The bustling specialized camellia and tea trading market on the Fujian\u2013Zhejiang border. Photo by Zhu Naizhang
After years of development, tea wholesale markets \u2014 which serve to gather and distribute products, assess value, collect information, and regulate supply and demand \u2014 have long been an important circulation channel for tea. But in the face of new circumstances and new demands, the transformation of tea wholesale markets is now urgent.
The state is vigorously promoting the transformation and upgrading of specialized markets and the integration of business formats, encouraging markets to become digitalized, comprehensive consumption venues. In May 2021, the Ministry of Commerce, the National Development and Reform Commission, and five other ministries issued the Special Action Plan for the Optimization and Upgrading of Commodity Markets (2021\u20132025), which emphasized cultivating a group of national commodity-market demonstration bases featuring distinctive merchandise operations, strong industrial and supply chain service functions, and integrated online-offline development \u2014 so as to make production-sales linkage mechanisms more stable, make the industry\u2019s radiating and driving effects more pronounced, and effectively improve commodity circulation efficiency.
Recently, our reporter investigated and interviewed tea wholesale markets in the midst of this transition. What are the main problems currently encountered in the transformation of tea wholesale markets? And what exploratory experiences are worth referencing and learning from?
The Production-Region Side
Leveraging production-region advantages, upgrading toward traceable raw materials
Tea wholesale markets in production regions hold core advantages in fresh-leaf trading, raw-material output, regional brand building, and origin traceability. China\u2019s tea regions are widely distributed, with a great variety of tea cultivars and over a thousand traditional famous teas. Production-region wholesale markets can satisfy tea operators\u2019 and raw-material buyers\u2019 needs for premium products, authentic raw materials, personalized materials, and innovative processing techniques \u2014 and can meet precise customization and procurement needs on demand.
However, the trading methods of domestic production-region tea wholesale markets are still relatively backward and urgently need upgrading. First, most transactions involve tea farmers trading directly in the market, with products lacking effective supervisory measures. Second, the products traded by farmers lag behind in quality grading, weight standardization, and packaging standardization, making it hard to standardize tea trading. In addition, packaging, warehousing, and freshness-keeping technologies are also relatively backward.
In March 2021, the Fuding White Tea Big-Data Traceability Platform was officially launched, providing a real-world model for upgrading traditional tea wholesale markets. Through three-party information cards for tea farmers, tea enterprises, and fresh-leaf brokers, the system enables closed-loop, scan-code transactions: tea enterprises apply for a corresponding number of traceability anti-counterfeit labels based on the total amount of fresh leaf purchased, then affix the labels for sale. The system effectively supervises enterprises, protects farmers\u2019 interests, and safeguards consumers\u2019 rights \u2014 while also setting things right at the source and preventing out-of-town fresh leaf from flowing into the Fuding tea market.
Zhu Naizhang, head of the cultural station of the Diantou Town government in Fuding, explained that fresh-leaf sellers must provide a personal ID card or wear a fresh-leaf trading permit to conduct real-name registered transactions; untraceable, improperly documented fresh leaf from outside the region is strictly forbidden from entering the Fuding tea market. When purchasing fresh leaf, brokers fulfill their duties of incoming inspection and receipt collection, truthfully recording relevant information \u2014 purchase time, quantity, price, origin, and the fresh-leaf seller\u2019s (farmer\u2019s) ID number \u2014 and are strictly prohibited from buying leaf of unknown provenance or with excessive pesticide residues, ensuring the fresh leaf is \u201cverifiable on record.\u201d
Relying on raw-material advantages, transforming toward vertical-category standardized warehousing
The reporter learned that the functions of traditional production-region tea wholesale markets need to be further supplemented and upgraded in the face of new demands. For example, ecological trading centers and origin traceability systems still need to be established; information collection and release, price regulation, quality supervision, and logistics support need to be done well \u2014 upgrading the overall image and service quality of production-region markets, optimizing the industrial layout, and preparing products for entry into the second and third stages of circulation.
Zhu Xiang, chairman of China White Tea City, told the reporter that China has a huge number of tea markets but a very low survival rate. Only by starting from the problems and solving the pain points of merchants and customers can tea wholesale markets be well operated and developed.<\/p>\n
The warehousing center of China White Tea City. Photo by our reporter Chen Hao
How can one effectively control the grade standards, origin standards, and vintage standards of production-region raw materials? China White Tea City has explored an innovative path. Zhu Xiang explained that the main goal of the China White Tea City supply chain platform is to achieve the aggregation of qualified white tea raw-material products. Addressing the three major pain points of tea enterprises in the circulation market \u2014 channels, capital, and credit \u2014 they empower tea enterprises\u2019 channels through three approaches: city service centers, brand-cluster investment attraction, and major-customer bidding. They empower capital through three measures: warehouse-receipt pledging, cooperative procurement, and pallet trading. And they empower credit through three levers: Zhongnong Tea Inspection, brand endorsement, and warehouse-receipt trading.
