar for the entire Chinese coffee industry.

Now, after all these years, it’s finally opening its very first store in its hometown. Some say Nantong failed Manner back then. Others say the founder has long since moved on, forgiven the city, or simply made peace with his younger self.

Maybe none of such gossip matters anymore.

What matters is that Manner is coming home. Only this time, it’s no longer the anonymous underdog that slipped away all those years ago.

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Just now, on the floor in Brussels, Weize Xu（徐维泽） — the Chinese competitor’s setup offered a clear window—not into how far she’d go, but into what she put on the table. The origins of those objects formed a kind of side-view map of where China’s coffee scene really stands.

The beans were Panamanian Geisha. The popcorn machine brand is - American LORING -…

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Let me start with a counterintuitive fact: on Xiaohongshu, China’s Instagram, eight or nine out of ten cafés are pushing creative drinks. When foreign media cover China’s coffee scene, they also give these drinks a very prominent place. When you go to a coffee festival in China, you're almost buried under a wave of strange, over-the-top creative concoct…

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Coffee roasting is a craft that blends thermodynamics, physics, and chemistry — From loading beans, dehydration, color change to the development phase, roasters use smell, sight and parameter control to release, reorganize, and stabilize the flavor compounds hidden in green beans under high heat.

If we roughly apportion th…

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Coffee is magical: it wakes you up, sharpens your mind, can even become addictive—and as long as you don’t overdo it, it’s actually good for your health. It’s similar to tea in terms of function, yet completely different in flavor; its energizing effect is almost instantaneous, more intense physiologically than tea, and naturally fits the fast pace of urban life.

On an emotional or culture-level, it represents a kind of Western lifestyle that is quality, free, and cool. That’s probably coffee’s innate advantage in China and across much of Asia: it has a built-in appeal for young people here.

In the past few years, thanks to mainstream media coverage, the outside world’s impression of Chinese coffee has long been stuck on the “Luckin vs. Starbucks” battle. This shallow understanding stems partly from entrenched biases about the Chinese market. On the other hand, much of the content out there in the market — mine included — still looks at coffee mainly from the consumer side, and lacks an industry perspective. That inevitably leaves readers with a somewhat one‑sided understanding of the coffee market.

So, this time, I want to do something slightly different — Let’s step away, for a moment, from the stage of “storefront or consumer perspective” and move the camera a layer deeper:

Where exactly do these coffees come from? Who is actually supplying the resources behind the cup in Chinese consumer's hand?

In fact, the coffee value chain is far more complex than most people imagine—from farming, picking and processing, to roasting, logistics, and finally landing in cafés or in consumers’ hands. Beyond that, there are futures markets, industry associations, trade shows, competitions, and grassroots communities all working together to empower and reshape this industry.

Today, I’ll start from one of the least-talked-about areas in the mainstream media—the origin of coffee: Green Beans (coffee before roasting) — and use that as an entry point to keep piecing together the puzzle of “China’s coffee world.”

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I’ve mentioned many times before — the Chinese market is unique in a very specific way—you may recall this: China is probably one of few places in the world that simultaneously has ultra-large-scale coffee consumption (a market worth hundreds of billions of RMB) + significant-scale coffee cultivation (currently ranked 14th globally). This combination almost guarantees that the brands, habits, and trends that emerge on this land will look different from anywhere else.

On one hand, it has given birth to massive coffee chains that drive consumption—Luckin, Manner, and now players that have crossed over into coffee, like Mixue and Gu Ming. On the other hand, this demand has in turn fed back into local production.

“Yunnan 云南” coffee now accounts for over 35% of China’s total coffee sales. And perhaps unexpectedly, “Hainan 海南” is also a coffee-growing region, though very small, contributing about 2% of domestic coffee bean output.

Taken together, these numbers make one thing very clear: the vast majority of green coffee consumed in China still comes from overseas rather than domestic production.

Notably, China is now a major importer of green coffee beans, bringing in around 200,000 tons each year, with 13.5 % yoy growth rate in 2025. The total consumption of green coffee here already ranks among the top ten in the world, according to a report by Science and Technology Daily.

Although green coffee beans have many physical attributes, the simplest and most intuitive way to classify them is by origin. So in this article, I’m not going to dwell too much on grand narratives. Instead, I want to start from a more micro perspective—the coffee-growing origins that are popular in China—to show how these beans are actually shaping the market here 👇

Let’s start at my home (China): Yunnan & Hainan

Yunnan: between being “looked down on” and “looked forward to”

First, some context,

The coffee market can be roughly divided into commercial coffee and specialty coffee: Commercial coffee: lower-quality beans that only need to satisfy the basic function of “keeping you awake.” Specialty coffee: higher-quality beans that not only energize you, but also offer flavor, terroir stories, rarity, and other variables that support a more “premium” experience.

This is also why, when I previously categorized cafés, I personally split them into three types: Chains (commercial coffee–led) ; Specialty chains (specialty coffee–led) ; Independent cafés (specialty + distinct positioning or personality — otherwise hard to survive)

Fundamentally, this is a basic segmentation along the axis of commercial vs. specialty coffee. With this in mind, it becomes much easier to understand how different beans are used and valued in the market.

For a long time, Yunnan’s overall bean quality lagged behind traditional origins, so most of its output went into: Instant coffee products or some inferior roasted blends. The proportion that could actually enter the real specialty market used to be consistently below 5%. But as the specialty segment has boomed in China in recent years, in 2024, this number is up to 30%!!!!!!!

However, some specialty varieties—Typica 铁皮卡, Caturra 卡杜拉, Geisha 瑰夏, SL28, Bourbon 波旁 etc.—are still planted in much smaller volumes, and experience is limited, though acreage has been expanding in recent years. Now, most of the coffee planted in Yunnan is still Catimor 卡迪姆, a variety that is easy to grow but lower in cup quality.

Catimor itself is genetically predisposed to certain flavor notes—woody, smoky. In professional coffee circles, this isn’t automatically a “defect.” But for Chinese consumers—especially when Catimor is processed and roasted poorly—pulling it out as a single-origin and asking people to drink it straight is often a recipe for total rejection.

On top of that, compared with other origins, labor costs in Yunnan are high, which is another reason why Yunnan specialty beans have long been stuck in an awkward position:

In short: not that tasty, and not that cheap.

Just look at these screenshots from XHS:
on the left, a user complains that Yunnan coffee tastes flat and uninteresting;
on the right, a barista from a well-known café bluntly says that Yunnan beans are both not tasty and expensive—so most coffee shops simply choose not to use them 👇

Worse still, in order to compete with international beans, some Yunnan producers resorted to shortcuts in processing: Artificial flavoring in “fermentation” Poor technique leading to unnatural, overly perfumed flavors — so called Artificial flavored beans 香精豆; Trying to aggressively manipulate flavor to mask inherent weaknesses of the beans; Even scandals where Catimor was sold as higher-value varieties like Typica. All of this understandably angered both consumers and professionals. Confidence and trust in “Yunnan specialty coffee” went through a real low point.

To adapt to changing market demands and rebuild trust, the Yunnan government and industry players have been pushing hard on multiple fronts in recent years: Upgrading farming and processing techniques；Investing in infrastructure；Attracting more talent into Yunnan’s coffee-growing sector；Introducing new varieties；Tightening market management and improving transparency and etc…

Under these changes, more and more Yunnan coffees have clearly improved in quality.

For example: The harsh, unpleasant finish often associated with Catimor has become less pronounced in many lots. Some lots of varieties—like “Sarchimor” (萨琪姆) — have shown surprisingly Ethiopia-like profiles, with faintly clean acidity and sweetness. Certain estates and batches have even delivered flavor experiences strong enough to stand shoulder-to-shoulder with world-class coffees.

My cupping experience makes one thing very clear: Yunnan is undergoing a drastic transformation. This year’s slots are a completely different animal compared with those from even two years ago. The market just hasn’t fully caught up yet—it needs some time to react.

However, we shouldn’t celebrate too early. We still have to admit that, compared with origins like Ethiopia and Panama, Yunnan as a whole still has a big gap: quality is unstable, differences between batches and farms are huge, and corner‑cutting and mislabeling still occur.

So I don’t want—and refuse—to irresponsibly “canonize” any particular Yunnan variety or estate here. This isn’t Ethiopia or Panama; you can’t assume consistency easily. A batch I find excellent might be followed by another batch that you find mediocre or worse. For a region or estate to truly get things right, it often takes many years, if not decades, of iteration and proof.

Don’t get me wrong—I’m not trying to pour cold water on Yunnan coffee. Its progress is obvious to anyone who’s been paying attention: from disappointment and anger, to sympathy (“what a shame”), to finally those moments of surprise you get after stubbornly “sifting the sea with a spoon.” That full emotional arc is exactly what keeps people who care about Yunnan coffee curious and willing to keep trying — Here, no one genuinely wants to see it fail.

