'Tea bubble' brews in China

Owes its flavors to oxidation levels between green & black tea.

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Oct 8th, '10, 05:32
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'Tea bubble' brews in China

by auhckw » Oct 8th, '10, 05:32

Related to Da Hong Pao...

'Tea bubble' brews in China
http://www.telegraph.co.uk/news/worldne ... China.html

Published: 9:00PM BST 01 Oct 2010

Chinese financial speculators are caught in a buying frenzy for a variety of tea that has seen its prices soar to levels only rivalled by the finest wines.

The rare tea made from bushes from the tea gardens of the Ming Dynasty emperors has become the latest craze for wealthy Chinese investors with their sights on a quick profit.

Prices for the Dahongpao tea, which is only grown in a small mountainous area of east coast province of Fujian, have increased tenfold since the middle of last year with online tea traders selling a single kilo for more than £1,000, the country's state media has reported.

"I never thought it would get so expensive," a tea producer, Wu Zongyan said. "It's one price one day, another price another day. Between when we pick the leaves and when it's ready to sell, the price has already gone up."

Chinese traditionally prize tea as the symbolic heart of national culture and believe that in varieties and taste differentials rival that of wine. China is prone to extreme speculative bubbles as opportunity-starved investors seek a home for their cash outside the traditional venues of the stock and property markets which are themselves notoriously volatile and speculative.

In the past year auction houses in China and Hong Kong have all reported fetching record prices for everything from Imperial artwork to French claret and, most recently, Communist-era stamps as speculators search for an outlet for their money.

CCTV, the state broadcaster has reported that the classic signs of a bubble were already evident in the Dahongpao tea trade, with the number of shops selling the tea in Wuyi, the town where the tea is produced, leaping from 200 to 1,500.

As with fine wine, dealers are also reporting fake teas are starting to appear on the market in another sign that the bubble might be about to burst.

An online tea trader told the The Daily Telegraph said prices had risen on he back of demonstrably absurd rumours – including that all Dahongpao tea came from just six bushes.

In reality, genuine Dahongpao is said to come from bushes propagated from six trees that were originally planted to serve the Ming Dynasty (1368-1644) emperors.

This is not the first time China has had a 'tea bubble'. In 2008 prices of Pu'er tea, a dark blend from southwestern Yunnan province suddenly spike to several thousand pounds a kilo.

Investors believed prices would be kept buoyant by a report that China's Olympic Games committee would put a tin of Pu'er tea on every competitor's bed – but prices soon crashed back down to earth.

But the level of interest in teas for investment is likely to rise as wealth levels increase. Chinese diplomats fondly recall President Richard Nixon's dismay that Chairman Mao Tse-tung offered him an official gift of 100 tea leaves on his ground-breaking visit to China in 1972. It fell to another Chinese leader to explain that the quantity represented half the wealth of China.

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Oct 8th, '10, 10:06
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Re: 'Tea bubble' brews in China

by gingkoseto » Oct 8th, '10, 10:06

It's probably indeed a bubble. Several media in China started to investigate Da Hong Pao price of this year. It's suspected Da Hong Pao market price is manipulated by some financial power(s) that has generated a market illusion and caused unreasonably high price of Da Hong Pao.

Although most tea farmers in Wuyi are generally doing well, when Da Hong Pao price soars this fast, the profit from dramatic mark-up doesn't go to the producers.

Meanwhile, China's tea export price is still very low. In 2009, 300,000 tons tea was exported for $700 million, which yields an average price of roughly $2.3 per kg, or $1.1 per pound. This price is even lower than some historical years while the real prices of most teas increased a lot in the past decade. This means export has been leaning to cheaper tea of lower grades. Of course some of the $1.1 per pound tea travels through the trade chain of importer, distributor, wholesaler, gets pretty packages and end up being sold for much higher price. I believe the low import price and high market price of tea is largely caused by Chinese exporters and domestic importers obviously make more money dealing with tons of cheap tea than smaller amount of good tea. But this will change, because producers and buyers both want good tea at reasonable prices.

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Oct 8th, '10, 12:05
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Re: 'Tea bubble' brews in China

by Tead Off » Oct 8th, '10, 12:05

Most of the shops here in BKK must be stocking the low end DHP. Horrible stuff. The difference in price for decent DHP is quite large. This could rank as the most 'hyped' tea in China after Puerh. So much garbage being sold.

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