This is an English adaptation of a FoodBud historical article originally published on October 19, 2022.
On the streets of Pingnan, a county under Guigang in Guangxi, milk tea is not just a drink category. Local people often describe it as a livelihood: among ten people, at least six have some link to the trade, whether they run a shop, used to sell milk tea, work in a shop, or have relatives in the business.
Pingnan has a resident population of 1.11 million, but the number of people working in milk tea has been estimated at 265,000. Across China, Pingnan natives have opened about 63,000 milk tea stores.
More than 200 brands have come out of the county, including Baojinzhu, Dakoujiu and Bulapin Gongcha. Many are unfamiliar to consumers in major cities, but they have long appeared across county and township markets in Guangxi, Guangdong, Guizhou, Yunnan and Jiangxi. In effect, they once functioned like 200-plus local versions of Mixue Bingcheng, dominating lower-tier markets.
According to the Pingnan Milk Tea Association, at their peak more than a decade ago, Pingnan brands once accounted for 65% of China’s milk tea market. By 2021, that share had fallen to 22%.
Mixue Bingcheng had already passed 20,000 stores nationwide, while no Pingnan milk tea brand had reached 1,000 stores.
Pingnan’s model began with migrant workers opening single stores outside the county, then bringing relatives and fellow villagers into the business. Once enough people had joined and the brand had some visibility, a headquarters would be set up back in Pingnan.
The pattern can be traced to the late 1990s. Chen Youjie, previously in the oil-pressing business, noticed the popularity of Taiwanese bubble tea and opened the first Taike Juba in Guangzhou’s Tianhe district. A cup sold for RMB 1. On opening day, the 12-square-meter shop sold more than 8,000 cups. Later stalls also sold over 1,000 cups a day, with daily net profit above RMB 500. At the time, Guangzhou housing prices were around RMB 3,000 per square meter, meaning one year of milk tea-store profit could help a Pingnan migrant worker buy a 60-square-meter home.
During Spring Festival 2000, Chen returned home with his business story. News spread quickly through Guantang Village in Donghua Town, and villagers from nearby Danzhu and Anhuai also came to learn. Some pooled money with relatives, sold tractors, or borrowed funds to follow Chen to Guangdong and open stores. In Guantang, a village of more than 500 people, nearly everyone entered the milk tea business. Early Pingnan brands such as Ludaocun and Shuangyangyang emerged from this wave.
Unlike modern franchise systems, Pingnan milk tea’s early expansion was a kinship and hometown network. Each village had several “laobiao,” or fellow-villager guides, who led others into the trade. Brands were shared, and so were resources.
One such guide was Lu Desheng, founder of Bulapin Gongcha. Born into poverty and orphaned young, he left for Guangdong at 15 or 16 and earned RMB 600-700 a month as a worker. After opening a milk tea store, he could earn that amount in a day. He told fellow villagers that milk tea required little investment, recovered capital quickly and carried low risk: everyone could bind together and make money together.
In the beginning, Lu said, people did not understand franchising. If someone paid RMB 1,000-2,000, he would teach them how to operate. He also helped villagers find shop sites, from Wuzhou, Liuzhou and Lipu in Guangxi to Guizhou, Yunnan and Guangdong. The best locations were small, inexpensive storefronts on old-street corners in county towns.
Pingnan’s old Chengxi Street was once the county’s busiest commercial area, with people gathering to eat and drink milk tea. Dakoujiu’s first local store can still be found there. Since 1999, Dakoujiu’s five generations of store formats have tracked product trends: bubble tea, grass jelly, coffee milk tea, cheese tea and buffalo-milk tea.
After the Central Shopping Plaza opened in 2016, merchants gradually moved away from Chengxi Street. Milk tea stores concentrated on Shifan Street beside the plaza. At least 30-40 brands gathered there, including local Pingnan brands such as Reli Xue, Chadoufu, Chazhidu, Qinkou Xiangning and Taoli Cha, alongside national chains such as Mixue Bingcheng, Shuyi Shaoxiancao and Chabaidao. The street became known simply as Milk Tea Street.
