Heytea, a Chinese brand backed by Tencent Holdings and Temasek, has opened its first pop-up store in Paris, marking the latest step in an international expansion plan for the so-called new-style tea company amid fierce domestic competition.
“The foreign customers’ recognition is our primary consideration,” said Gu Yujia, vice-president of the Shenzhen-based company. “We want to use a single store to test the local customers’ preferences and fix any issues.”
The opening of the Paris pop-up store, in partnership with the trendy Chinese restaurant chain BAO Family, coincides with the 2024 Olympics.
Founded in 2012, Heytea now has more than 4,000 stores in more than 300 cities in China and globally. Under its ambitious international plans, the company has already established a presence in the US, UK, Australia, Canada, Singapore, Malaysia and South Korea.
“The overseas market is an important opportunity for Chinese retail brands like Heytea to expand their income and put the brand’s vision into practice,” Gu said.
The company has achieved better-than-expected results in some markets, according to Gu. For example, it has seven stores in the UK and has added additional stores in Southeast Asia and North America. Its first New York store sold 2,500 cups on its first day in December 2023.
The company’s overseas expansion comes amid fierce competition in China’s new-style tea market, which is likely to surpass 200 billion yuan (US$27.6 billion) in 2025, according to an industry report jointly released by the China Chain Store & Franchise Association and e-commerce platform Meituan.
Heytea is not alone in expanding abroad. Nayuki Holdings, the first bubble tea to list on the Hong Kong stock exchange in 2021 and operator of the Naixue tea chain, opened its first store in Thailand at the end of 2023. The company will continue to pursue its overseas expansion, according to its earnings results released in March.
More than 55 per cent of retail brands globally cited foreign markets as helping them increase revenue in 2023, according to a survey by German payment company Ayden. Around one-third of Chinese brands in the survey said they want to open stores in other countries.
However, challenges remain for companies looking to establish themselves in international markets.
Young Parisians enjoy Heytea. Photo: Weibo
While setting up overseas branches offers opportunities to transfer capital and expand markets, the business model may not always fit the local environment, said Chong Tai-leung, an economics professor at the Chinese University of Hong Kong.
“Some retailing brands set up stores overseas, but they cannot control the cost of rents and labour like they do in mainland China,” Chong said.
The key challenge for brands is adapting to the target market’s environment while remaining true to the brand’s defining features, Heytea’s Gu said.
Heytea’s business model of using high-quality materials and an open kitchen continues to attract its target audience, Generation Z, in foreign markets, while the company’s co-branding with other popular companies also helps keep the brand “young”, he said.
Gu also identified similarities between consumers in China and foreign markets, noting that they both prefer “fruit teas with a crisp taste”.
