Chinese milk tea chains push into South Korea's coffee-saturated market

A woman sipping milk tea Getty Images Bank — A woman sipping milk tea/ Getty Images Bank

SEOUL, September 1 (AJP) - South Korea has long been known as a “coffee republic,” with one of the world’s highest concentrations of cafes per capita. But a wave of Chinese milk tea brands is challenging that dominance, betting that young Korean consumers are ready for a new kind of drink culture.

ChaPanda, a fast-growing Chinese beverage chain listed in Hong Kong, disclosed last week that South Korea had become its largest overseas market, accounting for nearly half of its more than 40 international outlets.

Since opening its first Seoul store in January, the company has expanded quickly into trendy districts like Gangnam and Hongdae, and even to Jeju Island.

ChaPanda, which operates 8,444 stores in China, has made South Korea a cornerstone of its broader push into markets including France and the United States.

Mixue, China’s biggest bubble tea chain by store count, has also opened more than 10 locations in Seoul, concentrating on university districts. The company runs over 53,000 outlets worldwide — 48,000 of them in mainland China — and reported $2.09 billion in revenue in the first half of this year, up nearly 40 percent from a year earlier.

Premium players are also eyeing the Korean market.

HeyTea has established shops in Gangnam, Myeongdong and Hongdae, part of a global network of more than 100 overseas locations. Chagee, another high-end brand and the first Chinese milk tea chain to list on Nasdaq, announced plans to enter South Korea soon. It already operates more than 7,000 stores worldwide.

The international rush reflects limits at home. China’s once-booming milk tea industry is now saturated, with thousands of outlets crowding cities and margins narrowing.

Seeking new growth, companies are turning abroad — and finding opportunities in markets like South Korea, where younger consumers are increasingly receptive to Chinese lifestyle brands, helped along by a recent surge in bilateral tourism after China eased visa restrictions.

Still, analysts caution that success is not guaranteed. Building brand awareness may be easier than building reliable supply chains, especially for drinks that depend on imported tea leaves, fruit and dairy.

The state-run China Securities Journal noted that ensuring ingredient quality overseas remains one of the biggest risks to the industry’s global expansion.

Kim Dong-young davekim0807@ajupress.com