Bursting of milk-tea bubble bringing out all of China’s wrongs

PEOPLE still spend money on small indulgences during economic downturns. If Chanel lipstick is the go-to item for women, milk-tea drinks are soothing China’s urban youth, who are dealing with stubbornly high unemployment.

Freshly made milk-tea shops are just about on every street corner across the country. Some concoctions are essentially milkshakes with chewy tapioca pearls, or bubbles. Others may have fresh fruit added to the brew. Customers can choose green, black or herbal tea, and the topping – whipped cream or cheese – among others. Last year, there were about 420,000 stores nationwide, generating 247 billion yuan (S$45.9 billion) in sales.

Equally impressive is the flood of venture capital that has gone into the brands, making their founders, who often started out as humble street vendors, paper billionaires, or at least millionaires many times over. Shenzhen-based Heytea, favoured by the likes of IDG Capital and Hillhouse Investment, was valued at more than 60 billion yuan in 2021. Last year, Sichuan Baicha Baidao Industrial, owner of the third-largest chain Chabaidao, raised 970 million yuan. It went public in Hong Kong in April, pulling in more than US$300 million.