Twists and Turns:Rising Costs and Falling Prices Hinder Gunpowder Tea Exports
The booming Gunpowder tea export market encountered difficulties starting in 2016.
For a long time, the Gunpowder tea export market has been monopolized by foreign tea merchants. Morocco in Africa has been the largest single market for Zhejiang's tea exports for ten consecutive years, accounting for half of its exports to Africa. This structure, heavily reliant on a single market, makes Zhejiang's Gunpowder tea industry extremely vulnerable to policy fluctuations in importing countries.
In 2016, Morocco introduced tea import regulations, imposing a 50% tariff on small-packaged tea, leading to a significant decrease in the volume of small-packaged tea exported from Zhejiang to Morocco.
The disorderly competition among domestic tea companies exacerbated the predicament. "Some tea companies sold inferior products, disrupting market order," several tea company executives told reporters. Due to differences in the quality of fresh leaves, processing techniques, and production capacity across various production areas, the quality of raw materials for pearl tea varied greatly. Meanwhile, tea export companies heavily relied on high volume to seize market share, engaging in fierce price wars. This resulted in an average export price increase of only 8% over 10 years, far lower than the increase in production material costs during the same period. The original model of "independent sampling and pricing based on quality" gradually shifted to "ordering based on samples and negotiating prices," leading to a "bad money drives out good" situation. This severely damaged the reputation of pearl tea, causing a "cliff-like" drop in international market prices, which had a significant impact on enterprises.
"At that time, domestic Gunpowder tea companies had high inventory levels, and tea prices fell sharply," Wang Xingu told reporters. A large number of refining and processing plants without independent export rights went bankrupt, resulting in only one in ten refining and processing plants remaining in Shengzhou.
