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Fang Cun Tea Market

Tony Liu tells how a small village in Guangdong Province has become a thriving center of the Chinese tea trade.

For anyone who is interested in Chinese tea and has a chance to visit Guangzhou in China, Fang Cun Tea Market is a must on your itinerary. The market is located in the southwestern part of Guangzhou, and you will find an exhibition of all varieties of tea from the whole country (including Taiwan), packaging materials, machinery for tea, and tea sets and utilities of various styles.

Origins and History

Fang Cun, meaning ‘fragrance village,’ has always been and is still famous for the cultivation of flowers. Back in the 1970s, the village produced mostly jasmine, Magnolia Yulan, and cut flowers for Cantonese families and for the Chinese New Year. Jasmine tea apeals to the palate of people living in the north of China and sells very well there. The flowering season for jasmine is short under the cold weather conditions of northern China, but long in the south. This was the reason why some local tea traders transported green tea from other provinces to Fang Cun, scented it with jasmine flowers, and then resold the finished jasmine tea throughout the entire country.

In the 1970s and 1980s, the economy in mainland China was miserable and underdeveloped. Farmers were permitted to grow only grain crops on the majority of cultivated land, while the production of economical crops, such as flowers (because they were seen as a symbol of capitalism), was not allowed.

Fortunately, Guangdong was an exception. Because of its location close to Hong Kong and Macau, and its open-minded people, the local government permitted villagers in Fang Cun to grow flowers in abundance. As the planting area and the output of jasmine flowers increased, prices went down, and this attracted jasmine tea wholesalers to Fang Cun from all over the country. The tea market came into being spontaneously, although it started with only one product - jasmine tea - several old houses, and less than 20 tea traders.

Development and Expansion

Jasmine tea in Fang Cun was gradually recognized by experts in the tea industry as being of excellent quality but low in price, and thus more and more small buyers came regularly to the area. Among them were owners of restaurants or retail shops who purchased not only jasmine tea, but also other varieties of tea. So the local traders started to order black tea from Yunan and Canton Provinces, green tea from Hunan and Zhejiang Provinces, and oolong tea from Fujian in order to satisfy their customers’ requirements.

Since Jasmine tea was sold at a comparatively low price, the buyers expected other tea products to be cheaper. Actually all the tea products sold in Fang Cun, except jasmine tea (which was manufactured locally), were purchased through agents and resold in the market. Prices were not low and were at least a little higher than in the producing area. Nevertheless, the availability of all the different teas in Fang Cun gave buyers the convenience of purchasing jasmine tea and all the other teas they required in one single trip.

This is exactly the same way in which supermarkets promote their business - selling some goods at attractive low prices and increasing sales of other goods. Local traders in Fang Cun were taking such measures almost without realizing it, as a result of the fact that jasmine tea sold well in the market, but so too did the other varieties of tea. Those who had set up in business first were earning their fortune.

These success stories attracted more tea traders to Fang Cun, with tea farmers and tea factories eventually taking steps to open their own shops in the village, where local Fang Cun residents were willing to rent them their houses. Before 1980, there were only 15 shops in the market. In the 10 years from 1981 to 1990, the number of traders registered locally increased to about 500. By January 2000, that number had risen to more than 1,000. The annual turnover has risen from one million RMB in 1980 to 100 million RMB in 1999 (1 USD=8.27 RMB).

There is a saying in China that flies may come in with the fresh air when the windows are open. As the tea business started booming up in Fang Cun, some greedy traders started selling poor quality tea at high prices, and some even cheated farmers out of their tea and sold it at rock bottom prices on the market. The local government intervened in the management of the market in order to support it, and to standardize it according to the needs of the tea businessmen. The Fang Cun Tea Association has also been established by the traders in order to allow the trade and the traders to control and discipline the business.

The Status Quo and The Future

The new tea market in Fang Cun.
After nearly 20 years of development, Fang Cun Market is now the biggest tea wholesale and retail market in the whole country. It is a great achievement. At present, there are more than 1,000 tea traders and manufacturers doing business there.

The total tea varieties and specifications in China are estimated to be over 1,000, and Fang Cun Market handles almost all the major varieties of tea from all the large tea plantations in the country. The market has even attracted tea traders from Taiwan Province and they have also set up offices and shops for the purpose of trading the expensive Taiwan Oolong Tea.

With an annual turnover in this market of over one hundred million RMB, it is a major source of tax income for the local government. Many traders have been exporting their products through professional tea export and import companies, which are the only agents in this field authorized by the government. As a result of the tea trade’s success, employment, manufacturing industry, and service businesses in the neighborhood have also prospered.

As yet, no foreign tea companies are operating in Fang Cun market, with the exception of Lipton which has its own tea blending plant in Guangzhou. The huge market in mainland China remains uncharted waters to foreign tea business. This may have some relation to the tax policy of the Chinese government in protecting local tea farmers.

As China moves to join the World Trade Organization in the near future, we believe the tea market in China will open up as more foreign tea traders join in. This will bring a new challenge and greater competition to the existing tea industry of China and may also mean that the Chinese people may be given more colorful choices in their daily life and cultural activities. Hopefully, it will urge the local tea industry to undertake reforms and eventually to reach a mature business module with mutual cooperation and opportunities for all parties.

The tea market is aiming to become a standard market of national scale, and even of international scale, integrated with possibilities for shopping, tourism and sightseeing. An internet web site is under construction and e-business will be enhanced in the near future.

Tea & Coffee - July/August 2000

Theta Ridge Coffee

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