All the Tea in China

All the tea in China is proving to be a lot of tea these days, as hillsides across central and southern China are bulldozed to make way for tea farms even as many young Chinese are losing interest in it.

China still has millions of tea lovers who lavish the same attention on their beverage that oenophiles devote to wine. The finest grades of green tea, made from the most delicate baby leaves and roasted in a pan by hand, sell for hundreds of dollars a pound in Shanghai and Beijing.

But Coca-Cola, Pepsi, McDonalds, KFC and other Western businesses have come up with many other ways to slake thirsts in China. Shifting tides in tastes, especially among the young, are creating waves over winners and losers both at home and abroad. Teahouses in China already are being replaced by coffeehouses, and Starbucks, now with more than 140 stores, has spawned a cottage industry of copycats.

With tea in abundance in China, more and more is being shipped abroad, by third-generation tea farmers like Pan Jintu, who has just begun supplying green tea to Starbucks stores in the United States.

"Many people love tea now, so I foresee our business will grow," he says, standing amid his rows of tea bushes, as women in broad hats plucked tea leaves in the surrounding hillsides here.

But expanding sales by Chinese tea growers like Pan are causing alarm in other developing countries that depend on growing tea, including India, Sri Lanka, Indonesia, Bangladesh, Kenya, Malawi and Zimbabwe.

While the growth of China’s textile industry with the end of global textile quotas has attracted more attention as a threat to poor countries, China’s tea industry also poses a serious challenge to some of the world’s poorest nations. China is now poised to become the world’s largest tea exporter by tonnage, overtaking Sri Lanka this year and Kenya next year.

Wide swaths of people across Asia depend on the tea industry for survival. Particularly vulnerable are three countries that suffered from the tsunami last December: Indonesia, India and above all Sri Lanka, where income from the growing, processing and transport of tea helps feed nearly a tenth of the people, according to the Asian Development Bank.

Yet China’s re-emergence as the world’s leading tea exporter invokes a pattern that is centuries old: The British East India Co., which bought its tea from China, held a monopoly on supplying Britain until 1834. Only when that monopoly was broken did other countries become big exporters. The saying "I wouldn’t do that for all the tea in China" came to mean a refusal to do something even for a large and valuable payment.

The history of tea itself reaches back to ancient times in China. The earliest known literary references date back nearly 5,000 years, when Emperor Shen Nung is said to have discovered the infusion when leaves dropped into his hot water by chance.

Green tea is widely believed to have some medical benefits. Black tea, which may have similar benefits, is used in everything from Darjeeling to Earl Grey and is made from the leaves of the same tea plants as green tea, though processed differently.

But after millenniums of popularity, tea consumption in China is growing by only two percent a year, according to the U.N. Food and Agriculture Organization in Rome. By contrast, Chinese figures show tea production rising 8.7 percent last year and rapidly accelerating as recently planted tea bushes reach maturity and as inefficiently managed, state-owned farms are turned over to output-conscious entrepreneurs.

Municipal and provincial governments now vie to offer subsidies to an industry increasingly seen as an answer to lingering poverty and unemployment in the countryside and are paying up to half the cost for the planting of new tea farms and the building of tea-processing factories. Beijing has also eliminated an 8 percent tax on tea production to increase rural incomes.

Government support helped produce an 18.9 percent jump in Chinese tea exports last year, to $437 million, in a global market that is nearly stagnant, according to official figures released at a recent conference in Hangzhou.

China’s surge in tea certainly caught many off guard. Tea growers in India, Sri Lanka and Indonesia invested in new processing equipment to produce green tea instead of black tea only to discover recently that China had become their looming competitor. They are only now beginning to see the giant steps, like investing in infrastructure, that China is making to improve its tea-making capability. Such advanced infrastructure far outpaces tea growers in India, Sri Lanka, Vietnam, Indonesia and other countries that make do with dirt roads and repeated power failures. The wide roads in China lower costs to ship in diesel fuel to power the processing factories and ship out containers stuffed with tea; electricity failures, a problem last year, have diminished here as more generating plants have been built.

"There’s no way the containers could get to our farms" because the roads are too narrow and the bridges too low, says Ranga Bedi, a tea grower near Bangalore, India.

Tea production is a huge employer in countries around the Indian Ocean, including East African nations and Bangladesh as well as India, Sri Lanka and Indonesia. But already, four dozen large farms producing black tea have shut down in the last two years, displacing tens of thousands of workers in southern India. Tea is one of the world’s most labor-intensive crops, with leaves that need to be harvested weekly for seven to 12 months of the year.

Although no one can yet read the tea leaves, there are several simmering challenges that could temper China’s tea business.

With so many hillside forests cleared to make way for tea bushes, erosion has become a problem.Prosperity is also pushing up wages, so farms already are drawing migrants from other provinces. The winters, though milder than they are in northern China, cause tea bushes in central China to stop producing new leaves for harvest from mid-October to mid-March. In contrast, tea bushes in warmer areas, like southern India and western Java in Indonesia, can grow and be harvested all year long, improving yields.

Finally, even a small appreciation in China’s currency "will really affect our business," says Xu Hairong, the deputy director of the Tea Research Institute at Zhejiang University.

For the global industry, the bigger worry is how much Chinese tea will arrive in world markets. That flood of tea will grow only if people in China keep switching to other beverages. Starbucks sells tea, as well as coffee, in China, but it has found that Chinese customers prefer the coffee, says Christine Day, president for Asia and the Pacific.

At a popular tea house in Hangzhou, a married couple of traditional Chinese medical practitioners savor a pot on a recent late afternoon but mourn that their 25-year-old son does not share their interest in the ancient brew.

"He doesn’t like tea," says the husband, who gave only his family name, Ren, because of a wariness of foreigners that is common among older Chinese. "He doesn’t like coffee; he mostly drinks Sprite, Coca-Cola and water." – New York Times News Service