This empowerment of production-region tea markets is a \u201cshot in the arm\u201d for the development of regional tea brands. Relying on production-region raw-material advantages to build standardized warehousing services for vertical-category public regional brands may become one of the directions for future development.
The Sales-Region Side
Leveraging sales-region advantages, transforming toward an integrated warehousing-plus-logistics business model
Compared with production-region tea wholesale markets, sales-region tea wholesale markets face more difficulties and a grimmer situation. In interviews and research, the reporter found that at present, foot traffic and transaction volumes at most sales-region markets have fallen by 30%\u201350%. How to leverage sales-region advantages and solve the practical problem of these markets\u2019 survival is the most urgent task of transformation.
At present, the functions of sales-region tea wholesale markets are relatively limited \u2014 they possess only traditional functions such as commodity distribution, warehousing, and logistics. A few tea wholesale markets still take \u201cproperty management\u201d as their main line, surviving on traditional leasing services, lacking related supporting services, and suffering from serious homogenization. In terms of logistics and distribution, few wholesale markets have built their own logistics systems or adopted cloud-logistics models, which to some extent limits the development of their products in the e-commerce market. As a result, expansion and transformation into new business areas is also an uphill struggle.
Take the Jinan Tea Wholesale Market in Shandong Province as an example. Established in 1996 and affiliated with the Jinan Supply and Marketing Cooperative, it is the largest tea wholesale market by transaction value in northern China. At its peak, annual turnover reached 4 billion yuan with more than 500 merchants. In 2018, due to municipal construction and subway construction, one-third of the market\u2019s area was expropriated, and the number of merchants shrank to just over 350. As the wholesale market\u2019s functions weakened, the market\u2019s transaction scale shrank to 2.8 billion yuan in 2021.<\/p>\n
An aerial view of the Jinan Tea Wholesale Market. (Photo provided by the Jinan Tea Wholesale Market)
The head of the Jinan Tea Wholesale Market told the reporter: \u201cAt present, the market is actively adjusting, planning to transform from a wholesale-focused tea market into \u2018the largest tea brand port and tea warehousing and logistics center in the northern market.\u2019\u201d Transformation takes time, and the market has provided considerable support for it \u2014 for example, training and cultivating tea enterprise merchants with strong management capabilities, rich marketing experience, and well-known brands. In addition, the market will rely on its convenient transport advantages to transform into a warehousing and logistics center.
Industry professionals analyze that with a complete warehousing system, tea trading markets can develop in the future toward a smart logistics system of \u201ccloud warehousing plus cloud logistics,\u201d achieving digitalized, intelligent tea sales, sorting, and delivery.
Creating scenario-based experiences, transforming toward exhibition-and-trade specialized markets
Facing the rise of e-commerce platforms and livestreaming formats, the functions of traditional tea circulation channels in sales regions are weakening at an accelerating pace; retail and wholesale businesses continue to shrink, and some markets are left with only basic warehousing functions.
In a sense, a tea wholesale market is more like a specialized industry exhibition \u2014 and the new exhibition-trade model emphasizes \u201cexhibition-trade\u201d rather than mere \u201ccommerce.\u201d Exhibition-trade means considering the full scenario of people, goods, and venue; promoting trade through exhibition; integrating exhibition and trade as one; and strengthening the digital integration of online-offline channels and livestream e-commerce. Such thinking and practice provide a useful reference for the transformation of sales-region tea wholesale markets.<\/p>\n
The negotiation and exchange area of L\u00fc\u2019ai Tea Town. (Photo provided by L\u00fc\u2019ai Holdings Co., Ltd.)
Relying on the uniquely favorable warehousing environment of northern China and the logistics advantages of Linyi City in Shandong Province, L\u00fc\u2019ai Holdings Co., Ltd. \u2014 founded in 2011 \u2014 established \u201cL\u00fc\u2019ai Tea Town\u201d in 2015, dedicated to building a nationwide loose-leaf tea trading market that competes with origin regions on quality and price. Through short video, livestreaming, information feeds, and e-commerce channels, it provides customers with customized, flexible design and production, along with trading-traffic support.
