The fall in Pu'er tea prices has a positive effect; in the face of market chaos, we might as well make good use of it

Recently, a rent dispute involving tenants resisting rent arose at the Guangzhou Fangcun Tea Wholesale Market, the largest Pu'er tea trading center in China. Once again it lifted a corner on the chaos in the Pu'er tea industry, and at the same time sounded an alarm for Pu'er tea investors in Dongguan, where Pu'er storage volumes are enormous. Industry insiders generally believe that the dispute at the Fangcun tea wholesale market stems in one respect from the continuous decline in Pu'er tea prices.

It is said that Dongguan's tea-storing community numbers in the tens of thousands, that private tea collections reaching several thousand tons are not isolated cases, and that those measured in the hundreds of tons are also numerous. Many collectors have storage areas of several thousand cubic meters to over ten thousand cubic meters. At the same time, there are as many as several thousand tea shops dealing in Pu'er tea. The cold spell hitting the Pu'er tea industry is likewise jangling the nerves of many tea merchants and Pu'er tea investors in Dongguan. In the past, Dongguan had the fine reputation of being the capital of Pu'er tea storage; now it may have become the less pleasant-sounding “capital of Pu'er tea being locked up”. After several years of repeated speculation, this round of foam being squeezed out of Pu'er tea may not be short.

For the many investors and tea merchants in Dongguan holding large stocks of tea, selling at a low price and “taking a loss” is undoubtedly not the best choice, and choosing to sell off the tea in hand is not easy to accomplish smoothly either. So we might as well look at it from another angle: perhaps the fall in Pu'er tea prices is precisely a good opportunity for Dongguan's Pu'er tea industry to return to the right track.

⟦NL> First, the Pu'er tea speculation that began in 2005, driven by speculative capital, created no small bubble in Pu'er tea, which is prized the longer it is aged. While this let those who entered early make a fortune, it also planted a time bomb for the Pu'er tea industry. Through the money-making tricks of creating concepts, hoarding “chips”, driving prices up and selling off at highs, Pu'er tea speculators caused many market participants lacking experience in financial investment to suffer large paper losses. To unwind their positions or achieve profits, Pu'er tea investors need to trade time for “space”.

Second, as part of the tea industry, whether the Pu'er tea industry prospers is closely tied to market heat. Pu'er tea itself has considerable drinking value, and its character of improving with age along with its health benefits have also become the cornerstone enabling tea prices to stabilize at a certain level.

Many Pu'er tea investors are themselves lovers of Pu'er tea. Only during the stage when tea prices soared did they shift from collecting for drinking to collecting for investment. Only by not forgetting the original intention can one reach the end. Tea people who persist in collecting for drinking can “survive” the market's vicious speculation, and most of them will not suffer losses because of the market's violent fluctuations. Therefore, Dongguan, sitting on a large stock of stored tea, much of it quality tea from famous mountains and major brands, likewise gives Dongguan's Pu'er tea industry notable advantages. And in a period of low tea prices and low thresholds, it is clearly more suitable to cultivate the consumer base for Pu'er tea, advocate a Pu'er tea drinking culture, and innovate business models based on Pu'er tea consumption. This is what matters most for the Pu'er tea industry at present.

For example, recently a tea enterprise has combined the features of traditional tea shops and tea art houses, focusing on a new model of tea retail and immediate drinking experience. This is precisely using action to interpret the industry demand that “Pu'er tea should be drunk rather than hoarded for profiteering”. Only by reducing investment-oriented collecting and focusing on Pu'er tea research and development, market expansion, cultivation of the consumer base, building tea culture, and business model innovation can Dongguan's Pu'er tea industry return to the right track. Only by bidding farewell to the restlessness of price speculation and gimmick-mongering can Dongguan's Pu'er tea industry adopt a different “way of living” and develop better.