If you have professional skills, long-term ambition, or capital in this space, Yunnan is absolutely worth a long-term investment. Personally, I’m more inclined to look at it on a 5–10 year horizon rather than one or two. I do believe that one day, it will deliver a real surprise to the world.

Hainan: small and bitter, carrying “caffeine and cost” on its back

What might surprise you is that China has another coffee origin: Hainan.

The elevation there is low, and the climate is hot and humid—conditions that are suitable for growing robusta. The issue is that these beans tend to be “too intense” in aroma—put simply, they’re very bitter, often carry rubbery notes, and are very high in caffeine. For most consumers, that’s hard to enjoy on its own.

So for now, their value is mostly realized in: Instant coffee products and as a supporting component in certain blends.

The role is similar to some of the more basic-quality Yunnan beans: They take on the “bitter + strong caffeine + cost reduction” job that no one sees, but the market needs.

Of course, top-grade robusta can compete with arabica in cup quality. But Hainan’s overall output is so small that even if there are excellent lots, their market impact is still minimal. So I won’t go deeper into that here today.

Halftime recap: a rough but real “map of China’s green beans”

If we roughly divide the sources of green beans in China by function, the picture looks something like this:

Yunnan: Transitioning from “cheap base + instant material” toward “promising but unstable specialty option.” On one side, dismissed as “overpriced and underwhelming”; on the other, burdened with the hope that it might one day represent China on the specialty stage.

Hainan: Small-origin, small but bitter—mainly responsible for “bitterness and caffeine” in instant and deep-roast blends.

Alright, let’s put the domestic part on pause for now.

As mentioned earlier, imported green beans already account for a larger share of the market than locally grown ones—and in terms of both scale and overall quality, they are still ahead of domestic beans.

According to China’s 2024 customs data, the main sources of imported green coffee were Brazil in first place, followed by Colombia, Vietnam, Ethiopia, Indonesia and Uganda. By 2025, however, the ranking had shifted: Ethiopia moved into first place, followed by Vietnam, Uganda, Brazil, Indonesia and Colombia.

Among them, the standout is Ethiopia: in 2024 it was still in fourth place, but by 2025 it had jumped to first, with imports increasing by a staggering 124%.

Let me put it in this way — at least for the moment, it’s these imported green coffees that are truly working behind the scenes to shape Chinese consumers’ taste preferences. But how? 👇

Imported Beans:

Ethiopia: China’s Best‑Selling and Most Influential Origin Today

Ethiopian green coffee holds a special position in the Chinese market for several reasons.

First, policy: China offers tariff exemptions to Ethiopian imports (and is phasing in zero-tariff treatment for more African countries), which gives Ethiopian coffee a natural price advantage.

Second, flavor: Ethiopian beans usually bring - Distinct florals and fruity aromatics - Bright but approachable acidity - Smooth, layered mouthfeel — lower‑grade lots often go into blends, while higher‑grade ones are typically used as single‑origin pour‑overs.

All of which align very well with the preferences of today’s mainstream urban coffee drinkers in China. So while few professionals will say this outright in “official” contexts, my personal view is — Ethiopia has become the de facto benchmark for everyday pour-over coffee. In simple terms: If your beans are more expensive than Ethiopian, you’d better offer something truly unique.

Let’s zoom in.

One major popular category is beans from Yirgacheffe region: Under light roasting, their jasmine aromatics are unforgettable.

Another category is, unsurprisingly, Gesha: whatever Gesha or Geisha sells, even most consumers can not really tell the difference. Well — Ethiopian Gesha in particular tend to have very intense florals and fruitiness, bright acidity, and outstanding cleanliness. It was one of the coffees that first introduced Chinese consumers to Gesha after Panama’s Geisha.

Notably, there’s an interesting coffee bean in the Chinese market: Oiran (花魁, which some people simply call “China Beauty”) 👇

The bean itself is a natural-process coffee beans from the Hambela, Buku Abel Station, selected by Ethiopia’s DW Coffee Export back in 2017. It won the Taste of Harvest (TOH) competition and was brought into China by a trader in BJ, where it was rebranded as “Oiran” (literally “queen of flowers 花中之王” in Chinese).

In fact, this name doesn’t align with what it’s called abroad. Outside China, it’s usually just called Hambela.

Let me slip in an interesting story here — you’ll notice that “Oiran” on the market keeps being renamed with each new import batch: from Oiran 1.0, 2.0… all the way up to the latest 11.0.

And there’s no 10.0 in between. Why?

Because some domestic green coffee traders wanted to “pay tribute” to Apple 🍎 and copy the iPhone naming strategy, so the 10th-generation coffee was simply called Oiran X. 😂

Admittedly — just like “Geisha” and “Yirgacheffe,” the Chinese name “Oiran” is pure genius: Simple and memorable; Expresses exactly what’s special about the coffee—intense florals and a tea-like structure; Carries rich cultural imagery. That naming stroke alone helped this origin dominate Chinese specialty coffee menus for years — its market recognition level is now on par with Geisha and Yirgacheffe.

Recently, the way coffee beans are named and marketed has been quietly changing. Over the past two years in China, there’s been a growing focus on:

• Named producers (like ALO, ETLO, etc.), and

• Specific varieties (such as 74158, 74100, etc.).

These details now often appear as explicit selling points on the menus of serious specialty cafés — and this isn’t just true for Ethiopia; other origins are following the same pattern.

On one level, you can read it as increased transparency on beans supply chain. On another, a lot of it is being pushed from the marketing side — The logic is simple: if you keep selling the same old “country / processing / flavor” formula forever, people are eventually going to get bored.

Indonesia: the “dark roast king”

Indonesia’s flagship in China is Mandheling 曼特宁.（I am not taking abt Robusta here)

In central and southern China, Mandheling is no longer popular as a single-origin espresso or pour-over; more precisely, it had its moment, but has gradually been replaced by more floral and fruity coffees. (Of course, as a component in blends, Mandheling is still one of the most widely used and enduring recipes.)

Why?

To me, Mandheling does have some redeeming good features — cocoa, caramel and deeper body. But it also comes with herbal and woody notes, and often bitterness. Even with deep roasting to mask some defects, it can still carry off-flavors — herbal medicine vibes, muddiness—that many Chinese customers find off-putting.

Of course, even many “consensus-trained” experts are reluctant to admit something — Thoughtful deep roasting + precise brewing = can unlock a side of dark roasts most people never see: stunning sweetness and surprisingly clean cups. It’s just that very few barista + roasters can actually execute this consistently. Anyone who has really experienced good dark roasts will know what I mean.

One more interesting thing I’ve noticed about Mandheling is a kind of geographic–cultural wrinkle👇

Perhaps because northern Chinese consumers are used to stronger alcohol and bolder flavors, or maybe because the north has been more influenced by Japanese dark‑roast culture, cities like Beijing show a much higher tolerance dark roasts and straight black coffees and Mandheling is actually a star product in many cafés there. This stands in clear contrast to the south, where people generally prefer brighter, lighter‑roasted beans.

Vietnam & Uganda: the invisible backbone of instant and espresso blends

Vietnam and Uganda share a key trait: both are robusta powerhouses. In China, their main roles are: Raw material for instant coffee and Base layer in espresso blends

They contribute: Bitterness; Crema and body; And help keep overall costs under control. You rarely see “Vietnam estate X” or “Uganda micro-lot Y” on café menus. but on procurement sheets in factories and roasteries, they’re anything but invisible.

In many ways, they’re the uncredited workhorses of China’s coffee industrial complex.

Brazil: the crucial chassis

Brazil is probably the most “invisible yet crucial” origin in today’s Chinese coffee cups.

Its role is simple - Flavor-wise: nutty, chocolaty, caramelly, full bodied; Quality-wise: solid and very consistent — Operationally: ideal for large-scale, reliable sourcing

Key facts: Luckin buys about 60% of all Brazilian coffee imported into China. Many premium espresso blends also choose Brazilian beans as their base to ensure intensity and consistency.

Colombia: a love–hate relationship

Colombia is a textbook “polarizing” origin:

On one side, it produces a number of truly high-quality Geisha, Bourbon, and other great varieties.

On the other, it might the one of the most aggressive origins in experimenting with special processing in the world.

Unfortunately, Chinese consumers are particularly sensitive to this now, partly because in Yunnan, as I just mentioned, we went through a whole phase where “artificial flavored” and “over-processed” beans were used to mask poor raw material —so for many people, “special processing = cheating” became a default mental shortcut. So many cafés now treat “no artificial flavored beans” as a moral bottom line. This emotional backlash has hit good Yunan and Colombian coffees as well.

I can’t say this is the only reason, but the outcome is clear: Colombia’s green bean imports into China have been on a clear downward trend last year, and that lines up closely with what I’ve been observing in terms of changing consumer preferences on the ground.

