20200625 Dragon Spring Tea

What is This Like?

      I would not address the format of Taiwan's tea market as industry.  Instead, I would say it is just some kind of business.  My reasons are as below:

1. It does not have a standard operations procedure (SOP);

2. Its pricing mechanism is not transparent;

3. Many of its tasks can be mechanized and automated but have continued being rejected;

4. Tea masters are like artists instead of business persons;

5. Wage-paying logic on the farm and factory is by old time standard;

6. Pricing logic is based on the old-time cost-plus-profit formula.

      Because people are not pursuing industrialization, the tea sector of Taiwan is labor intensive.  Moreover, it has poor efficiency.  For example, taking care of tea farm needs labors.  Collecting matured tea leaves needs labors.  Manufacturing rough tea leaves into well-done tea needs labors.  Moreover, interacting with buyers either distributors, corporate buyers, or individual customers needs labors.  After all, I believe there are way more than necessary labors on the production/supplier's side.

      I make such judgement based on the principle of affordability.  Eventually, there are too many people in Taiwan's tea sector than it can sufficiently support economically.  In 2018, annual revenue of  Taiwan's tea related market is about 2.83 billion US dollars.  Bubble tea consists $1.16 billion, convenience stores and supermarkets tea sales consist of $0.83 billion, while specialty tea consists of the remaining $0.84 billion.  There are 25 thousand tea farming families in Taiwan.  Just looking at the specialty sector, each family only gets a share revenue of $33,400 in average.  Costs for labors and all other expenses are not yet subtracted.  As for the bubble tea sector, we know that raw materials only cost 17% of the price.  But tea is not the only raw material.  Thus, we can assume that cost of tea will not exceed 10% of the price.  Similarly, we can figure out that the share of revenue farmers get from convenience stores and supermarkets is also likely to be very low.

    

      Under these circumstances, many tea farmers in Taiwan are like facing a dead end.  The overall situation could be like a prisoner's dilemma.  There are resolutions and there must be a way out!  However, "unknown" and "uncertainty" are keeping most of the tea farmers under struggle pursuing different approaches.  I believe  there are only few whom really don't know what to do.  Most of them do but they just don't want to change their minds.  Or I should say they don't want to take risks investing in new approaches either mechanization or international marketing.

      In summary, there are many issues to be considered and evaluated for pursuing mechanization and international marketing for Taiwan's tea sector.  Necessity and capability are the first two issues that must be taken care of.  And there are more to look into.  Let's look over these topics next time.

A Story has Two Sides

      A story has tow sides.  Actually sometimes even more.  It all depends on how we look at things!  There are positive thinking, negative thinking, and others.  What I want to talk about is the situation of the tea business sector of Taiwan.

      Taiwan is an island located on West Pacific Ocean.  east to China, north to the Philippines, and south to Japan.  Moreover, the acreage of Taiwan is about 10% of Japan and Germany, and about 9% of California.  For the rest factors of Taiwan please search online.

      Instead of talking way back to the mid 19th century and talking about history, I will go straight to my topic this time and leave the history for some other time.  Briefly speaking, descriptions about the situation of the tea business sector of Taiwan are: 

1. mess of products and breeds;

2. nearly unregulated pricing;

3. dispersed of tea gardens;

4. weak bargaining power;

5. small scale of producers and most distributors; and 

6. Income below overall average line.

      Honestly speaking, these descriptions I listed seem quite negative.  I suppose that people making those descriptions believe in economy of scale and competitiveness.  I'm not against those viewpoints but I'm just wondering that if there are other resolutions for us in 2020 under a mobile age?

      For instance, would planting several kinds of tea trees more or less promote biodiversity and benefit the environment in all?  Second, shall we just leave the price checking tasks for each individual instead of investing resources in tea market regulation?  After all, specialty tea is not standardized and is very difficult to regulate.  Third, making tea gardens next to each other is artificial and nearly impossible.  Fourth, if we believe in mutual benefits, there is no need to bargain.  Fifth, there must be ways for small scale businesses making good profits.  It just takes time to discover.  Finally, perhaps we have emphasized too much on the importance of income.  Money is not the only income.  There are more and many are psychological!

      In the end, I have been working on finding the resolutions for our situation.  Hopefully, I can find my answers with you soon!