BEIJING - Steeped in rich history, the misty and verdant mountains of Wuyi are set to sport an organic hue that not only promises to bring in the tourists, but also keep the cash registers ringing for tea growers.
Tea has been one of the most important Chinese exports for several years now, with the Wuyi blends being the cup of choice among connoisseurs of Chinese tea.
Black tea is one of the major components of the global trade and accounted for 66 percent of the 4.06 million tons of tea produced in 2010, according to the latest figures from the China Tea Marketing Association. Exports of black tea stood at 1.3 million tons in 2010 and accounted for nearly 75 percent of global tea exports. Nearly 44 percent, or 40,000 tons, of the black tea produced in China comes from Fujian, especially from Wuyi Mountain.
In spite of these impressive figures, black tea exports from China currently account for less than 5 percent of the global total. Stiff competition from other growing nations in terms of pricing and stringent quality controls imposed by importing nations have made life difficult for many Chinese tea growers. However, things are set to look up again as consumers across the world become more health conscious and increasingly turn to products with more natural ingredients.
Wuyishan, a county-level city in Nanping, northwest of Fujian province and named after Wuyi Mountain, is the cradle of most black teas in the world.
The city has 592 companies and 958 family workshops engaged in tea production. Many of them have already turned to organic cultivation with an eye on the future.
Organic tea
Tribute Tea Co was one of the first local companies to pioneer the production of organic tea in Wuyishan.
Yu Zeqin, general manager of the company, said that Wuyi Mountain offers conditions that are particularly suitable for cultivation of organic tea.
"The temperature difference between day and night in the mountain range is huge, which makes tea trees less vulnerable to diseases and pests. Hence they need fewer pesticides and fertilizers," Yu said.
Established in 2007, the company has 35 hectares of organic tea gardens n Wuyi Mountain, with 90 percent of its employees being tea growers.
"Tea is a special commodity. Its price and profit varies based on the quality," said Yu, adding that a higher level of quality would help growers gain a greater say in product pricing. Some tea growers have seen their revenues grow fivefold after obtaining organic certification, he says.
The local government has also taken several steps to encourage organic planting and invested 22.1 million yuan ($3.5 million) to build an organic plantation of 2,800 hectares in the city.
According to the city's 12th Five-Year Plan (2011-2015), Wuyishan will build a tea technology center with investment of 600 million yuan.
Over the next five to 10 years, Wuyishan plans to become the provincial tea production base, with an annual output worth 200 million yuan by 2015.
The shift toward organic tea production in Wuyishan was prompted by low yields and declining productivity.
Spread over 2,798 square kilometers (sq km), Wuyishan has just 87.4 sq km of tea gardens and produced 9,770 tons of tea in 2010. In contrast, Sri Lanka, with 2,500 sq km of plantations, produced 399,000 tons of raw tea in the same year.
"Every year we receive large export orders, but we cannot cater to them because of limited labor and productivity," said Kang Liyun, marketing manager of Lapsang Tea Industry Co.
Established in 1998, Kang's company has 130 employees and produces 600 tons of tea every year.
The company ships about 100 tons of unprocessed tea to the European Union (EU), the United States, and some Asian countries such as Japan and South Korea. It also has two processing factories, spread over an area of 4,500 sq m. Apart from the plantations it owns in Hubei and Jiangxi provinces, it also has alliances with local tea gardens and processing factories.
To further increase productivity, the company has sought 20,000 sq m of land from the local government to build a new processing facility. The total investment in the new facility is expected to be about 60 million yuan and, if permitted, would increase production by three to four times.
"We plan to build a modern factory to help standardize our processing and shorten the production cycle."
At the same time exporters are also facing higher risks as tea-consuming countries in the West raise their testing standards.
Last year, the European Commission issued an order to impose special controls on tea imports from China.
Stricter examination
The directive called for stricter examination of Chinese tea exports to the EU, including entry into the bloc through designated ports, and also stipulated that 10 percent of the goods should undergo onsite inspection and sampling for pesticide residues and other items.
Shen Qing, chief executive of King Building, a Beijing-based company that specializes in industry planning and marketing, said that most of the directives are technical barriers.
He said that Sri Lanka exports about $1.2 billion worth of tea every year. Most of its products meet the standards required by most consuming countries.
"China should strive to have stricter quality control in its tea-garden management and production system. It may reduce productivity to some extent temporarily, but the quality may increase by a large degree, and so will the overseas sales."
The export price is another issue that concerns domestic producers. A report from the China Tea Marketing Association showed that the average price of Chinese tea in the world market is about $2 a kilogram (kg), 40 percent lower than that of tea from India and 60 percent lower than from Sri Lanka.
In the domestic market, the average price of black tea is about 150 yuan a kg. One kg of Jinjunmei, a leading variety of black tea, is priced at anything from 7,200 yuan to more than 20,000 yuan.
Wei Saiming, general manager of Fujian Tea Import and Export Co, said that stricter testing in the EU may increase export costs to some extent, but the real hindrance to the expansion of exports is the low profit in overseas markets because of inadequate pricing.
"Right now, the domestic market, with its high revenue and low market threshold, is more lucrative for tea producers. On the other hand, to satisfy the strict requirements of the EU, producers have to apply a series of quality-control measures, from the use of pesticides to the final processing method. It all pushes up the costs and management risks for tea producers."
