(Yicai) Aug. 17 -- Chinese tea beverage brands are increasingly looking overseas, following years of intense competition and price wars in the domestic market. They are also benefitting from a “scarcity dividend” in foreign markets, as they can charge higher prices based on local supply and demand dynamics.

Chinese tea brands have clear advantages in overseas markets, said Tong Jianlei, vice president for the Asia-Pacific region and head of global consumer business at Hangzhou-based digital trade platform PingPong, which provides cross-border payment services for several Chinese tea beverage brands. 

Their product iteration, supply chains, store operations, and digital capabilities have been honed through intense competition in China, and this gives the brands an edge in many international markets, Tong told Yicai.

According to data from Yicai CBNData, by the end of 2025, there were 478,000 milk tea shops in China, or one for every 3,000 people. The price wars in China appear to have peaked, with some products from Heytea dropping below CNY7 (USD1), and in-store prices nearly returning to levels last seen in 2015. 

At rival milk tea brand Chagee, the net profit margin has decreased from 18 percent to 12 percent, and the growth rate of new store openings so far in the third quarter of this year is down 64 percent compared to last year, the data showed.

The fierce competition in the domestic market prompted companies to seek growth opportunities abroad, and more than 44 Chinese tea beverage brands have opened stores overseas, totalling nearly 15,000 outlets.

The average price of Heytea products in the United States is nearly CNY40 (USD5.9) higher than in China. Mixue Ice Cream & Tea sells lemonade for USD1.99, which is three to four times the domestic price. Chagee has only 345 overseas stores, but its overseas gross merchandise volume has grown by over 75 percent year-on-year for three consecutive quarters, significantly outpacing its growth in the domestic market.

The higher pricing has not dampened consumer enthusiasm, and has validated the potential for internationalization. Amanda Wang, founder of Ningji Lemon Tea, said the US is an "emerging market" for milk tea, adding that “Chinese tea beverages still have significant growth potential in the US.”

According to a report by US-based restaurant point of sale provider MenuSifu, the ready-to-drink tea beverage market in the US is growing at an annual rate of 9.1 percent, with an estimated 5 to 10 times expansion potential. Also, no single brand holds a market share of over 5 percent, indicating that the industry landscape is far from settled.

The overseas expansion of tea beverage brands is partly based on competition in products and services, but it is also a test of supply chain stability. "In the past, it was more about exporting products and testing single stores. Now, brands are exporting products, supply chains, store standard operating procedures, franchise systems, and digital operation capabilities," Tong said.

Meanwhile, the pathways for overseas expansion have become more stratified. Southeast Asia is often viewed as a more realistic market for scaling up due to its proximity, similar consumption habits, a solid Chinese population base, and a relatively mature franchise ecosystem. 

The US and Europe represent more of a brand stronghold and are seen as essential markets for the long term. "For many tea beverage brands, the US may not be the fastest market for expansion, but it is an important market for validating brand internationalization capabilities and establishing a global mindset," Tong noted.

In Wang’s view, companies cannot simply rely on their supply chain in China -- they must also create a global supply system that can maintain product standards while fully utilizing local resources.

Editor: Tom Litting