This is an English adaptation of a FoodBud historical article originally published on September 27, 2022.
This article was originally published by Hongzhang Consumer Research Society, with analysis by Weng Yinuo, founding partner of Hongzhang Capital. It examines why Southeast Asia became an early overseas target for Chinese tea-drink chains and what operators should consider when entering the region.
Over the past decade, China produced several large tea-drink chain brands. Mixue Bingcheng, which had just filed for listing at the time of the article, had exceeded 20,000 stores by March 2022 and had more than 1,000 overseas stores. The article frames overseas expansion as a second growth curve for brands that already built supply-chain scale and brand capability at home.
Southeast Asia’s tea-drink market, like mainland China’s, was heavily influenced by Taiwanese brands. Many local founders began as franchise agents for Taiwanese bubble-tea operators.
By 2015, milk tea was already established in Southeast Asia. The article compares tea drinks with coffee’s consumption curve: instant coffee cultivated basic habits, cafe formats broadened acceptance through sweet and milky drinks, and specialty coffee later pushed consumers toward product quality and more frequent consumption.
For tea drinks, the article describes three stages:
The operating implication is that tea-drink trends may run in 3-7 year product cycles, while new items that sustain repeat purchase need quarterly development. Product innovation is therefore a meaningful barrier for chain brands.
Citing CNA, Momentum Works, and Qlub, the article states that Southeast Asian consumers spent about US$3.66 billion annually on bubble tea and related new-style tea drinks. Singapore had the highest consumption despite having the smallest population among the six key markets covered.
The same research cited these market figures:
Milk tea remained the leading drink type at 26.03%, followed by tea at 26.03%, while juice and coffee drinks were each around 14.98%.
The climate supports the category: average temperatures in Southeast Asia are close to 30 degrees Celsius, creating year-round cold-drink demand with less pronounced seasonality.
Singapore’s bubble-tea history is described in waves. Bubble Tea Garden introduced bubble tea there in 1992 at Marina Square and built a student-heavy following. KOI and Gong Cha entered Singapore in 2007 and 2009, bringing another wave with higher perceived quality and prices rising from about S$3 to about S$6. A third wave began in 2018 as cheese tea, fruit tea, and brown-sugar pearl milk tea expanded the category.
GrabFood data from 2018 showed bubble-tea orders in Southeast Asia growing rapidly, with an average growth rate of 3,000%. GrabFood users bought an average of four bubble teas per person per month. Thai consumers bought twice the regional average; the Philippines followed at five cups per person per month. Malaysia, Singapore, and Indonesia averaged three cups per month.
Singapore has high labor and operating costs. Foodservice chains face hiring difficulty, and the article notes constraints around ratios of foreign labor to local Singaporean employment. Local Singaporeans are generally less willing to work in chain retail roles.
The article describes Singapore retail-chain competition as not yet extremely crowded, with healthy price bands and gross margins, but high labor cost and operating complexity.
Malaysia appears cheaper on some inputs: store labor cost was estimated at one-quarter lower than in China, and rent one-third lower. But overseas operations require stronger local management capability. Staff may need Chinese, English, and Malay, with higher expectations for education and overall capability.
Estimated store-capacity assumptions in the article:
Singapore real estate is also expensive, especially around commercial areas along the Singapore River, including Clarke Quay Center, Riverwalk, and One Raffles Place.
LiHo is cited as a local Singapore tea-drink example. Its founder had been an agent for Taiwan’s Gong Cha and sought to create an independent Singaporean brand. LiHo adopted new material suppliers, tea-making processes, store design, and menu branding. The name reflects the Hokkien pronunciation of “hello”; Malaysia has about 2 million permanent residents of Hokkien background. The brand is described as simple, bright, accessible, and good value.
In November 2018, Heytea and Nayuki chose Singapore as their first overseas market. In September 2018, Mixue Bingcheng opened its first overseas store in Hanoi, Vietnam.
Other brands that had already entered Southeast Asia included Chatime, Black Whale, Yihetang, KOI, TenRen’s Tea, Chun Shui Tang, The Alley, World Tea, and Gong Cha. The article argues that Southeast Asia had already proven itself as the first major landing zone for new-style tea-drink expansion.
Key entry requirements identified:
The article segments China’s tea-drink price bands as follows: above RMB20 for brands such as Heytea and Nayuki; RMB10-20 as the middle segment; below RMB10 for Mixue Bingcheng. It argues that the RMB10-20 equivalent segment is attractive because it can combine scale, brand-building, premium perception, and social currency.
Malaysia and Singapore are still described as Chinese-consumer-heavy markets where milk tea is popular. The article cautions that this does not automatically mean equal popularity across the rest of Southeast Asia or in the Americas. The central recommendation is that tea-drink brands can globalize, but operations must localize country by country, and strong joint-venture or local partners are critical.
The article also argues that current overseas milk-tea pricing was unusually high because of supply scarcity and immature supply chains. It cites Happy Lemon at RMB14-15 per cup in China versus more than RMB40 overseas. For milk tea to scale globally like coffee, the article says pricing would need to fall to roughly RMB15-20.
Social media is another growth driver. As tea-drink brands emphasize product aesthetics and marketing, consumers increasingly photograph and share drinks online.
Chagee is used as an example. The Yunnan-origin brand focused on fresh milk tea made with original-leaf tea. In Malaysia, it designed tall paper cups with a tearable lower section containing a small random gift such as a mask or pen. It also brought in Lee Chong Wei as a Malaysia spokesperson during its 2.0 brand upgrade. According to media reports cited in the article, on Singles’ Day 2021, Chagee’s Malaysia stores sold 30,000 cups in total, with average daily revenue of RMB25,000.
The article argues that many Chinese brands initially rely on overseas Chinese consumers, whose purchasing power is significant. Over time, however, brands risk remaining confined to immigrant communities rather than becoming accepted by local mainstream consumers.
Franchise versus direct operation is presented as a strategic choice. Franchising uses private capital and local resources to share risk and expand quickly, but the difficulty is management depth and systemization. Digital tools can solve part of the management problem.
Shopping centers in Southeast Asia are described as receptive to jointly operated stores because headquarters can manage operations consistently and build brand momentum. The article suggests that direct and joint-operation stores help build internal talent systems, including supervisors and store managers, before later franchise replication.
On June 22, 2021, Mixue’s overseas brand MIXUE announced through its Vietnam Facebook account that in the third quarter of 2021 it would offer waived franchise, design, and management fees to attract franchisees.
Mixue’s model is presented as more experienced in franchising. Low franchise fees and its own raw-material supply chain were described as the basis for low prices. In mainland China, the franchise fee was RMB10,000, and including equipment and raw materials, one year’s investment cost was RMB300,000-400,000. Each franchise store bore its own profit and loss. Mixue’s revenue came from franchise fees and material fees from stores nationwide, meaning the model relied on scale and supply-chain economics.
The article’s core view is that Chinese brand expansion overseas is an era-level trend. After 10-20 years of high-speed domestic competition, some leading brands had built scale and profit, and some had already listed or gained capital-market access. Overseas markets were therefore a natural second growth curve.
For international foodservice operators, the practical lessons are straightforward: Southeast Asia offers strong demand, favorable climate, social-media amplification, and established category awareness, but the market is operationally demanding. Labor, real estate, regulatory localization, halal capability, partner quality, and supply-chain maturity may matter as much as product-market fit.
Note: IPO references, store-capacity estimates, expansion plans, pricing comparisons, and forward-looking market views are historical, based on the September 27, 2022 source article.