Summary of Key Points
NaiXueTea was fined 320,000 yuan for unfair competition for “exploiting” the IP of PopMart (with large print promoting the collaboration and small print disclaiming any official partnership), revealing its financial distress. Amidst a cooling trend in the new tea drink industry and an 8-year cumulative loss of over 2 billion yuan, NaiXue has tried to survive by closing larger stores, opening smaller ones, reducing average transaction prices, and adjusting its product structure (switching from in-store baking to centralized distribution). However, it faces fierce competition in the mid-range market, difficulties with franchise expansion, and a plummeting stock price (down 95% from its peak), leaving its future profitability in doubt.
I. Fined for IP Exploitation: A Bad Move Born out of Financial Pressure
NaiXue’s penalty was essentially due to trying to save money but ending up losing more. The incident was simple: the company used large print on its marketing materials promoting “Drink Mibubu and get a LABUBU” (a popular PopMart IP), while only mentioning in very small font that there was no official collaboration with PopMart. The court ruled this as misleading to consumers and considered it unfair competition, resulting in the 320,000 yuan fine.
Why did NaiXue do this? It stems from a contradiction between limited funds and a need for traffic: the cost of licensing popular IPs has skyrocketed (for example, the “Nezha” IP fee increased by 80%). Despite increasing marketing expenses by 48% in 2024, the company still suffered a loss of over 900 million yuan and had to cut promotional costs by 19.5% in 2025. With no money to purchase IPs and seeking to attract customers through popular ones, NaiXue resorted to the cheap tactic of “free riding” on these IPs, only to end up losing both money and brand integrity—a classic case of trying to save a little and losing a lot.
II. Decline in Collaborations: From Overenthusiasm to Retreat
NaiXue was once a leader in industry collaborations, with 33 partnerships in 2023 (the most in the industry) and 23 in 2024 (still among the top). However, this number dropped sharply to 12 in 2025 (ranking fourth). This is not because NaiXue doesn’t want to collaborate anymore, but because the entire industry can no longer afford it:
- High costs: Licensing fees for popular IPs have become unaffordable for small brands.
- Consumer fatigue: Consumers are tired of the routine of getting free merchandise with tea drinks, making such promotions less effective.
- NaiXue’s own challenges: With an 8-year cumulative loss of over 2 billion yuan (the only new tea drink company to lose money), it had to cut its marketing budget in 2025, leaving little funds for collaborations.
Collaborations were originally meant to attract customers, but now they have become a costly endeavor with little return. NaiXue has no alternative strategy and thus resorted to IP exploitation as a last resort.
III. Closing Large Stores and Opening Smaller Ones: A Downward Shift in Positioning
NaiXue once focused on high-end stores, such as those covering several hundred square meters in central business districts, designed as “third spaces” for customers to socialize. This approach is no longer viable:
- High costs: Rent and labor are expensive, and large stores take up a lot of space.
- Changing consumer habits: More people order food delivery (NaiXue’s delivery revenue accounted for over 50% in 2025), making the “third space” an unnecessary expense.
As a result, NaiXue closed 165 direct-operated stores in 2025, experiencing its first year of negative store growth. It is now exploring smaller store formats (opening 50 new ones) in offices and communities, reducing costs. However, this path is difficult:
- Fierce mid-range competition: Brands like HiTea and BaWangChaJi have established a strong presence in the mid-range market.
- Low-end barriers to entry: Competitors like MiXueBingCheng and GuMing use efficiency (such as centralized kitchens and supply chains) to keep prices low, making it hard for NaiXue to compete.
The former leader in the new tea drink industry is now forced into a territory it is not familiar with.
IV. Product and Channel Adjustments: Necessary Sacrifices for Survival
To adapt to the smaller store format, NaiXue has made significant changes:
- Reduction in baking operations: The company’s signature “tea drinks + soft European bread” combination required on-site baking, which was space-consuming. By switching to centralized distribution, it saved space but saw baking revenue drop by 33% (to 352 million yuan) in 2025, with the proportion falling from 10.7% to 8.1%.
- Decrease in average transaction prices: Prices dropped from 43 yuan in 2020 to 25 yuan in 2025, nearly halving. This was done to attract more customers, but it also weakens the brand’s premium image.
- Increasing reliance on delivery: Delivery accounted for 52.6% of sales in 2025, indicating a shift from in-store consumption to online orders, contrary to the company’s earlier “third space” concept.
These adjustments aim to reduce costs and improve efficiency but come at the expense of some brand identity and profit margins.
V. Plunging Stock Price and Future Prospects: Can It Turn Around?
NaiXue’s stock price has plummeted by 95% from its peak, now below HK$1 per share, reflecting a complete loss of market confidence. The reasons include:
- Long-term losses: Over 8 years, the company has lost over 2 billion yuan, with another 919 million yuan in 2024.
- Uncertainty around transformation: Whether the new small-store strategy will succeed or whether it can compete in the mid-range market is uncertain.
- Franchise challenges: Only 13 new franchise stores were opened in 2025, as franchisees are wary of losses—given that even NaiXue’s direct-operated stores are closing, who would invest?
NaiXue has been constantly adjusting its strategy: from high-end stores to smaller ones, from aggressive collaborations to cost-cutting measures. Whether it can turn around depends on the success of its new small-store model and its ability to find new sources of profit. Currently, the road ahead seems long and uncertain.
In summary, NaiXue’s story reflects the intense competition in the new tea drink industry. Once a pioneer with a premium image and successful collaborations, it now has to adapt to higher costs and lower traffic levels. Its struggles reflect both internal issues (losses and unclear positioning) and broader industry trends (shifting from growth to competitive stability). Whether it can break out of its losses depends on whether its new strategies truly meet consumer needs.