Summary of Key Points
Chinese tea brands such as Mixue Ice City and Ba Wang Cha Ji initially expanded rapidly in Southeast Asia by leveraging proven efficiency, supply chain strengths, and business models (with Mixue having over 4,500 overseas stores, 95% of which are in Southeast Asia, and Ba Wang Cha Ji having more than 350 overseas locations). However, starting from 2025, they encountered challenges related to localization: conflicts between headquarters and local teams in management approaches, the ineffectiveness of directly copying domestic models, and the emergence of local brands like MOMOYO. This highlights a critical issue for companies entering the service retail industry abroad—success cannot be achieved solely through replicating efficiency; instead, there is a need to "export aesthetics," deeply understand local cultures, integrate into local markets, and even transform from being an outsider to becoming a part of the community.
Detailed Analysis
1. Early Success in Southeast Asia: Leveraging Domestic Strengths
The reason Chinese tea brands were able to open stores quickly in Southeast Asia was due to a combination of supply constraints and operational capabilities:
- Mixue Ice City: Its mature domestic supply chain (self-managed raw materials, lower costs), standardized store formats (easy to replicate), and early-mover advantage made it highly competitive. It was even nicknamed the "angel that occupies vacant shops" in Indonesia.
- Ba Wang Cha Ji: Focused on a cultural appeal with higher-priced products, relying on local partners with resources to establish a foothold in Malaysia before expanding to Indonesia.
- Tian Lala: Targeted the lower-income markets in Indonesia and the Philippines with affordable prices, continuing to grow despite having fewer than 200 stores.
These brands chose Southeast Asia (a region with a large Chinese population) as their first step abroad, leveraging their domestic success to capture untapped markets.
2. Expansion Stalls: The Challenges of Localization
After 2025, growth slowed down, and some brands even had to close stores. The problem stemmed from blindly copying domestic models:
- Frictions between Headquarters and Local Teams: Issues ranged from strategic decisions (such as whether to open new stores) to tactical choices (like discounts). For example, headquarters wanted to use TikTok for marketing, but local teams feared it would damage the brand's reputation.
- Model Incompatibility: Trying to replicate domestic high-end concepts (like Starbucks) didn't resonate with local consumers who valued affordability more.
3. Local Brands Surpassing Foreign Competitors
A local brand like MOMOYO, established in 2023, learned from Chinese tea brands but understood local preferences better:
- Product Adaptation: It focused on affordable ice cream, a popular choice among Indonesians.
- Innovative Store Design: It included children's play areas, appealing to families and capturing the consumer trend of taking children to restaurants.
- Avoiding Price Wars: It maintained stable prices, as local consumers didn't see frequent discounts as trustworthy.
4. The True Challenge of Internationalizing Service Retail
Internationalizing service retail is about more than just selling products; it's about understanding local culture, habits, and aesthetics:
- Local Staff Are Essential: While product distribution can be managed remotely, service delivery requires local employees.
- Avoid Overrelying on Domestic Models: Copying domestic practices (e.g., working long hours) may not work effectively abroad.
- New Success Formula: The balance now shifts to 50% product quality and 50% localization—products and prices plus local design, services, and context.
5. From "Going Global" to "Being Part of the Local Market"
The goal should be to become a integral part of the local market, not just to make quick profits:
- Seeking Deeper Growth: Instead of competing on price or launching new products domestically, companies should explore new markets internationally.
- Trust Local Teams: Understanding cultural differences is crucial; blaming failures on local staff is often a sign of poor management.
- Learning from Local Platforms: Success in overseas markets (e.g., TikTok) comes from integrating with local content and creators.
In conclusion, Chinese tea brands' experience in Southeast Asia shows that internationalizing service retail means going beyond simple product distribution; it requires truly understanding and adapting to local cultures. Companies need to reinvent their strategies rather than relying on past successes.
In One Sentence
The transition of Chinese tea brands in Southeast Asia from rapid expansion to localized challenges highlights that internationalizing service retail is about becoming a preferred choice for local consumers, not just selling products from home.