Unlike in Beijing, Shanghai, Guangzhou or Shenzhen, local milk tea stores on Milk Tea Street are large. Even the smallest are about 60 square meters, and multi-level stores of 200-300 square meters are common.
Although average monthly wages in Pingnan are around RMB 3,000, consumption is relatively strong. A 2018 county-level consumption power ranking by Yicai’s New First-Tier Cities Research Institute placed Pingnan first among Guangxi county-level cities and 144th nationwide.
Pingnan’s milk tea culture is also different from grab-and-go big-city consumption. Stores are adapted to a slower lifestyle. Customers sit for hours, play mobile games, meet friends, or use private rooms. Many local stores have mahjong or card rooms, with minimum spends of RMB 68 or RMB 88 enough for several hours.
This local behavior can make outside brands awkward fits. A manager at Shuyi Shaoxiancao said he had suggested replacing wooden chairs with sofas before the Pingnan store opened, but headquarters required standardized decor designed to prevent customers from occupying tables too long. In Pingnan, that logic did not work.
Mixue, however, found an advantage: price. A standard bubble milk tea cost RMB 7 at Mixue versus RMB 9 at Reli Xue. On delivery platforms, the Mixue store at the entrance of Shifan Street had more than 3,000 monthly orders and ranked first on Pingnan’s milk tea popularity list.
The pressure from Mixue was not just local. From 2005 to 2010, Pingnan milk tea was at its strongest, with about 65% of China’s market by the association’s estimate. Dakoujiu had more than 4,000 stores nationwide, while Mixue, founded ten years earlier, still had only one store in 2006.
By 2022, Mixue had 23,000 stores and annual revenue in the tens of billions of yuan as it pursued what the article called China’s “second milk tea stock.” In June 2022, Mixue announced that it would open township-store franchising, directly targeting Pingnan milk tea’s most important market.
As Mixue pushed deeper into lower-tier markets, Pingnan brands tried to defend their base while also learning from higher-end new-style tea brands such as Heytea and Nayuki.
Their expansion model has gradually shifted from hometown networks toward formal franchising. Reli Xue, for example, charged RMB 9,800 for county-level and below franchises, and RMB 20,000 for city-level franchises. Operators also needed to pay RMB 50,000 for equipment, RMB 3,000 for store design and a RMB 10,000 deposit.
Yet personal relationships still mattered. Among Pingnan milk tea operators, there was an unspoken rule to avoid direct conflict with fellow villagers: if a Pingnan brand already existed on a street, a later entrant would not choose a nearby site; some would avoid the same county altogether.
Reli Xue’s company launched Qinkou Xiangning in 2021, focused on “palace-style glutinous lemon tea” priced at RMB 15. In July 2022, it launched Chaguifang, built around red bean paste and coconut milk, with prices set at RMB 10-15. Founder Lu Jinyang said he wanted to move into Nanning because Pingnan was too small, and that he had found lemon tea and red bean drinks at trade shows in Shanghai and Guangzhou.
The visual language also changed. Where older Pingnan milk tea stores often used dark green, Reli Xue adopted what Lu called “Hermes orange,” while Qinkou Xiangning used “Klein blue.” These brands also opened Xiaohongshu accounts and posted holiday marketing materials and new-product promotions, though engagement was limited.
Li Jinxiu, the post-1990s owner of Taoli & Cha, viewed brands like Reli Xue as still rooted in an older generation’s thinking. Taoli & Cha’s design closely resembled Nayuki, while its product line borrowed from Heytea and Nayuki, with prices around RMB 20. Li did not avoid the comparison. Before the pandemic, she traveled outside Guangxi at least twice a year to observe new product trends.
Taoli & Cha launched 2-3 seasonal drinks each month, a frequency Li said no other Pingnan brand matched. It was also Pingnan’s first brand to use mini-program ordering. After experiencing the convenience at a Nanning milk tea shop two years earlier, Li noted the service provider’s phone number and spent nearly RMB 10,000 to customize a system for Pingnan.
Li said Nayuki and Heytea would not come to counties like Pingnan, but consumer expectations would still move forward. Taoli & Cha reportedly generated RMB 80,000-100,000 in monthly net profit, and Li was preparing a second store with a camping-style design.