Panama: in the high-end game, China is no longer just a spectator

When it comes to high-end coffee beans and “street cred,” Panama is almost impossible to avoid.

In the minds of most serious coffee lovers, “Panama Geisha” is no longer just an origin + variety label. It’s a whole package of symbols: Exquisite florals; Complex fruit acidity ; Layered sweetness and tea-like structure; Very high cupping scores; And, increasingly, absurd auction prices.

What many people may not realize is this:

In recent years, a large share of those record-breaking auction lots from Panama—the ones that make global headlines — have been bought by Chinese buyers.

Here is a selection of buyer information from the official website of the 2025 Panama coffee auction 👇

This sends two strong signals:

1. China is no longer a follower, but an active player in the high-end pricing game.

When you’re willing to pay the highest prices in the world for a coffee, you’re not just buying beans — you’re participating in defining - What counts as “top-tier flavor” in the coming years — Which processing methods and origins others will try to emulate

2. Panama’s industry now has to take “Chinese taste” seriously.

When one of your biggest buyers is from China, it becomes inevitable that: Chinese judges appear on juries and more professionals show up at origin.

This isn’t token representation; it’s about building Chinese consumer’s preferences directly into the auction feedback loop - impact the whole supply chain eventually.

In the end…

To wrap this up, if I had to force everything into one sentence, the current “green bean battlefield” in China roughly looks like this — Imported beans are supporting the fast-growing coffee consumption civilization we live in today; Domestic beans is quietly laying the groundwork for a future that hasn’t fully arrived yet.

No doubt, the story of green beans is far from over—what I’ve done here is only to open up the map a little. A single article can’t possibly cover every origin, nor can it do justice to all the detailed trends. In the future, I’ll probably write more pieces that dive into specific subtopics on the bean side.

Needless to say, a green bean on its own can’t go straight into your cup—it’s just raw material. To become good coffee it must pass through a whole series of steps, as discussed. The next article in this coffee series—though not finalized—will most likely focus on coffee roasting in China, a crucial link between the bean and the bar.

If this interests you, please consider sharing this piece and subscribing. Thank you.

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China now has over 400,000 freshly made tea (new-style tea) shops. From 2025 to March 2026, 120,000 new stores opened and 140,000 shut down. It’s a massive market, but it has clearly entered a phase of brutal internal competition and rapid “upgrading.” In this arena, any brand without real differentiation is destined to be eliminated.

Broadly, the tea brands that are still in a high-growth phase can be grouped into six archetypes:

1. Super chains (HeyTea, Mixue, ChaGee…)

2. Innovation labs (Sexy Tea)

3. Regional culture / unique-origin ingredients (CreaTea 去茶山)

4. Heavy hand-made operations (Ah Ma Handmade, etc.)

5. Health-oriented concepts (Naixue and Hun Juice 混果汁)

6. Tea brands that aggressively borrow from coffee (BASAO, Mamahecha, Alcalcha)

To survive and grow, all of these brands are throwing everything they’ve got at the market. But what is the real driver of growth?

In my view, it always comes back to product. Especially in a capital winter in the consumer sector, a truly distinctive, repeatedly buyable product is the only real foundation for survival. Moreover, milk tea sector has a particular structural challenge: you cannot protect a food or drink product with copyright. That means brands have no choice but to keep innovating – if you stop for a second, you invite elimination 👇

Hey Tea — “Kitchen” Upgrade (Product Quality + Operational Efficiency)

After HeyTea suspended franchising, it systematically upgraded and re-architected its store operations to address the quality degradation caused by over-expansion. Today, HeyTea insists on washing, peeling, and processing fresh fruit on-site in every store, every day, to ensure a genuinely fresh and distinctive flavor profile. This “sincere” way of making tea drinks is gradually winning back consumer trust.

The cost, however, is extreme back-of-house complexity. Different fruits require very different handling flows, and the processes are time-consuming. This places very high demands on kitchen layout, staffing, and management. Without exceptional kitchen design and operational discipline, it’s simply impossible to reconcile “complex, fresh processing” with “fast output at peak hours.”

Mixue — 100% Integrated Core Ingredient Supply Chain + Global Expansion + Multi-Brand Play

I’ve said this before – and I may have been one of the first to phrase it this way: Mixue is not really a milk-tea company; it is, at heart, a supply-chain company.

Mixue has built an integrated system that runs from raw materials (core ingredients are self-produced; other materials are procured at massive scale), to processing and warehousing, all the way through to highly efficient store-level turnover.

The key structural difference between Mixue and HeyTea is where complexity sits. HeyTea pushes complexity to the front: fruit is processed fresh in-store. Mixue pulls it to the back: the heavy lifting is done in Mixue’s own factories, while stores focus on standardized assembly and output. This dramatically lowers store-level operational difficulty – and that is one of the core reasons Mixue can open stores at such astonishing speed worldwide, while HeyTea cannot grow at the same pace.

More importantly, Mixue is now executing a multi-brand strategy: extending from tea into coffee and even beer. This is fully consistent with how Mixue has always seen itself – not as a “tea brand,” but as a fresh-made beverage platform. In earlier posts, I pointed out this detail: Mixue’s ambition is to become the world’s largest fresh-beverage company – the offline Coca-Cola, the McDonald’s of drinks – rather than just a “milk tea chain.”

ChaGee — Big Vision + Cultural Capital + A Starbucks-Style Positioning, But Severely Misaligned Product Strength

ChaGee’s challenges are extremely visible. As I mentioned in my previous post, in an intensely competitive domestic tea market, its products are not particularly strong, while its direct and indirect competitors are very, very capable.

The founder seems deeply enamored with grand narratives and “model innovation,” but shows a clear lack of depth and experience in product. The claim that ChaGee “relies too heavily on a few hero SKUs” is really a symptom of a deeper issue: it lacks a systematic capability to generate and mass-produce hit products.

In China, one or two star products are nowhere near enough. You need a repeatable mechanism to create hits over and over if you want to survive multiple cycles. If ChaGee truly tries to run a “outdated Starbucks playbook” – a handful of classics holding up the whole enterprise – in China’s tea market, it’s effectively setting itself up for failure. （ In fact, Starbucks has already gone through its own round of reflection and now clearly recognizes how critical continuous product innovation is in the Chinese market.）

And none of this can be fixed by surface-level PR and beautiful store design – the parts of the story the media like to tell. What the founding team needs is a fundamental reset on three fronts:

1. Rebuild the business around a real, coherent product system, not only narrative;

2. Redesign the store model to reflect that product logic, rather than stacking concepts;

3. Reconfigure the organization and incentives so that the company is structurally committed – and able – to invest in product strength.

Without that, all the grand cultural assets and high-level storytelling will eventually evaporate.

GuMing — Mixue-Level Supply-Chain Strength + HeyTea-Level Product Quality + Possibly the Best Coffee in Milk-Tea Land

GuMing’s supply-chain capability is second only to Mixue’s. Its self-production ratio in manufacturing is somewhat lower than Mixue’s, but structurally its supply chain is very similar – and it may even have an edge in cold-chain logistics. It operates its own refrigerated fleet, delivering to stores every two days, and in some locations daily, which gives it a very strong “freshness” advantage on ingredients.

On the product side, GuMing is, in many ways, the closest to HeyTea. It has essentially treated HeyTea as a living product library: when HeyTea launches a successful SKU, GuMing will often replicate it, then optimize it into its own version. It is not a particularly original innovator, but it is extremely good at digesting competitors’ ideas, reengineering them, and making them feel like “its own.” In a hyper-competitive market, that is a real capability.

Like most major tea brands, GuMing has also moved into coffee as food-delivery competition heats up. In 2025, GuMing officially launched coffee products, and founder Wang Yunan recently said, “Our track has shifted from milk tea to tea-coffee.” That shift from “we also sell coffee” to “we sell a different kind of coffee” is really about injecting milk-tea supply-chain advantages into coffee, using a deeper understanding of milk and dairy to rework what coffee can be.

Overall, GuMing is very grounded: its own original R&D is not outstanding, but it is extraordinarily good at absorbing competitors’ best ideas and operationalizing them. Turning other people’s strengths into your own competitive system is, in itself, a powerful survival skill.

Naixue — Great Ingredients + “Green” Formulas, But Simply Not Very Tasty

Counterintuitively, if you study Naixue’s supply chain carefully, you’ll find that its ingredient quality is likely among the best in the industry, and its formulas are among the healthiest – almost no syrup, almost no artificial flavoring.

The downside is clear: its health profile significantly outperforms the industry, but its flavor perception lags behind its key competitors. In practice, it’s the “good but not good-tasting” paradox. In a market where consumers’ palates have already been trained by high sugar, high flavorings, and strong sensory stimulation, Naixue’s restrained and “clean” approach loses in head-to-head taste tests, even if it wins on the health dimension.