The reporter learned that L\u00fc\u2019ai Tea Town has 521 standard shops and 200,000 square meters of intelligent standard tea warehouses. Zoned according to the six major tea categories, the shops can host display, tasting, and negotiation functions, while the standard tea warehouses meet the differing storage requirements of the six tea categories \u2014 creating a business model of front-end trading and back-end shipping. In addition, through rich operational activities such as bulk trading, a never-ending tea expo, tea-dueling competitions, and tasting and evaluation events, the town is building a new-format tea market.<\/p>\n
A rendering of the L\u00fc\u2019ai loose-leaf tea bulk-trading market. (Photo provided by L\u00fc\u2019ai Holdings Co., Ltd.)
\u201cThe tea city of the future will be more than a place for commodity trading \u2014 it will be a lifestyle-oriented, scenario-based, leisure-oriented venue for comprehensive display and concentrated exchange. It must also drive the development of tea tourism culture, create immersive experience scenarios, and provide consulting services on different tea categories and tea origins,\u201d Guo Jianbo, chairman of L\u00fc\u2019ai Holdings Co., Ltd., told the reporter.
Building a \u201csmart\u201d space, transforming toward \u201cdigitalization\u201d and \u201cinformatization\u201d
In recent years, digitalization and informatization have been hot topics across all industries. Behind this lies strong technical support \u2014 the popularization of 5G base stations, hardware, and software \u2014 and a behavioral consensus in market trading. Making tea information transparent and trustworthy, and connecting information on tea categories, origins, grades, vintages, and warehousing to build a true \u201csmart\u201d space for tea, is an inevitable trend.
The reporter learned that many cities\u2019 key construction projects are currently transforming in this direction, and there are also online-centered \u201conline plus offline\u201d trading platforms and \u201cdigital tea warehouses\u201d being explored and tested \u2014 for example, the Lu Yu Tea Exchange and Dongguan Zhongcha International Digital Technology Co., Ltd.
Digital and informatized transformation, and the building of a \u201csmart\u201d business-format space, have become buzzwords in recent years. Recently, the \u201cMaliandao International Tea Digital-Twin Block\u201d in Beijing, unveiled at the Xicheng sub-forum of the 2022 Global Digital Economy Conference, uses IoT technology on the basis of building information modeling and the city\u2019s 3D geographic information system to digitalize all elements of the block \u2014 a concept similar to a \u201cparallel universe\u201d \u2014 constructing a \u201cvirtual block\u201d in cyberspace that corresponds exactly to the physical one, so that consumers can enjoy the same tea-buying experience online as in a physical store.
It is understood that the project will also launch a \u201cmeeting hall\u201d named after the Maliandao block\u2019s cartoon mascot \u201cMa Lianlian,\u201d building an enterprise salon club for Xicheng District with diversified supply and demand in the Maliandao area, and creating an open dialogue platform with the government to seek more cooperation opportunities for enterprises.
The \u201cpredicament\u201d facing China\u2019s tea wholesale markets is a required question in the development and progress of the business format, and the pace of transformation and upgrading has never stopped. There is every reason to believe that as long as exploration never ceases, China\u2019s tea wholesale markets will surely reach their own \u201cpoetry and distant horizons.\u201d
Produced by: China Co-op Times \u00b7 Tea Weekly All-Media<\/p>\n
\u2014
\nAuthor: Lam Sam (LamSam), the Old Tea Head
\nZENTEA MANOR
\nAlliance Supply Chain Services Limited
\nUnit 902-3, 9\/F, Mini Cube, 10 Sam Chuk Street, San Po Kong, Kowloon, Hong Kong
\nwww.zentea-shop.com Email:info@zentea-shop.com<\/p>\n","protected":false},"excerpt":{"rendered":"
The bustling specialized camellia and tea trading market on the Fujian\u2013Zhejiang border. Photo by Zhu NaizhangAfter years of development, tea wholesale markets \u2014 which serve to gather and distribute products, assess value, collect information, and regulate supply and demand \u2014 have long been an important circulation channel for tea. But in the face of new […]<\/p>\n","protected":false},"author":1,"featured_media":13512,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[95],"tags":[],"class_list":["post-13511","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-yun-tea-mountains-en"],"_links":{"self":[{"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/posts\/13511","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/comments?post=13511"}],"version-history":[{"count":1,"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/posts\/13511\/revisions"}],"predecessor-version":[{"id":13513,"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/posts\/13511\/revisions\/13513"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/media\/13512"}],"wp:attachment":[{"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/media?parent=13511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/categories?post=13511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zentea-shop.com\/en\/wp-json\/wp\/v2\/tags?post=13511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}