New proposal
In October 2011, Michael Bunston, chairman of the International Tea Industry Committee, along with tea experts from Canada and the United Kingdom, introduced a Wuyi Mountain proposal at the International Tea Conference & Tea Products Trade Fair 2011.
The proposal aimed to reposition Wuyi Mountain tea in the global industry and find a way to increase its market share and build up its reputation.
It also suggested that the local government and members of the tea industry should protect Wuyi Mountain's tea culture and numerous varieties, and encourage producers to sustain their efforts through organic cultivation in such a way that Wuyi Mountain tea will sell in the EU on the basis of World Trade Organization terms and EU standards.
Yang Jiangfan, president of Wuyi University, said that for Chinese tea to be popular in the West, the first priority is to increase the prevalence of Chinese tea culture.
"Wuyi Mountain tea has its own features and own geographic characteristics and historical foundations. Local companies should combine it with their products to better promote Wuyi Mountain tea in overseas markets," said Yang, who is also managing director of the China Tea Society.
Yang said that the different consumption habits have also resulted in diverse markets at home and abroad.
He added that Western consumers treat tea as a daily drink. Thus they prefer the convenience and standardized tastes gained from using teabags.
However, Chinese people endow tea drinking with cultural significance and enjoy the often complicated process of making tea.
Tea firms set to explore high-end int'l market
Even as some Chinese companies are reducing prices to boost exports, other producers such as Lin Rongxi are looking to make inroads in the high-end luxury market with gourmet tea products.
"Right now everyone is talking about the rise of China. In my opinion, Chinese tea should be the symbol of that rise, much as Louis Vuitton bags and Porsche or Ferrari sports cars are," said Lin, deputy general manager of Eight Horses Tea Co Ltd.
The company, along with four other tea producers from Anxi county in Fujian province, will soon open its first marketing center for Oolong tea in Saint-Germain-des-Pres, an area in the 6th arrondissement in Paris.
"With the launch of the marketing center, we plan to enter the core area of the high-end market in Europe and build up our networks and regional influences," said Lin.
In April, Eight Horses and its partners entered into an agreement as a group with a European partner, Leblond Gre'gory. According to this agreement, the five companies will operate the center jointly with the brand name Anxi Tieguanyin, aiming to provide tea as a luxury product for the European premium market.
Tieguanyin, or Iron Goddess of Mercy, is a renowned variety of Chinese Oolong. According to legend, an iron statue of Guanyin, or the Goddess of Mercy, gave a farmer the tea and helped the poor to prosper. The grateful farmer named the tea Tieguanyin.
"The European market is the symbolic spot for Chinese tea companies to go global, especially Paris, which hosts many luxury brands," said Wang Wenli, head of the Anxi Tieguanyin Tea Association.
"Through this marketing center, we would like to promote Tieguanyin as a luxury product and look for a broader international market," Wang said.
Every year, China exports about 20,000 tons of Oolong at a price of between $2 and $3 a kilogram (kg). In Lin's opinion, the current export price is not consistent with the value of the product. "Tea is a good and fine product, not just some raw material for industrial processing of bottled drinks."
The company has more than 800 stores across China, with annual domestic sales of 1,000 tons. It exported 2,000 tons of Oolong in 2010, accounting for 15 percent of China's annual export of the tea.
The first container of Tieguanyin has already been shipped to Paris, and is likely to be priced at a range between 50 euros ($64.6) and 500 euros a kg.
The center will be ready by Chinese Spring Festival in late January and the five companies will together invest about 30 million yuan ($4.76 million) for the initial construction, management and promotion.
Lin, however, does not expect huge profits or record sales in the short term.
"Chinese tea used to be a prized possession among the upper classes in Europe some 300 years ago for its health benefits," he said. "What's more important is that we are back in the high-end market, and promoting the Anxi Tieguanyin brand."
The center will be spread over 100 square meters and divided into a sales zone and a tasting zone. It will also host various cultural activities to promote tea culture.
Lin said that the main barrier to the promotion of Tieguanyin in Europe is the lack of Chinese tea culture.
"Previously our products were mainly sold overseas in bulk. Now we want to sell packaged tea at a much higher price. Western consumers may need time to accept the fact that tea can be really expensive.
"The second issue is the tea-making process. Europeans are used to drinking the beverage with tea bags. But traditionally, Chinese tea needs to be treated with more complicated procedures. Also, tea tasting requires a certain understanding of the Chinese tea culture."
Besides tea sales, tea-making performances and training courses will be held on a regular basis for consumers.
Lin hopes that the new marketing center will provide a template for local producers to change their strategy in international markets.
"We want to raise another round of Chinese tea mania in Europe," Lin said.
He expects Tieguanyin to be popular in the European Union within five years. "It is our aim, but it all depends on our long-term efforts."
Shen Qing, CEO of King Building, a Beijing-based company that specializes in industry planning and marketing, said that Chinese companies should figure out a way to make the best tea at the lowest possible price, just as Lipton's Teas - owned by Unilever PLC - does. That is the only way for domestic producers to make a successful return to the global market, Shen said.
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