Chinese tea industry in Penang set for healthy growth

One of the intentionally aged teas, Pu-Erh has a loyal following.

User avatar
Apr 7th, '12, 07:41
Posts: 1653
Joined: May 24th, '10, 00:30
Location: Malaysia

Chinese tea industry in Penang set for healthy growth

by auhckw » Apr 7th, '12, 07:41

In our local newspaper today, Penang = North Malaysia

Chinese tea industry in Penang set for healthy growth
Saturday April 7, 2012 ... c=metrobiz

THE Chinese tea industry in Penang appears set for healthy growth, riding on George Town’s status as a World Heritage Site (WHS) city, and Malaysia’s reputation as a pu’er tea storage and ageing site.

Ten Yee Tea Trading Sdn Bhd managing director Yeap Kim Cheok said that since George Town gained WHS status in 2008, the company’s business, located on Beach Street within the inner George Town enclave, had improved by about 20% due to purchases from overseas’ visitors.

The tea market in the northern region is now worth more than RM30mil a year, double what it used to be before George Town was bestowed WHS status in 2008, Yeap added.

The tea industry in Malaysia since 2003 has revolved mainly around raw pu’er tea, a variety of black tea from Yunnan; liu bao, a black tea from Guangxi; da hong bao, a variety of oolong tea from Fujian; and long qing, a variety of green tea from Hangzhou.

“Due to rising international demand and a shortage of tea leaves from tea plantations in China since 2000, the value of high-grade raw pu’er tea that has been aging since the 1950s is now about RM100,000 for 357 grammes, while those aging since 1900 can fetch about RM450,000 per 357 grammes.

“The value of other tea varieties from China has also risen. Naturally aged liu bao tea, for example, is now worth about RM1,000 per kilo, compared to RM100 in 2003.

“Da hong bao and long jing are now about RM300 per 100 grammes, compared with RM100 per 100 grammes in 2003,” she said.

Besides the WHS status, another reason why foreigners come to Malaysia to purchase pu’er tea has to do with its reputation as a raw pu’er tea storage and ageing site.

Raw pu’er tea, which is aged and naturally fermented, has been in high demand in Malaysia since 2000, as the tea generates a good yield after five years of storage and ageing.

Lucrative venture: Ng of Wu Yi Tea Art Import and Export says the growing number of Malaysian visitors to China over the past 10 years has further exposed people to the variety of tea leaves from the various provinces of China.
“Malaysia’s humidity at 80% and temperature of around 30°C are very suitable for storing and ageing raw pu’er tea.

“Furthermore, the rent for warehouse space in Malaysia is relatively cheap, compared with other countries in the region, which makes it attractive for pu’er tea entrepreneurs to store and age the tea here.

“This is why Malaysia is known as one of the key centres in Asia to purchase good quality pu’er tea — the large quantity of high-grade pu’er tea stored here.

“Raw pu’er tea needs to be stored and aged for at least five years before it can fetch an attractive price on the market.

“Raw pu’er tea that has been ageing since 2007 can fetch between RM300 and RM500 per 357 grammes at retail, depending on the grade and quality of the tea leaves,” Yeap said.

Before the handing over of Hong Kong back to China in 1997, many of the tea entrepreneurs in Hong Kong, in a rush to migrate, started selling their aged high-grade raw pu’er tea to investors from Taiwan and several other Asian countries.

Variety: Some of Ten Yee Tea Trading’s selection of teas.
“The Hong Kong tea entrepreneurs and, later, the Taiwanese investors who resold the pu’er tea made substantial profits.

“This was reported in various tea magazines, which influenced entrepreneurs in Malaysia to also invest in high-grade raw pu’er tea and set up wholesale and retail tea businesses here,” Yeap said.

The trend of establishing wholesale and retail tea business in the northern region started in 2003.

”Many of the tea wholesale and retail businesses in the northern region today started in 2003.

”The tea business has also attracted many young entrepreneurs,” Yeap said, adding that there are some 30 medium and large wholesale and retail tea businesses in the northern region at the moment.

The resilient pricing of raw pu’er tea is a key factor in attracting young entrepreneurs into the tea business.

“Even when there was an oversupply of pu’er tea in 2007, the pricing of high-grade raw pu’er tea did not drop. It was the pricing of the normal pu’er tea that was affected.

Art form: Ten Yee Tea Trading’s director Lim Lee Seang demonstrating the preparation of tea.
“The similarity between raw pu’er tea and Tieh Guan Yin in fragrance and taste is also another reason for the interest shown in raw pu’er.

“Tieh Guan Yin, a very well-known oolong tea, was widely consumed in Malaysia before 2000,” she said.

Ten Yee Tea, established in 1994, sells locally and exports overseas as well.

“It now takes about RM100,000 to RM200,000 to start a small retail tea business, compared with about RM100,000 required in 1994 for a medium-sized retail business,” Yeap said, adding that she was in her thirties when she started the tea business.

Established Chinese tea retail businesses in Penang such as Tea Home Trading and Wu Yi Trading Art Import & Export Sdn Bhd are also run by young entrepreneurs.

The founders of Tea Home Trading in Penang, for example, are 29-year-old entrepreneurs who ventured into the tea business in 2009, attracted by the long-term prospects of the tea business.

“Unlike other businesses, the tea business, especially dealing in raw pu’er tea, pays off in the long run, compared to investments in other commodities,” said Tan Chee Leong 29, one of the co-founders of Tea Home Trading.

To start off with a small tea retail business, Tan said an initial capital of at least RM150,000 was required, of which 70% had to be spent on investing in high-grade tea, and the remainder for rent, renovation, and other expenses.

“Many of our customers are in their 30s. The tea-drinking culture is no longer confined to the middle-aged,” he said.

Besides raw pu’er tea, Tan said there was now a trend towards investing in liu bao tea, another variety of black tea from Guangxi, China, which was starting to generate a good yield after eight years of storage and ageing.

“However, the demand for liu bao tea is currently confined to South-East Asia,” Tan said.

Meanwhile, Wu Yi Tea Art Import and Export Sdn Bhd director Ng Mei Ling, 21, who is now taking over the business started by her father, said the growing number of Malaysian visitors to China over the past 10 years had further exposed them to the variety of tea leaves from Fujian, Yunnan, Guangzhou, and Hangzhou, and the culture of drinking tea in China.

“The famous Wu Yi mountain is in Fujian, where many of the Ming-Nan Chinese in Malaysia and Singapore are from.

”That is how most of the locals here learnt about da hong bao, which originates from Wu Yi mountain.

“The locals here frequently go to Yunnan for holidays and in Yunnan they learnt about raw pu’er tea and the investment potential of the tea.

“When returning from China, they know what to look for in Penang. This helps us to save a lot on marketing and advertising fees, allowing us to compete more effectively in the market,” she said.

Ng said she had invested about RM2mil in the business since 1990, which generated a monthly revenue of between RM100,000 and RM200,000.