---
title: "China's 70,000 Tea Companies Can't Beat One Lipton: Is This a Success or Failure for Chinese Tea Companies?"
description: "The article challenges the common criticism that China's 70,000 tea companies are inferior to Lipton, arguing that the fragmentation of China's tea industry is a sign of success, not failure. It posits that national industries tend to be fragmented, while imported industries are concentrated, and that Chinese tea's diversity and cultural depth are its strengths, not weaknesses."
author: "New Distribution"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2016-03-29"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/china-s-70-000-tea-companies-can-t-beat-one-lipton-is-this-a-success-or-a0874dd4.md"
original_source: "https://mp.weixin.qq.com/s/qVstQTpvY5Cjf63k7OGRKA"
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---

# China's 70,000 Tea Companies Can't Beat One Lipton: Is This a Success or Failure for Chinese Tea Companies?

> The article challenges the common criticism that China's 70,000 tea companies are inferior to Lipton, arguing that the fragmentation of China's tea industry is a sign of success, not failure. It posits that national industries tend to be fragmented, while imported industries are concentrated, and that Chinese tea's diversity and cultural depth are its strengths, not weaknesses.

> Looking at the title, some may wonder if the answer isn't obvious. For years, Chinese tea companies have been criticized in this way.
>
> **However, the world is not that simple. Simple questions are not questions, and the logic behind simple answers is not necessarily simple.**
>
> Beer expert Mr. Fang Gang recently made a remark in a community group that caught my attention. He said: **"China's 70,000 tea companies can't beat one Lipton. This is not a failure of Chinese tea; it should be a success of Chinese tea companies! Otherwise, they would have been wiped out by Lipton long ago!"**
>
> I have long disagreed with using Lipton to criticize Chinese tea companies. Taking advantage of Mr. Fang's words, I commented: "**Finally, someone who understands speaks clearly.**" What I value is not Fang's conclusion but his logic, especially the last sentence: "Otherwise, they would have been wiped out by Lipton long ago." Because the only tea companies that haven't been wiped out by Lipton seem to be in China. Isn't not being wiped out a success?
>
> Of course, there are dissenting opinions. For example, group member Zhu Limin said: "This view once again proves the relativity of viewpoints! A great defeat can be described as a victory; I'm convinced!" It's estimated that more people disagree but didn't express it.
>
> **Lipton is just a trigger for discussing Chinese tea companies. What we need to think about is at a higher level: the form in which a nation's industry appears in other countries.**
> **The Fragmentation of National Industries**
>
> 70,000 tea companies versus one Lipton. Here, 70,000 is key, referring to the **fragmentation of the industry**.
>
> Every country has national industries. Let's start with German beer. Germany has over 2,000 beer companies, while the US has only two major beer groups. However, no one questions why 2,000 can't beat the US's two. The German Beer Festival is so popular, but the US doesn't have that.
>
> There was once a discussion: Is China's beer structure the American model or the German model? Essentially, it's asking whether it's fragmented or concentrated.
>
> Some say it's neither the American nor the German model; it's the Chinese model. It's not as concentrated as the US, nor as fragmented as Germany; it's limited concentration or limited fragmentation.
>
> **I say China's beer must follow the American model.** Why? Because beer is Germany's national industry, but it's not in the US, and even less so in China. After reform and opening up, when beer became popular in China, it was often called "horse urine."
>
> Why use national industry as a criterion? Because there's a general rule: **National industries are basically fragmented, while imported industries are basically concentrated.**
>
> Although Americans also love beer, it's different from Germany. It's said that during World War II, when American planes were shot down by Japan and pilots parachuted into China, the first thing they asked for was a bottle of beer. But after all, it's not America's national industry.
>
> Take wine as another example. Wine is France's national industry and is highly fragmented, but it's slightly different in other countries. In China, it's definitely concentrated because modern wine is not China's national industry; it's an imported industry.
>
> Baijiu (Chinese liquor) is China's national industry and is highly fragmented in China. No one knows exactly how many baijiu companies there are. Some have always said baijiu will consolidate, but I strongly oppose that. The sales of Moutai and Wuliangye may increase, but that doesn't mean consolidation because their market share is too small.
>
> **Why must baijiu be fragmented? Because it's China's national industry.** Perhaps as China becomes stronger, baijiu will be exported to other countries or regions like beer and wine, and then it should be concentrated abroad, unless it's consumed by overseas Chinese themselves.
>
> Coffee is similar. Europeans and Americans rarely drink instant coffee; it's like Chinese people drinking Lipton tea, a sign of not understanding coffee culture. Foreigners' way of drinking coffee is very much like Chinese people drinking tea—it's very particular.
>
> **Even more fragmented than baijiu and tea companies might be Chinese food.** Some say, in the US, is Chinese food more powerful or McDonald's? Countless Chinese restaurants versus one McDonald's, and they're not inferior.
>
> **My conclusion is: National industries are basically fragmented, while imported industries are basically concentrated.**
>
> **Based on this, we cannot compare Lipton with Chinese tea companies. 70,000 tea companies is a normal state. If there were only one Chinese tea company, would there still be Chinese tea culture? Only fragmented tea companies can withstand the competition from Lipton with its brand advantage.**
> **Why Are National Industries Fragmented?**
>
> **National industries are products of long historical sedimentation and correspond to the character and culture of a nation.** Even under the impact of foreign cultures, they will not easily disappear. Facing the impact of foreign alcoholic beverages, some people lose confidence in baijiu, but I disagree.
>
> Most national industries grew up in the era of agricultural civilization, when population migration radius was small, and commodity circulation radius was also relatively small. Therefore, national industries are related to geography, climate, and humanities. In relatively closed environments, diversity is easily formed. In fact, diversity is also adaptability.
