Chagee Opened Its 40th Malaysia Store as Southeast Asia Network Approached 60 Units

This is an English adaptation of a FoodBud historical article originally published on August 17, 2022.

On August 14, 2022, Chagee opened its Kuching Chinese Friendship Park store in Sarawak, Malaysia. The company described it as its largest Southeast Asia store and its first Chinese-style overwater building store.

The unit was Chagee's second store in East Malaysia, following its July announcement that its first East Malaysia site would be in Kota Kinabalu, Sabah. The Kuching store covers more than 260 square meters.

Malaysia Reached 40 Stores

From June to August 2022, Chagee's Southeast Asia opening pace accelerated. At the time of the article, the brand had:

• 40 stores in Malaysia
• nearly 60 stores across Southeast Asia
• four flagship stores in Malaysia, including the new Sarawak unit

The previous three Malaysian flagship stores were all in Kuala Lumpur, in West Malaysia. Chagee expected its Southeast Asia store base could reach 80 stores in 2022.

Why Malaysia Came First

Chagee began its overseas expansion before the pandemic, in 2019. After being invited by a potential Malaysian partner to study the local market, the company found strong interest among local Chinese consumers in China's new-style tea drinks, while seeing few relevant brands serving that demand.

Chagee chose Malaysia as its first overseas market and prepared a Malaysian subsidiary. In August 2019, it opened its first Malaysia store, then later entered Singapore and Thailand. The article noted that Malaysia, Singapore, and Thailand had been familiar outbound travel destinations for Chinese consumers and had large Chinese communities or consumer groups familiar with China.

Positioning and Market Model

In Southeast Asia, Chagee identified a gap in the mid-to-high-end tea beverage market. Strategically, it positioned itself against Starbucks, following a route of building brand presence overseas while scaling domestically.

The article contrasted Chagee with Mixue, another Chinese tea and beverage brand active in Southeast Asia. Mixue had started exploring Vietnam in 2018 and had already grown to more than 1,000 stores in Southeast Asia by the time of the article. Its model was described as smaller-format stores with faster scale-up through regional franchising.

Chagee, by contrast, expanded in Southeast Asia by bringing in local partners and using joint-venture companies. The article framed this as a more brand-led approach, while Mixue's lighter small-store franchise model enabled faster store-count growth.

As China's domestic tea market became more competitive, brands were moving overseas to compete with Taiwanese milk-tea brands and emerging local players. The article also noted that overseas expansion could help brands respond to copycat operators if they appeared.

Note: store-count expectations and forward-looking figures are historical as of August 17, 2022.