Ah Ma Handmade (AMH) — High-End, Hand-Crafted, and Operationally Complex Kitchens

AMH’s “kitchen” model is, quite literally, hard to believe. It is easily an order of magnitude more complex than HeyTea’s. It doesn’t just process fresh fruit on-site; ingredients like taro, ice cream, mochi, and almost every other component you can think of are all freshly sourced and hand-prepared in the store. That leads to extremely high labor costs and a very demanding people-management challenge.

But precisely because AMH is willing to invest in, and relentlessly refine, such a complex operational system, it has built a very high, very hard-to-copy moat in an overcrowded market.

The flip side is structural: this kind of system is inherently difficult to scale. Expansion is slow by design. If store-level sales ever dip below a certain threshold, the weight of that labor cost can crash the business very quickly. That is the core risk of a “high quality + high complexity” model.

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Sexy Tea — The Undisputed Product Innovation Lab of China’s Tea Industry

Sexy Tea really needs no introduction: it is the original product innovator in China’s new-style tea segment.

Its pace of product innovation is comparable to Luckin Coffee’s, but what’s more interesting is how it innovates: it likes to redefine categories from first principles. Tea cocktails, tea-coffee hybrids, creative lemon teas, new store formats – these are not just riffs, they’re category experiments. I’ve said this more than once: Sexy Tea is, in practice, the core inspiration source for a large part of the Chinese tea industry. Many “novel” products you see across other brands are, in reality, things Sexy Tea tried first.

Beyond product itself, they’ve even begun experimenting with factory-style automation equipment inside the store to make drinks on site. By doing this, they turn an extremely complex set of procedures into something simple and efficient. If this works, we may soon see the entire industry adopt similar systems.

CreaTea 去茶山 — A “Water Brand” from Guizhou

CreaTea is very explicit about wanting to take share from specialty cafe and craft beer shops. Many of its locations use equipment that is essentially on par with premium coffee store and craft beer bars already — so wild.

This aligns with how the founder frames the business: they’re not just “a tea brand”; they’re trying to “make a truly good-tasting cup of water.” In that sense, CreaTea looks more like a premium version of Mixue – a quality-focused platform that will eventually extend into multiple beverage categories, rather than a narrow tea-only concept.

Interestingly, the brand did not lean heavily into the “Guizhou” element at the start. It was only when it expanded nationwide that it discovered how commercially powerful that regional identity could be. This was enabled by post-Covid tourism: the boom in Guizhou tourism exposed a national audience to the region’s landscapes and culture, which in turn created a window for “Guizhou-origin ingredients” to travel across the country — such as Roxburgh Rose 刺梨 and Tongren Macha 铜仁抹茶.

Alcalcha — Rebuilding Coffee’s Category Architecture in Tea, but with Very Strange Tastes

Alcalcha’s store layout is divided into three parallel sections: tea-coffee, tea-based specialty drinks, and tea pour-over. This is a direct mirroring of the three major pillars of the coffee industry.

Strategically, it’s bold and even elegant on paper. But several of its actual products don’t live up to that ambition. From my own experience, the tea-coffee drinks I tried were literally odd and, frankly, taste unpleasant. It’s hard to understand what the founder was thinking at the product level – it’s one thing to have a clever concept; it’s another to serve consumers something that, at the end of the day, just isn’t drinkable.

By contrast, within this “coffee-benchmarked” segment, I much prefer Mamahecha and BASAO: the former does an excellent job with tea-based cocktail creative drinks, and the latter delivers a truly outstanding pure-tea experience.

Conclusion: The New-Style Tea War Is Now a War of Hard Fundamentals

China’s fresh-made tea war has already moved past the stage of “who tells the better story.” We are now in the phase of “who has the harder fundamentals” – product, supply chain, and organizational execution.

• Super chains are competing on supply-chain depth, standardization, and scale efficiency;

• Innovation labs are competing on who can define the next product paradigm;

• Regional-culture brands are trying to turn local terroir into scalable product assets;

• “Freshness and Hand-made” concepts are trading extreme experience for high margins and high loyalty;

• Coffee-inspired tea brands are attempting to rebuild the coffee category architecture around tea.

In a category where products cannot be protected by copyright, any brand that stops moving will, often quietly, be left behind.

There are only two types of players that can survive this cycle:

1. Those who always have something genuinely new to offer, without breaking their operating system;

2. Those who may not tell the flashiest story, but who go extremely deep in supply chain, store operations, and product.

Everyone else will slowly be cleared out by this “fresh-made tea war.”

You can tell stories. In fact, you should. But the product has to outweigh the story’s momentum by a wide margin if the story is to sustain itself. Otherwise, the bigger the story you tell, the faster it will turn and hit you on the way down.

To learn more about China’s fresh-made tea industry, feel free to explore my earlier posts linked below 👇

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Alibaba

• Qwen AI in commerce > On January 15, 2026, Qwen integrated with Taobao Flash Sale and Alipay AI Pay, launching a natural language ordering feature (consumers can directly voice “给我点一杯奶茶” to get delivery). Chinese consumers placed over 120 million orders through Alibaba‘s Qwen app in six days. Plus, Qwen has now integrated with Amap and other Alibaba services, positioning itself as a new consumer search gateway—challenging not only e-commerce platforms but also search engines.

• Hema (Freshippo) > 2026 strategy centers on “dual-wheel synergy,” targeting “premium quality” and “downmarket penetration.” Hema Fresh positions itself for mid-to-high-end urban families, offering high-quality fresh products and 30-minute instant delivery; Super Hema NB targets community hard discount, achieving extreme value-for-money through streamlined SKUs and direct sourcing.

Meituan

• Acquisition of Dingdong Macao (叮咚买菜）> On February 5, Meituan announced it would acquire 100% of Dingdong Maicai’s China operations for an initial consideration of about USD 717 million.

• Xiaoxiang Supermarket > Opening physical stores (Beijing Dec 2025, Ningbo Jan 2026) fills online fulfillment gaps and supports Meituan Flash Sale—stores act as fulfillment nodes, enable pickup, in-store experience, and online purchase.

Taking Shanghai as an example, in the fresh food e-commerce front-warehouse and store-warehouse integrated models, Hema and Sam’s Club each hold around 30% market share, while Dingdong Maicai holds 20%, and Meituan’s Xiaoxiang Supermarket only around 10%. After the merger, their combined market share reaches approximately 30%, enabling them to compete directly with Hema and Sam’s Club, rather than “burning money” to expand market share.

Walmart > Since 2025 Walmart has piloted a community-store pivot in Shenzhen with 500 m² shops, 30% private-label mix; plans 150 new stores in 2026 focused on mature communities in Tier-1/2 cities.

ALDI > Q1 2026 store count will exceed 100 in East China

Busy Ming (physical snack chain)> IPO in Hong Kong: Listed 2026-01-28. In the first nine months of 2025, Chinese top snack retailer Busy Ming ( the giant brand formed after the merger of Busy For You and Zhao Yiming) reported rapid expansion with revenue of 46.4 billion yuan (approx. S$8.4 billion) and a net profit estimated to be at least 2.3 billion yuan for the full year 2025. Revenue surged by 75% compared to the same period in 2024, supported by a network of over 19,500 stores by September 2025. (exceeded 20,000 stores by January 2026)

Wancheng Group (physical snack chain)> According to the company’s latest financial report, Wancheng Group recorded RMB 36.56 billion (USD 5.1 billion) in revenue for the first three quarters of 2025, up 77.37% year-on-year. Net profit reached RMB 855 million (USD 119.7 million), a staggering 917.04% increase. The latest store count stands over 19,000.

Three Squirrels (the former snack king who excelled in e-commerce) > 2025 profit warning (2026-01-29): In the first three quarters of 2025, Three Squirrels reported an operating revenue of 7.759 billion yuan, marking a year-on-year increase of 8.22%. However, net profit attributable to shareholders decreased by 52.91% year-on-year to 161 million yuan.

To counter declining performance, Three Squirrels—a brand that excels in e-commerce—has embraced an omnichannel model to reach consumers more efficiently. The company is achieving full-channel coverage of “online + offline + distribution” through offline distribution network expansion, full-category lifestyle store deployment, integrated supply chain support, and organizational management optimization. The goal: balanced revenue of RMB 10 billion each for online and offline in 2026, becoming a “full-category, omnichannel, manufacturing-based private-label retailer.”

Pangdonglai > Founder Yu Donglai announced retirement from operational duties on 2026-02-11, moving to an advisory role; daily operations and strategy now run by a Pangdonglai Decision Committee—marking a move from founder-driven to institutional governance.

Yonghui > Continues struggling with a transformation—shifting from traditional format to an experience level nearly matching Pangdonglai—that brings financial strain. 2025 preliminary results (2026-01-20) show net loss to shareholders of ~RMB 2.14 billion (45.6% worse YoY) and adjusted net loss of ~RMB 2.94 billion. This marks the fifth consecutive year of losses, with cumulative five-year losses exceeding RMB 10 billion.