>
> For example, Chinese baijiu has four major aroma types, six minor aroma types, and many innovative ones. If foreigners drink Chinese baijiu, they might think it's all the same; they can't enjoy the rich variety of baijiu aromas, so their choice is simple: they drink brands.
>
> Similarly, if you ask ordinary Chinese consumers to appreciate the richness of French wine, unless you're an expert or an enthusiast, ordinary people don't have that tasting ability. So, when French people see Chinese people drinking wine like baijiu, adding cola to wine, they find it incomprehensible. In such cases, the simplest method is to drink brands.
>
> **Only recognizing brands is a consumption method lacking appreciation in certain fields. Being able to explain what's behind the brand is what consumer culture is about.**
>
> Chinese tea is so diverse. If you made all Chinese tea into Lipton, would it still be Chinese tea?
>
> Chinese tea emphasizes tea culture, just as French people emphasize wine culture and Germans emphasize beer culture. However, when Chinese tea culture is exported to Western developed countries, they don't recognize it. They can't enjoy tea culture, so they can only consume tea like Lipton, which has no culture but has a brand.
> **Imported Cultural Consumption and Branding**
>
> I once briefly served Dayi, China's largest tea company. I never served tea companies before because I understood the national character of tea. Later, I learned from Dayi that the reason it became big is that it makes blended tea, blending tea from different years, different mountains, and different seasons, basically achieving standardization. Because of this, I was willing to serve Dayi.
>
> **To make a mass brand, standardization is key; only standardization can ensure stable quality.** But in Chinese tea culture, the individuality of tea is highly valued, making standardization very difficult. Without standardization, mass production is hard. So, using Chinese tea culture concepts to build a tea brand is very difficult. I knew I couldn't solve this problem, so I didn't dare to get involved.
>
> Dayi's blended tea is opposed by many tea connoisseurs, even dismissed. However, it has become one of the most successful Chinese tea companies. I don't know if it's a blessing or a curse for Chinese tea companies.
>
> Saying Dayi is a blessing for Chinese tea companies is because its approach, though contrary to traditional tea culture, helps open up broader markets. Chinese tea originally had strong regional characteristics, but Dayi's approach helps transcend regionality and is more conducive to future international market expansion.
>
> Beer is similar. German beer is non-standard, but some companies standardized it and began mass production, forming brands that can be mass-produced. Such products are very easy to export to regions without consumption culture.
>
> When Chinese people drink domestic wine, how many care about the origin, grape variety, process, or vintage? Only when drinking French origin wines or vintage wines do they show off these aspects.
>
> **When a nation's industry enters countries or regions with heterogeneous consumption cultures, it must differ from the national industry.** I can say that bringing Chinese tea culture to Western countries is difficult to succeed. **Only standardization and branding can become popular in heterogeneous consumption cultures.**
>
> The British originally didn't drink tea. When the British brought Chinese tea to Europe, they transformed it. For the British, tea consumption is an imported culture, definitely different from Chinese tea. Lipton tea takes the tea leaves that Chinese people look down upon, blends them, standardizes them, and forms a brand, allowing it to circulate in countries other than China.
>
> So, Lipton operates in markets outside China, while China's 70,000 tea companies only operate in one country, China. The market capacities are incomparable.
>
> **For Chinese tea companies to go global, it must be through standardization and branding, not the cultural or regional model of Chinese tea companies. Dayi is doing this in expanding international markets.**
> **Selling Culture Requires "Qualification"**
>
> Doing things requires timing and qualification. For example, 20 years ago, building a world brand in China was not the right time; doing it too early wouldn't work. Now it's different.
>
> **I believe that even if Chinese tea companies adopt the Lipton model, they will find it hard to compete with Lipton in the short term because there's also the issue of national influence.**
>
> Before the Opium War, China had already fallen far behind the West. But in Sino-Western trade, China had a huge surplus. At that time, Chinese cultural products such as silk, porcelain, tea, and spices were imported into Europe on a large scale, while China imported very few modern products from Europe, resulting in a trade surplus for China and a large inflow of silver. Opium was the most effective commodity the West could think of to solve the trade deficit.
>
> A country in decline was still exporting cultural products and luxury goods on a large scale. I never thought of that. I don't know if tea was imported into Europe at that time.
>
> A country about to decline still had strong cultural influence before its decline; that's very paradoxical.
>
> It's the same now. Europe is declining, but luxury goods sell well worldwide. The US is powerful, but Europeans think it's "uncultured," only high-tech products sell well globally. China is rising, but it doesn't have the power to influence the world.
>
> **Now, a rising China can only sell cheap goods. Before the Opium War, a declining China sold luxury goods to the world. Think about what this means.**
> Back to Mr. Fang's statement. The core of his statement is: Without 70,000 tea companies and the diversity of Chinese tea, perhaps Lipton would have fully occupied the Chinese tea market.
>
> **The diversity of Chinese tea must be long-term, even eternal. Don't expect Chinese tea companies to become "Liptonized." For Chinese tea companies to go global, they cannot do it in the current way; at least it should be the way coffee entered China—standardized and branded.**
>
> Chinese tea has occupied the Chinese market, and Lipton has occupied the "outside China" market. They cannot be compared.
>
> **Some may ask, can Chinese tea also go global? As a cultural product, it's not yet the time for large-scale tea companies to go global on a large scale; that requires strong national brand endorsement.**
>
> Click to read the original text to view:
> ## Why Can't China's 70,000 Tea Companies Beat One Lipton?
> -END-
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