But imitation was harder outside Pingnan. Taoli & Cha’s Zhuhai franchise closed after nine months, affected partly by the pandemic, and its Shenzhen branch performed only modestly. Reli Xue’s Nanning site had to be placed near the airport, a less central location.
Meanwhile, Guangxi had produced another regional tea brand with a stronger differentiated story. Ama Handmade, founded in 2018, emphasized freshly cooked ingredients including Bama glutinous rice, Guangxi buffalo milk, Guangxi black sugar and Lipu taro, with average spending around RMB 30. Since 2021 it had received strategic financing from Shunwei Capital and Gongtong Jiayuan Investment, Series A financing from Maison Capital, and Series A+ financing from Shanghai Yinhe Industrial, the parent company of Manner Coffee.
Pingnan, by contrast, had many milk tea brands but few associations with financing or capital.
Under pressure from large brands, Pingnan operators were still trying to organize. In 2018, Chen Youjie founded the Guangxi Pingnan Milk Tea Association, with Lu Desheng as executive chairman. More than 50 Pingnan milk tea brands had joined.
In 2021, the Pingnan county government proposed building Pingnan into “China’s No. 1 milk tea county” and creating a RMB 10 billion milk tea industry cluster. The goals were to establish a local milk tea supply-chain system and build a regional brand and geographical-indication trademark.
The challenge is fragmentation. Pingnan milk tea has scale as a collective industry, but individual brands remain obscure. Lu Jinyang said that if the county’s many brands had integrated resources earlier, they could have produced a major national brand. Yet even he did not want to lead such an effort. Among more than 200 brands, stronger players have less incentive to unite, and coordinating interests is difficult.
Baojinzhu, with nearly 400 stores nationwide, declined to join the association. Since 2019, the association had supported poverty-alleviation entrepreneurship by helping 300 poor households open milk tea stores, waiving franchise and training fees and subsidizing equipment and raw materials worth RMB 10,000. Baojinzhu owner Lu Wujin said he preferred to keep a low profile and avoid larger public issues.
Pingnan hoped to market milk tea as a regional brand in the way Liuzhou turned luosifen into a national product. But luosifen is a distinctive local snack that was little known outside Liuzhou before packaged versions appeared in 2014. Milk tea is already a highly competitive category, and Pingnan milk tea lacks the same clear differentiation.
Supply chain is the more important issue. Luo Yuexin, a researcher at the Guangxi Tea Science Research Institute, had worked in Liuzhou and witnessed how government support helped industrialize luosifen, from snail farming to pickled beans and bamboo shoots, fried beancurd sheets and rice-noodle processing.
Most Pingnan milk tea brands still buy materials from outside. Bulapin, for example, uses mangoes from Baise in Guangxi, grapes from Xing’an, passion fruit from Vietnam, and tea from Yunnan and Fujian.
Luo said Pingnan’s milk tea industry consumes 65,000 tons of tea raw materials each year, but in 2020 Pingnan had less than 1,500 hectares of tea gardens and produced only about 3,300 tons of tea. The gardens were scattered, with the largest base under 70 hectares. Lu Desheng had also tested locally grown tea and found the flavor too light for milk tea.
Other materials, including pearls, grass jelly, milk powder, syrup and straws, are mostly purchased from factories in Guangdong and Jiangxi. Lu Jinyang said that, apart from fresh fruit, all materials are centrally purchased by his company and delivered to three warehouses in Pingnan. Franchisees must order through the backend system, with one free monthly delivery. As he put it, one store earns one store’s money, but selling ingredients earns from hundreds of stores.
If Pingnan could build factories like Mixue and bring raw-material production home, it could reduce costs and logistics expenses while creating local jobs and income. The county had already planned a milk tea industrial park of more than 3,000 mu near Pingnan South Station. At the time of reporting, however, the site did not appear to have started construction.
Luo cautioned that planning and execution are different: a tea garden takes two to three years before tea can be harvested, and fruit trees need several years to bear fruit. Liuzhou’s luosifen industry took five to six years to reach a mass market. Success at that speed is not easy to replicate.
Note: IPO, financing, store-count, revenue and county industrial-plan figures are historical, reflecting the article’s October 19, 2022 publication context.