To learn more about grocery wars in China, please read this post👇

East Buy > After losing star anchors like Dong Yuhui, the brand accelerated a Douyin (TikTok China) account matrix, and offline stores tests. Opened a 400 m² flagship in Zhongguancun, Beijing — quick-serve cafe to create “shop + hangout + meet” experiences for well-paid crowds. Store finishing late 2025, slated to open Mar–Apr 2026.

To learn more about the drama between star anchor Dong Yuhui and East Buy, please read the following article I wrote 2 years ago 👇

Dreame × Spring Festival Gala 🇨🇳 + Super Bowl 🇺🇸

Dreame Technology (founded in 2017) is a rapidly growing global tech company specializing in high-performance smart home cleaning devices, including robot vacuums, wet/dry vacuums, and hair dryers.

The brand has become a strategic partner of the 2026 CCTV Spring Festival Gala and will also appear at the Super Bowl. It's seizing both of the biggest annual galas in China and the U.S. for maximum exposure—likely the first and only brand in the world to do so.

To me, Dreame is a company full of imagination — their products are cool. Its founder aspires to be “China’s Elon Musk” and a superhero, but many employees think he’s just dreaming and talk shit.

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Huawei

From January 29 to February 28, Huawei is running a promotion on smartphones, tablets, and wearables, with discounts of up to 4,000 RMB on certain products. This is clearly a counterattack against Apple's CNY "price war”.

Apple's aggressive pricing in China is a serious test for domestic brands. Don't assume only Chinese brands excel at price wars—Apple's global supply chain and cost control give it more flexibility and lower marginal costs.

Insta360

In an interview with Luo Yonghao (老罗), Insta360's founder said that without DJI pioneering the consumer drone category, Insta360 would not exist—DJI's strength surpasses what most people imagine. But this is a warning, not praise: "Don't encroach on our territory."

Insta360 and DJI are already competing across multiple fronts — last July DJI released a 360° camera, officially stepping into Insta360’s territory, and just 15 days later Insta360 struck back with a 360° drone aimed at DJI. (I’m not sure who truly initiated the move — it’s unlikely Insta360 developed a drone from scratch in just 15 days;

JK Liu claims he will be DJI’s competitor for the rest of his life.

TIIANLALA (甜拉拉)

TIIANLALA has over 8,000 stores nationwide, focusing on lower-tier markets as a bubble tea chain and is perhaps a rival to Mixue.

It launched two new drinks, “Juicy Fresh Orange Jasmine” and “Juicy Fresh Orange Passionfruit,” building out a “fresh fruit, fresh tea” product matrix. It seems that “freshness” and “ is the core positioning in its contest with Mixue.

HEYTEA

HEYTEA released a year-end review of its differentiated achievements: the “tea mixology” series became a best-selling product line, and the brand opened over 100 stores in 32 overseas cities.

What is the essence of tea mixology?—using a limited vessel to create unlimited possibilities—breaking through the constraints of beverage categories by endlessly incorporating different ingredients to achieve the goal of stunning the palate.

The tea mixology is just as magic as coffee mixology—perhaps this category wasn’t invented in China, but it has certainly flourished here—because in such a fiercely competitive market, without constantl innovation, survival is impossible.

Pop Mart

Pop Mart is currently testing dessert/bakery offline stores or pop-up formats centered around its proprietary IPs in select cities, with products including cakes, desserts, and beverages, emphasizing IP imagery + visual design + photo-worthy attributes, rather than traditional dessert chain logic.

What truly matters here is not “desserts” but the monetization boundaries of IP continue to expand—from blind boxes → home goods → theme parks → desserts, Pop Mart is essentially testing: can IP, like Disney, become a form of “edible emotional consumption”?

ANTA

Anta has become a strategic partner of the Hellenic Olympic Committee, creating professional competition apparel for the national sports delegation.

Bosideng (Down Jackets)

Bosideng partnered with designer Kim Jones to launch its premium line AREAL, which made its overseas debut with a pop-up store at Galeries Lafayette in Paris.

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The notorious melamine scandal severely damaged China’s dairy industry in the short term, but it did not fundamentally alter the industry’s trajectory of being pushed onto an “accelerated” path.

Under the top-down government narrative of “improving national nutrition” and “matching developed countries’ per-capita milk consumption,” upstream farms and processing capacity expanded rapidly. Massive imports of dairy cows, densely established farms, and raw milk production surged to high levels in a very short period—while actual consumer demand lagged behind expectations — the industry experienced explosive production growth starting in 2020, and in less than four years, began to decline in 2024.

The reasons are likely multi-layered: the total population has peaked, births and student populations continue to decline; lactose intolerance remains common; and in traditional dietary patterns, milk has never been a must-have on the table. The result is clear — this is an industry that theoretically “still looks like it has huge potential,” but in reality has entered a cycle of oversupply, destocking, and falling margins.

However, within this overall downward trajectory, different forces are still reorganizing value. Below I want to show readers three Chinese dairy brands I pay special attention to and somewhat admire, and how each is finding its own way to survive and grow against the headwinds 👇.

伊利 (Yili)

A Slowed Giant and a Belated Turn 😭(Yili; Yicai)

• Pressured growth: In the first three quarters of 2025, Yili reported total operating revenue of RMB 90.56 billion, a year-on-year increase of only 1.7%, while net profit attributable to the parent was RMB 10.43 billion, down 4.1% year-on-year. ( In 2024, the company achieved total operating revenue of 115.78 billion yuan, down 8.24% year-over-year; net profit attributable to shareholders was 8.453 billion yuan, down 18.94% year-over-year)

• Core engine malfunctioning: The drag on the whole was its cornerstone business: UHT milk(Yili holds ~38% share; together with Mengniu, the duopoly controls over 70% of the market.) That segment’s revenue in the first three quarters was RMB 54.94 billion, down 4.5% year-on-year. By contrast, its infant formula and cheese businesses kept growing but are not yet large enough to offset the main channel’s decline.

• Slow pace of transformation: Although the chilled fresh milk market is growing rapidly, Yili’s financial reports have never separately disclosed fresh milk sales, and the extension of its marquee ambient UHT brand “Jindian” into fresh milk has not made a big market splash.

Yili’s earnings report reads like a typical “giant turning” health check.

When the industry’s prevailing current shifts from the wide UHT (ambient) sea toward the fresh milk lane that requires cold-chain protection, this giant ship feels unprecedented resistance. Its 4.5% decline in core business is not a random quarterly blip but a snapshot of an era: the nationwide distribution network and large-scale standardized production that once delivered success are becoming liabilities in the face of consumer demand for freshness, short shelf life, and ready-to-drink formats.

The problem is not that Yili hasn’t seen the trend — it began investing in fresh milk years ago. The problem is that the transformation speed of its massive system has fallen out of sync with the pace of consumer change. A sharper contrast is that Yili has only recently significantly increased investment in ready-to-drink dairy drinks, even as ready-to-drink tea has already become a brutal red ocean. Such slowness might have been masked by scale in an up-cycle, but in a down-cycle of static demand it translates directly into painful share loss to competitors.

Perhaps an outbound story must become Yili’s second narrative. Leveraging its mature domestic supply chain and cost advantages to explore Southeast Asia, the Middle East, and other incremental markets is logically sound. But dairy is highly localized: brand recognition, taste habits, and channel barriers make it a long-term undertaking. Yili’s public globalization data remain fuzzy — whether this giant can regain speed in unfamiliar waters is still uncertain.

Its dilemma reveals a harsh truth: in a period of industry paradigm shift, the greatest risk often stems from the path dependence forged by past success.

New Hope Dairy

The Actuary of High-Value Categories 📈（New Hope Diary)

• Outstanding profit elasticity: In the first three quarters of 2025, the company’s revenue was RMB 8.434 billion, up 3.49% year-on-year; net profit attributable to the parent was RMB 623 million, up a substantial 31.48% year-on-year. Profit growth far outpaced revenue growth — the best proof of strategic quality.

• National expansion:

  • Centered on the "24-hour" series and the "Asahi" brand emphasizing quality and freshness expanding into the premium national market.

  • Localized market penetration: Replicating the success of regional brands like "Liangshan Snow" (which holds 75% market share in Xichang, Sichuan), cultivating low-tier markets.

• New model: Through a “city-factory + regional cold chain + multi-new-channels ” model, it has built an extremely efficient network of localized fresh milk supply that is hard for national brands to replicate.

If Yili’s report reflects the “pain” of transformation, New Hope Dairy’s report precisely exemplifies the “joy” of focus.

While the industry sinks into price wars, destocking, and margin erosion, its 31.48% net profit growth is like a sharp flash illuminating a completely different path: abandon the obsession with “volume,” and instead pursue “quality” and “price” deeply.

New Hope’s impressive growth shows the foresight of its strategy; fundamentally it is a precise “value segmentation” operation. It did not try to educate the whole country to drink more milk; it decisively bet on a high-value consumer segment that is insensitive to price but highly sensitive to quality and freshness.

