Summary of Key Points
Mixue Ice City has become dominant in the domestic market by leveraging an “excellent supply chain and large-scale self-built production capacity” to offer affordable and stable milk tea, with nearly 60,000 stores across the country. However, its international expansion has faced significant setbacks: 92% of its stores are still located in China, and in 2025, it closed a net of 428 overseas locations. Its ambitions to expand into Japan have failed miserably, with the number of stores dropping from a target of 1,000 to just 4; stores in Hong Kong and Vietnam have also shut down. The root of these issues lies in the fact that Mixue’s domestic success strategies cannot be easily replicated in overseas markets due to differences in supply chains, pricing, localization, and competitive environments.
Detailed Analysis
1. Domestic Supply Chain Advantages Fail Overseas
Mixue’s ability to sell lemon water for 3 yuan and milk tea for 6 yuan domestically stems from its control over the entire production process: it owns raw material factories (such as those producing milk tea powder and fruit juices in Henan) and purchases in bulk to reduce costs, which it then spreads across its extensive store network to lower logistics expenses. This approach fails overseas:
- High Logistics Costs: Shipping raw materials from China to Japan, along with customs clearance and local delivery, is several times more expensive than domestically.
- Limited Local Purchasing Capacity: With fewer stores overseas, Mixue cannot purchase large quantities of ingredients (e.g., 100 tons of sugar at a time) to negotiate lower prices, and local suppliers are reluctant to provide discounts for small orders.
- Insufficient Production Capacity: Lacking self-built factories abroad, Mixue relies on imports or small local workshops, leading to unstable supply chains (for example, store closures in Vietnam due to ingredient shortages). As a result, overseas prices are higher than domestically, either reducing Mixue’s competitiveness or resulting in losses.
2. The Low-Price Strategy Is Not Appealingly Differentiated Overseas
While low prices are highly valued in China’s lower-income markets, they resonate differently in other countries:
- Japan: Consumers there prefer quality and experience; Mixue’s milk tea (around 10 yuan) is seen as inexpensive and not as appealing as local brands like CoCo.
- Southeast Asia: Local brands dominate the low-price market, with prices often lower than Mixue’s (e.g., 3–5 yuan for milk tea in Vietnam).
- Hong Kong: Consumers are more inclined to pay for trendy or distinctive products; Mixue’s basic offerings (lemon water, pearl milk tea) lack appeal.
3. Inadequate Localization Leads to Misfitting Products and Brands
Mixue’s success in China relied on its familiarity as a “national” milk tea brand, but overseas localization efforts were insufficient:
- Unsuitable Flavors: Japanese consumers prefer stronger tea flavors and less sugar; Mixue’s sweet, rich formulas (e.g., high-sugar mango-flavored milk tea) do not match local tastes. Vietnamese consumers prefer fresh fruit in their drinks, and Mixue’s pre-packaged fruit juices are of poor quality.
- Brand Recognition: Mixue’s marketing approach is not well understood overseas; it remains an unknown brand with no distinct identity.
- Service Mismatch: Japanese customers expect high-quality in-store services and elegant packaging, while Mixue’s stores are more convenient but lack this aspect.
4. Fierce Competition Overseas as a Latecomer
Mixue is a dominant player in China, but overseas it faces competition from established local and international brands:
- Southeast Asia: Local brands like Phúc Long and ChaTraMue have been in the market for decades, establishing strong customer bases and supply chains.
- Japan: International brands like Starbucks, CoCo, and Gongcha dominate the market, leaving Mixue with no distinct competitive advantage.
- Hong Kong: The market favors trendy and distinctive products; Mixue’s offerings lack appeal compared to popular brands like Hicha and NaiXue.
5. Rapid Expansion with Challenges in Overseas Management
Mixue’s fast expansion strategy using franchising models has encountered problems:
- Variation in Franchisee Quality: Overseas franchisees may not understand Mixue’s business model, leading to operational issues (e.g., poor cost control).
- Lack of Support from Headquarters: Mixue’s overseas operations lack comprehensive training and supply chain support.
- Compliance Issues: Different countries have strict food regulations; non-compliance can result in fines or store closures.
Conclusion
Mixue’s failure to establish a foothold internationally stems from blindly applying its domestic strategies without adapting to local market differences. To succeed overseas, it needs to reevaluate its approach, focusing on localized products and services that resonate with local consumers. For example, it should offer milk tea tailored to Japanese tastes or fresh, distinctive drinks in Southeast Asia. Milk tea is a highly localized business that requires adaptation to each market. Simply replicating domestic models is not enough.