However, this brand also faces a risk worth noting: succession.

The future leader is Liu Chang, daughter of founder Liu Yonghao—a female entrepreneur as accomplished and principled as Zong Fuli. While New Hope Dairy’s succession looks more stable than Wahaha’s, appearances can deceive. It’s hard to see what’s really happening inside. The real test will come when Liu Yonghao fully steps back: can Liu Chang establish unquestioned strategic authority and control over resources within the group’s complex industrial empire and its entrenched network of veteran executives?

I hope Liu Chang won’t repeat Zong Fuli’s tragedy.

BeFood (必如)

The “Niche King” That Defines Standards 👑

• An unlisted invisible champion: As a private company, BeFood does not disclose financials. Its influence can’t be measured by traditional reports but shows up in another dimension — category-defining power.

• Creating and owning a category: Its core product, Eisbock 冰博客 (a concentrated milk produced through freeze-distillation), intensifies milk flavor through industrial processing and has become inseparable from “Dirty,” the breakout drink in China’s specialty coffee scene.

• Securing B2B formula entry: In B2B markets, it has made “Dirty = BeFood = Eisbock” the default formula. It doesn’t advertise directly to consumers but controls consumption choices indirectly by shaping thousands of coffeeshops’ product standards.

So who is Dirty? 👇

A coffee drink built around a hot espresso shot crashing into ice‑cold milk, designed to create a strong temperature and texture contrast;

The recipe originated from a Japanese specialty café, but it was in China that Dirty became a true menu staple;

Today, Dirty is a near‑mandatory SKU in most specialty coffee shops in China.

BeFood’s case is the most strategically instructive beyond financial statements. It proves that in an industry perceived as struggled and consolidated, there remains a disruptive opportunity to “create a new game and set the rules.”

The brand smart moves was not to improve old products or chase popular new categories like fresh milk. It did something more radical: based on a uniquely Chinese growth scene (the booming specialty coffee culture), it deliberately created an industrial raw material tailored to that scene — a previously unseen standardized ingredient.

The strategy’s power is seismic.

It sidestepped head-to-head battles with giants over channels and consumer advertising, and instead went upstream to capture the key position of “formula.” When a new coffee shop opens and wants to make a market-recognized Dirty, using Eisbock becomes an almost unquestioned industry norm. That means BeFood’s moat is not brand loyalty but the product’s standardness and indispensability. It may never have Yili’s tens-of-billions revenue, but in its narrow and deep niche it enjoys near-monopoly pricing power and an unassailable position.

This reveals the ultimate survival philosophy in an over-competitive market: rather than fighting to be the biggest fish in a red ocean, find your blue ocean and become the undisputed shark.

If you want to make Eisbock at home, read the article by the American coffee champion — Morgan Eckroth — in both her piece and my commentary, you’ll see our shared appreciation for the BeFood brand 👇

Coffee For Here

How to make barista championship milk at home

I’m very lactose sensitive (I stubbornly refuse to give up cheese) but if you hand me a freeze-distilled cortado, I’ll finish the whole thing…

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2 years ago · 75 likes · 9 comments · Morgan Eckroth

Summary > Three Paths, One Future — The War for Value Depth

These three markedly different “report cards” together map the clear migration of value pools in China’s dairy industry:

• Yili represents the old-continent guardian: it holds the largest terrain (channels and share), but the soil underfoot (ambient milk demand) is sinking; reclaiming new land (fresh milk, overseas markets) requires time and huge resolve.

• New Hope Dairy represents the new-continent boutique farmer: it voluntarily abandons barren land and chooses the most fertile soil (high-tier cities, chilled categories), cultivating intensively to reap rich returns (margins).

• BeFood represents the new-continent “pick-maker” or toolmaker: it doesn’t farm land or fight for territory; instead it discovers a new gold rush (specialty coffee) . Its success lies in capturing derived demand.

The core of this battle has shifted from “who has broader channels and louder voice” to “whose value anchors are deeper and more indispensable.” Whether it’s New Hope binding to freshness and scene, or BeFood binding to formula and standards, both deepen the link between their offerings and real consumer needs.

The industry’s endgame may no longer be unchecked expansion by a single giant, but a new ecosystem of “mega players plus many invisible champions” coexisting. Yili-like firms may continue to hold the basic market and mass traffic, while New Hope, BeFood and others will carve out profit-rich, defensible fiefdoms in specific niches.

For consumers, this is arguably the best era — we are no longer being lectured to “drink a kilo of milk every day,” but are served as individuals with more precise and innovative offerings.

To learn more about China's milk industry, you can check out this article I wrote two years ago 👇

Before discussing “going global,” we must clarify two often-conflated concepts: export and brand. Export measures scale and channels; brand concerns identity, legitimacy, and long-term bargaining power.

On the surface, Chinese trade remains resilient: reaching new highs in 2024, with exports still growing in 2025. …

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Nike

Nike’s China sales decline for sixth consecutive quarter — (business insider)

As I’ve mentioned thousands of times, in China, with the rise of national self-awareness and the significant weakening of past sentiments of worshipping foreign things, many Western brands have lost the values and narrative advantages they once enjoyed — Nike is no exception.

Today’s Nike China cannot influence Chinese customers through its “cult-like cultural values,” and those once-inspiring stories of typical American individualism are now being rejected by the Chinese. In this market that rejects Western values, Nike’s most crucial leverage is the product itself. consecutive sales declines have exposed their product weakness—lack of innovation, relying on past glory, mediocre design, and severely insufficient attention to segmented market needs, leaving space for competitors.

Most importantly, I think Nike fans worldwide would agree with me—Nike’s quality keeps getting worse, unable to support its premium status anymore.

Chinese consumers often joke about Nike, saying “if you buy a pair of Nikes today with great quality, those must be fake ones produced by Chinese factories. Instead, the ones that come unglued after two days of wear are the authentic Nikes.”

ANTA

ANTA accelerates globalization (Bloomberg; Vogue)

ANTA’s model now mirrors Nike’s almost in reverse — Nike abandons DTC, ANTA doubles down on DTC; Nike leaves China’s supply chain, ANTA relies on China’s supply chain; Nike maintains a single brand, ANTA deploys multiple brands to target segmented markets; Nike tells American stories, ANTA tells Chinese stories. Nike gave up signing Kyrie Irving, ANTA directly invited Irving to become Chief Creative Officer.

This should be no coincidence; ANTA’s leveraging a strategic framework benchmarking Nike, but more innovative and bold than Nike, while discovering Nike’s mistakes and immediately attacking without mercy.

Obviously, ANTA’s strategy has already achieved results — it has become the world’s third-largest sports brand, trailing only Nike and Adidas. Its global expansion will certainly allow more audiences to experience ANTA’s product appeal — I’m not bragging, but many of their shoe designs are bolder than Nike’s, and the quality is even better than Nike’s👇

However, ANTA's weaknesses are equally clear—the product line and brand matrix is overly complex and chaotic, diluting brand recognition and creating unclear positioning. To this day, I still don't understand who is ANTA and what ANTA stands for. If ANTA hasn't clarified this domestically, imagine how challenging it will be to communicate with international consumers.

lululemon

China now serves as a major growth engine for lulu, offsetting slower sales in the Americas (lululemon)

As I mentioned in my previous posts, lulu's success in the Chinese market stems from establishing a near-monopoly product experience, fitting into the outdoor sports trend, and penetrating consumers outside big cities. However, there's one key point I missed—the rise in the status of Chinese women. This shift provided lululemon with a huge and growing target customer base, purchasing power, and cultural foundation.on.

(Perhaps many could argue that there are very few women among the top leadership at national political arena or state owned enterprises, but it is undeniable that in broader social spheres, women's status has been rising rapidly)

Big picture - the rise in Chinese women’s status is uneven—in coastal areas, women’s status is already very high, but inland regions are still in a very conservative state — this gives lululemon enormous room for continued growth in China— let’s see what’s next.

Among the many investors and business icons, Duan Yongping stands out as particularly unique. What makes his thinking so compelling is not just his investment success, but the dual perspective he offers, blending the “Entrepreneur” and the “Investor.” This is the most fundamental distinction between him and most investors.

A Dual Identity, A Unique Dimension

Duan Yongping is, first and foremost, an exceptional entrepreneur. He personally built business legends like 小霸王，步步高，OPPO and vivo, profoundly influencing an entire consumer electronics ecosystem. This background dictates that his lens for examining a company is fundamentally different from that of a Wall Street analyst: he focuses not only on profit growth on a spreadsheet but on the underlying operational essence behind it all.

His core criterion for judging a company can be boiled down to a simple question: “Is this company doing the right thing?”

“The right thing” is not a vague notion but a systemic business judgment, akin to a combination of “right timing, favorable conditions, good product, team, culture and etc…” — Is the product direction correct? Is the market timing ripe? Is the corporate culture healthy? Is the core team capable? Only when these elements align toward a positive direction can a company build enduring competitive advantages.

This sounds like common sense, so why do so few truly see through it?

Why Is This “Common Sense” So Rare?

The reason lies precisely in the fact that most people lack the firsthand experience of building something from zero to one and steering an enterprise through uncertainty. Without this experience, it’s easy to fall into Hindsight Bias: Only inferring a company's excellence from lagging results like "profits and revenue" on financial statements, with inferior ability to systematically think about and diagnose Chinese domestic companies' business models, governance methods, corporate culture, execution details, competition landscape and consumer behavior shift.

At its core, this is a lack of local business intuition and deep understanding. To truly comprehend a company requires not just analyzing what it did, but understanding why it did it, and even assessing how well it was done, what they might do next and what challenge they may encounter..

Resonance and Divergence with Buffett

This aligns perfectly with Warren Buffett’s core principle—”buying a stock means becoming an owner of the business.” This sounds simple but is exceedingly difficult in practice. A vast cognitive chasm separates the act of clicking “buy” from psychologically truly “owning” the company.

Truly “owning” a company means you must think like its founder and operator. You must care not only about next quarter’s earnings report but also about its product competitiveness, user sentiment, talent pipeline, and cultural resilience. You must even mentally simulate: If I were the CEO or product director, what would I decide? Could I do better than them? Only with this depth of understanding can you cut through market noise and identify a company’s inherent health and excellence.

Without firsthand, frontline experience in the Chinese market, it’s incredibly difficult for an outsider to truly “wear the boots” of a Chinese decision-maker. The strategic choices, competitive tactics, and compliance wisdom born from that local context remain opaque to those without lived experience. This deep, almost ineffable local insight is Duan’s unique and hard-to-replicate advantage when understanding and investing in Chinese companies.

Conclusion: Insight Springs from Understanding Essence

Duan Yongping’s investment philosophy teaches us that the highest form of investment wisdom often comes not from complex models, but from a profound grasp of the simple essence of business. It demands we place ourselves in the operator’s position and measure an enterprise against the ruler of “doing the right thing.” This perspective, forged from entrepreneurial spirit and tempered by an intimate understanding of China’s commercial ecosystem, is the sharpest and most fascinating aspect of Duan Yongping’s thinking—it brings investment back to business fundamentals, guarding a rare clarity and conviction amidst the market’s noise.

Of course, while I greatly admire Duan, that doesn’t mean I agree with all his views. In particular, I don’t quite understand his bias against Elon Musk —he seems trapped in an echo chamber, or perhaps age has made his thinking more conservative.

In an economic environment marked by slowing growth and intensifying competition, waiting until the first curve peaks to consider change is often too late. Charles Handy’s “Second Curve” theory emphasizes that companies must courageously forge new growth paths before their primary business reaches its zenith. This post explores how three Chinese consumer brands have proactively practiced this principle, successfully leaping to their new growth curve while their core businesses remained strong, thereby achieving resilient growth 👇👇

Atour — Turning Hotel Stays into a Lifestyle Business

• According to Atour Group’s Q2 2025 financial results, its retail business accounted for 39.1% of revenue, becoming its second-largest revenue pillar. The revenue of retail segment for the quarter reached ¥965 million RMB, a year-on-year increase of approximately 80%.

• The retial business of Atour has been divided our private lables into three product lines—ATOUR PLANET, SAVHE and Z2GO&CO., covering a wide range of products from sleep-related products, personal care to travel necessities.

• The success of its “Atour Planet” home products has significantly boosted the growth. To put this in perspective, here’s how Atour Planet stacks up against leading Chinese home textile brands in 2024:

  • Revenue Comparison: Luolai Home Fashion: ¥4.56 billion; Mercury Home Textiles: ¥4.2 billion; Fuanna: ¥3 billion; Mendale: ¥1.7 billion — [Atour Planet: ¥2.2 billion]

  • Gross Margin Comparison: Luolai: 48%; Fuanna: 56%; Mercury: 41.4%; Mendale: 40.3% — [Atour Planet: 50.7%], higher than many traditional brands, and even significantly higher than its own hotel management business at 35.9%.

Atour’s model is both powerful and elegant: guests build trust through firsthand experience and then bring that experience home. This goes far beyond cross-selling; it’s a profound form of scenario-based ecosystem building. It successfully transforms one-time accommodation services into a sustained, high-margin revenue stream, embedding the brand more deeply into users’ lives.

The retail business’s gross margin is notably higher than that of the core hotel operations, validating that the second curve brings not only scale growth but also a higher-quality profit model. Atour’s practice reveals a key insight: the most sophisticated second curve often starts by turning your most potent physical space into an immersive, tangible “product catalog.”

Sexy Tea (ChaYan) — When a Tea Brand Grows Beyond Drinks

• In 2024, Sexy Tea reported approximately 3 billion RMB in revenue, with a net profit of around 450 million RMB. By the end of 2024, the total number of stores under the “Sexy Tea brand portfolio” — had surpassed 1,000. Within this total, the flagship brand “Sexy Tea” itself operated more than 780 stores (as of November 2025), all of which adhere to a directly-operated model.

• In 2024, its retail sales, including snacks and merchandise, surpasssed ¥100 million, a 12-fold year-on-year increase, accounting for 30% of total revenue.

• The brand has initiated its overseas expansion by launching snack products on North American e-commerce platforms, a strategic choice that leverages a retail model better suited to its current capabilities than the complex logistics of its innovative beverage line.

Notably, it is highly likely that Sexy Tea is now already the world’s largest fully direct-operated freshly-made tea beverage brand.

While competitors expanded aggressively, Sexy Tea’s deep focus on its home city of Changsha was often mistaken for conservatism. In reality, it was conducting a masterclass in stealth innovation within its stronghold — when milk tea store growth hit a bottleneck and faced fierce competition, it didn’t choose to follow the crowd and frantically open stores like most other brands, but instead focused on direct-operated model and invest harshly on its core regional users and core products to create more complex and novel cross-category tea beverages, even unexpectedly entering the retail sector.

It proved two unique ideas: first, a company doesn’t need a nationwide presence – dominating a single city can create a powerful, formidable brand; second, taking product innovation to the extreme builds immunity to copying.

Its global expansion strategy is particularly noteworthy. While other brands burden themselves with heavy assets to open stores overseas, Sexy Tea opted for a light-asset e-commerce model, first selling its proven-successful snacks and cultural-creative products in North America. This move not only tests international waters at minimal cost and counters the proliferation of copycat stores abroad but also cleverly sidesteps the complex supply chain and certification challenges faced by made-to-order tea beverages expanding abroad.

As for Sexy Tea’s IPO plans, I haven’t done extensive research—but the truth is, whether it goes public or not, its status in the tea drink world remains unshaken. It is, in many ways, the creative epicenter of China’s tea beverage scene. Even Chagee, which has gained significant attention on the global stage, can be seen as a simplified, standardized iteration of Sexy Tea’s original vision.

Nongfu Spring — How the “Worst-Tasting Drink” Became a Billion-Dollar Business

• In the first half of 2025, Nongfu Spring reported a total revenue of over 25.6 billion RMB, representing a 15.6% year-on-year growth. Notably, revenue from its tea beverage segment surpassed 10 billion RMB, overtaking its traditional packaged water business to become the largest revenue contributor, with growth approaching 20%.

• Its once-criticized sugar-free tea, “Oriental Leaves,” now commands a 75% share of China’s sugar-free tea market. Founder Zhong Shanshan revealed that this business segment was unprofitable for its first six years.

Nongfu Spring’s success reflects a rigorous new-category expansion strategy. It identified the health trend early, patiently invested in consumer education and R&D, and leveraged its distribution network to scale at the critical moment. In a market obsessed with quick wins, it proved that sustainable competitive advantage comes from planting seeds long before the harvest.

The journey of “Oriental Leaves” from skepticism to market dominance highlights that finding the second curve requires not only strategic vision but also the financial discipline to withstand market noise – the courage to endure years of strategic losses to secure a future position of market leadership.

In a complex macroeconomic landscape, these Chinese brands have demonstrated remarkable resilience—not merely sustaining operations but achieving profitable growth. Their outperformance stems not from commoditized price competition or undisciplined expansion, but from deepening user monetization and executing strategic plays into logically adjacent, higher-margin segments.

This disciplined approach stands in sharp contrast to peers trapped in mediocre and tedious price war cycles. Their success offers a critical investment thesis: market saturation in China acts not as a barrier, but as a filter for identifying resilient, long-term compounders with durable competitive advantages.

Ultimately, sustainable value creation depends not on counting which curve you’re on, but on a company’s ability to systematically reinvent itself—resilient brands must have the institutional capacity to evolve while preserving their core brand identity and competitive moat.

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The Revolutions Reshaping China’s Tea Industry

China’s tea culture, ancient and revered, is undergoing a modern metamorphosis. Moving beyond sugary milk teas (I’m already tired of these unhealthy, cheap drinks), a new wave of brands is driving a sophisticated transformation. They are systematically applying the logic, aesthetics, and business models of the global coffee industry to reinvent tea for a new generation. This isn’t just a trend; it’s a fundamental restructuring of the sector 👇

ChaGee — The Giant’s Double Game: Globalization & Product Pivot

Fierce competition and sliding same-store sales in its domestic market are pushing Chagee, a leading Chinese milk tea chain, to aggressively pursue a dual strategy.

• Global Expansion: The company is reporting strong international growth, particularly in Southeast Asia and North America, as it seeks new frontiers for growth.

• Domestic Innovation: In the domestic market, Chagee is accelerating R&D investment and launching new products while exploring new categories such as low-caffeine series, regional customized recipes, fruit tea and fresh-brewed tea (so-called tea espresso)—searching for a “second growth curve” beyond its signature milk tea products.

ChaGee’s strategic pivot is a logical response to a saturated domestic market, with overseas expansion serving as a crucial release valve for growth. Its venture into fresh brewed tea is particularly telling — an attempt to migrate the proven playbook of the coffee industry to the tea sector — much like Starbucks’ store and product matrix.

However, ChaGee has not meaningfully updated its foundational core offerings. I’m very much looking forward to them surprising us with their core products — though the prolonged lack of updates makes me worry whether they’ve encountered some major difficulties internally.

MĀMĀHĒCHÁ — The “Reverse Growth” Model of a Regional Challenger

• “MĀMĀHĒCHÁ” (妈妈喝茶), a boutique tea brand that started in the lower-tier city of Zhenjiang, my lovely hometown😊, has now opened a location on Shanghai’s trendy Xiangyang South Road. The brand distinguished itself by applying coffee cocktail techniques to tea, creating innovative tea-based beverages.

• Its successful expansion follows a “test in tier-2/3 cities, scale in tier-1” model reminiscent of the mass-market giant Mixue Bingcheng’s strategy, but applied to a premium context.

Mama Hecha exemplifies a shrewd “reverse growth” strategy. By developing and refining its unique and creative product proposition in a lower-cost, less-saturated market, it avoided a costly head-on fight with giants in Shanghai or Beijing from day one. This approach allows a brand to achieve product-market fit, build a confident identity, and then enter major metropolitan areas with a proven concept and a compelling story.

Of course, MAMA HECHA’s success stems from their great products. Three years ago, when I first walked into their unassuming store and tried their drinks, the flavor and creative recipes amazed me. I told their owner and staff with certainty: your products can beat most stores across the country. When I met their team again in Shanghai’s new crowded storefront, we exchanged a knowing smile—good things don’t stay hidden; they just need a chance to be seen by more people.

BASAO — The Systematic Reinvention of Pure Tea

• BASAO, a premium tea brand from Xiamen, is taking a radical approach to China’s most traditional product: pure, unadulterated tea. It is methodically rebuilding the sensory appreciation system for Chinese tea by adopting the lexicon and logic of third-wave coffee. This includes a focus on single-origin traceability, precise processing methods, and a standardized brewing methodology akin to pour-over coffee.

BASAO and many local brands are tackling the core problem of traditional tea: opaque value and subjective quality assessment. By introducing coffee’s framework of flavor wheels, standardized parameters, and traceable provenance, BASAO gives an ancient product a modern, universal language. This demystifies high-quality tea and dramatically lowers the barrier to entry for curious, younger consumers raised on specialty coffee. Its mission is the most profound of the three: it’s not just selling a beverage—it’s fundamentally reconstructing the value proposition of pure tea for the 21st century within China version.

💎 The Big Picture: The “Coffee-fication” of Tea and a Looming Supply Chain Revolution

Collectively, ChaGee’s scale, Mama Hecha’s savvy, and BASAO’s depth paint a complete picture of an industry in transition. The common thread is the strategic migration of methodologies from coffee to tea.

This “coffee-fication” is transforming tea from an artisanal “craft” reliant on vague expertise into a systematic, scalable “science.” The well-established pillars of the global coffee industry—supply chain management, sensory education, retail experience, and global brand building—are being expertly adapted.

The most significant long-term impact will be upstream. This consumer-driven revolution, demanding transparency, quality, and consistency, will inevitably force a modernization of China’s fragmented and often opaque tea supply chain. The old ways of trading and storytelling will be supplanted by data-driven, quality-focused operations. In this fiercely competitive and innovative environment, the emergence of future global tea champions is not just possible—it is inevitable.

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Chinese Barista Sun Lei Claims 2nd Place at World Barista Championships (WBC) with “Sustainability” Stories

• Historic Achievement: Sun Lei secured second place at the 2025 World Barista Championship (WBC) in Milan, setting a new record for mainland Chinese contestants in this premier competition.

• Unique Competition Narrative: Sun Lei centered his presentation on Sustainability, exploring emotional connections and environmental stewardship through coffee. He featured beans from eco-conscious estates, such as a Panamanian Geisha cultivated using low-carbon methods like biochar soil enrichment and natural cold spring processing.

The WBC — that is, the World Barista Championship for espresso coffee — is perhaps the last major competition that Chinese competitors need to conquer. In roasting, latte art, and pour-over coffee, Chinese competitors have already claimed the world champion title more than once. I believe Sun Lei’s runner-up achievement will give all Chinese coffee professionals confidence that in the realm of espresso, Chinese can reach the pinnacle of the world as well.

BLACKSHEEP ESPRESSO Goes Global: Shanghai Roaster Lands in Tokyo’s Daikanyama

• Strategic Global Entry: Chinese specialty coffee brand BLACKSHEEP ESPRESSO opened its first overseas location in Daikanyama, an upscale Tokyo neighborhood known for its refined aesthetics.

• Core Competency: Precision Roasting: As one of Shanghai’s early advocates for in-house roasting, BLACKSHEEP’s strength lies in its masterful roasting techniques. The Tokyo store features a unique menu that prices drinks by coffee flavor profiles, directly demonstrating the brand’s confidence in its beans and roasting expertise.

• Philosophy-Driven Approach: This pricing strategy aims to engage deeply with Japan’s sophisticated coffee culture, communicating a brand philosophy centered on product purity and flavor integrity.

BLACKSHEEP’s expansion represents a high-stakes endeavor in value-based positioning. By entering the demanding Japanese market—home to some of the world’s most discerning coffee drinkers—the brand is subjecting its product, specifically its roasting prowess, to the ultimate test. Its flavor-based pricing acts as a bold educational tool, training consumers to appreciate the value that expert roasting imparts to each bean. This offers a new blueprint for Chinese coffee brands going global: success begins in the cup but is ultimately built on technical craftsmanship and unwavering standards.

In fact, the global expansion of Chinese specialty coffee is not limited to independent coffee shops opening overseas—Yunnan coffee beans and the creative specialty drinks that Chinese baristas excel at have long penetrated international markets. At this point, aside from cheap chains like Luckin, China’s specialty coffee sector, after years of fierce domestic competition, is now ready to face the test of global consumers.

Of course, while China’s coffee industry has developed rapidly, some fundamental industry challenges remain unresolved—especially regarding green bean resources. Currently, the overall quality of Yunnan green beans still falls short of traditional producing regions, and the best beans from those traditional regions are not yet under the control of Chinese buyers.

Lujiazui Coffee Festival’s 10th Edition: A Global Showcase of Roasting Excellence

• Unprecedented International Participation: The “International City Tour” segment featured 48 globally renowned roasters, including industry icons such as Denmark’s La Cabra, Japan’s Apollon’s Gold, Australia’s Stitch Coffee, the Netherlands’ Dak, and Thailand’s Brewlab.

• Champion Lineup and Dedicated Segments: The event gathered five world coffee champions with their own brands and introduced a first-time “Specialty Coffee Zone” for in-depth dialogue and tasting sessions with top international names.

• Cross-Industry Integration: The festival collaborated with 58 lifestyle brands and 36 cultural creative institutions, while its global coffee forum convened supply chain experts to discuss trends from seed to cup.

The tenth Lujiazui Coffee Festival has evolved from a local event into a key hub in the Asia-Pacific coffee landscape. Its ability to attract world-class roasters demonstrates the growing influence of Chinese consumers in the global market. The addition of specialized zones and expert forums signals a strategic shift from mass appeal to deep industry engagement and professional discourse, actively shaping China’s voice in the international coffee community.

Exposure to the world’s top specialty coffee players will make China’s specialty coffee market more vibrant, diverse, and dynamic. Through this process, Chinese coffee brands will continue to evolve—growing beyond budget chains like Luckin into powerhouses that exceed everyone’s expectations.

To understand the landscape of China’s specialty coffee scene, please read my previous articles 👇

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