The single biggest influence on the price of tea is how much money people in China are willing to pay for that tea. Imagine that instead of going to a store or buying tea online, you have to go to an auction every time you need to restock, but that auction was attended by 1.3 billion people all looking to buy. While exporters remove that step, essentially we all compete for tea, and to get tea up for sale outside of China we have to outbid the 1.3 billion people in the domestic market. To understand tea prices, it is crucial to understand how the Chinese market works, what people spend money on, and how their those domestic preferences change.

Tribute Tea: The Top Ten Famous Teas in China

China is the oldest continuous civilization in the world. Their records go back further than any others. An important part of those records is compiling lists- the most beautiful historical figures, the most livable cities, the best natural springs, and of course, the best tea. “Best of” lists were kept largely because of their connection to Imperial Tribute and the Chinese tax system. Emperors had the right to add something to their best of list. This meant that the producer would send a substantial amount of their craft, be it tea, jewelry etc, to the imperial city as tax payment.

If your village was chosen as a tea producer worthy of supplying the emperor, you would celebrate, because sending tea certainly beats conscripted labor, the most common way to pay your annual taxes.

Longjing Tea Mrs Li-7583
Mrs. Li near her home in Dragonwell Village

Was a tea chosen for taxes necessarily better than other teas? Absolutely not. Often, it was pure luck that an emperor tried the tea in the first place. Dragonwell Village is close to Hangzhou, one of the most important cities in ancient China, and a favorite imperial vacation spot was West Lake. It was not big effort to get a cup of Dragonwell in the hands of Emperor Qianlong. The wild tea forests of Qianjiazhai are far from civilization and off the radar. It is no surprise that Dragonwell made the list of famous teas while the pu’er from Qianjiazhai did not.

Master Han’s workshop in Qianjiazhai, 6 hours from “civilization”

The internet is littered with claims of businesses selling tribute teas, or such and such being in the top ten most famous tea list. In general, these claims have absolutely no relation to quality. Some regions simply haven’t grown tea long enough to get imperial endorsement. Laoshan Village didn’t start growing until after the communist revolution, so they missed thier window of opportunity.

Despite the somewhat arbitrary nature of imperial celebrity endorsement, Chinese consumers still pay a much higher premium to the endorsed and famous teas. The gravitas of history is very great. Before anyone thinks that it is foolish to base preference on imperial endorsement, let’s remember that teas have been made and broken by pop star and talk show endorsements here in the United States too.

Longjing Tea-7494
Mrs. Li’s Shi Feng Dragonwell

Tea Gifts & Guanxi

In China, much of the tea industry is fueled by gift buying. Of course people buy tea for themselves, but gifting beautiful decorative boxes of high-end tea has become an important part of government and business culture. Most often, gifts are given to establish connections, to build up favor and debts – these connections are commonly referred to as guanxi.

Cash bribes seem less and less tasteful to give out in the open, and tea has stepped in to fill that gap. If you look at tradition, what better gift to give if you are looking to leverage some influence but tribute tea? If it was good enough for an emperor, it must be good enough for your boss. The historical weight of presenting a gilded box of precious tea immediately evokes a village representative paying dues to those with power to protect the village from conscription. You couldn’t ask for a weightier statement.

simple tea gift packaging

For gifting purposes, it really does make more sense to find an officially endorsed tea. Why take a risk on something new? Everyone in China can immediately understand the personal cost you had to bear if you purchase a famous tea like Dragonwell. Less so with wild picked pu’er from Qianjiazhai or fresh Laoshan Green.

In a culture where tea tribute is still alive and well, add another complicating factor and we can really begin to understand how prices skyrocket. Government officials don’t use their personal salary to purchase tea for interdepartmental gifting. They use the “company card.” Officials above a certain rank can write a check that draws directly from the treasury of the department they oversee without oversight.

It is not at all uncommon for some of our friends in China to see a government official drop $40,000 US dollars in one visit buying the very top grade teas, and the gilded packaging that goes with it.

Some of the most desirable teas are Dragonwell, Tieguanyin, Wuyi Oolong and pu’er from one of the famous mountains and workshops. A couple of years ago, a farmer with a desirable plot in Dragonwell or Wuyi who was well-respected could charge over $5000 a pound for their first picking teas. As you can imagine, the intense competition to get your hands on the very best teas has direct implications for what you can buy as a consumer outside of China, and how much you have to pay to get it.

Near the center of Dragonwell, a tea company has erected a stone monumnet

Tea Branding: Factories vs Family Farms

At the very top are the famous workshops or factories in the famous ‘tribute tea regions’ that have put ad money into developing brands, and producing packaging worthy of giving the impression of imperial tribute. When people spend $5000 on a bag of tea, they want to know that it comes from a legitimate operation. A small farmer might have a better plot of land, and be better at their craft, but they can never charge the premium that a name brand workshop can charge.

Perhaps this, too, connects back to the idea of celebrity endorsement. The large companies produce stamps and seals for their tea packaging. They seek special icons from the local government authority or tea research institute to put on their package. They enter their tea in large scale competitions and win. Their packaging is adorned with these seals, these symbols of power. How can a small farmer compete with the overwhelming authenticity that is ensured by the logos of certifying bodies?  For the Chinese consumer purchasing mainly for gifting purposes, a small farmer cannot.

mr he field MVI_3607-11
Mr He looks over one of his tea fields

The real scandal at the heart of Chinese domestic demand is that most gift tea is never consumed. It is passed from person to person as a gift and eventually discarded. It is a symbol of value, a currency. To understand why the big brand names are valued in China requires understanding that the tea purchased is bought as an idea of value, not as a product intended for drinking. People in the industry in China know that tea from small farms is better, but that does not change where the majority of demand lies.

Satisfying Demand, at any cost

The overwhelming and unchecked market forces that can elevate a tea from $100 a pound to $5000 overnight leave a lot of debris behind them. If you look at which teas have become famous and most in demand outside of China, it is clearly the tribute teas,  preferably from the large workshops. It should be no surprise that only the most famous teas in China have made it out for drinking across the world. For most tea companies, it is easier to ride the name recognition of a tribute tea rather than build a name from scratch for an unknown village.

What it is important to realize as a consumer is that in a village like Dragonwell, there are only a couple dozen families with plots of land on Lion’s Peak (Shi Feng), and only so many producers even in the greater West Lake (Xi Hu) area. If Chinese consumers are snapping up Lion’s Peak Dragonwell at $5000 a pound, how much authentic Dragonwell do you think gets flagged for export? The majority of the Dragonwell being sold in America is being dishonestly marketed as real Dragonwell when it is not even from Zhejiang Province. Within the 1% that actually comes from the province, most of that grows saturated in air pollution from Hangzhou in “West Lake” region. Only a tiny fraction comes from the clean, spring-fed slopes of Lion’s Peak.

On the left, leaves near West Lake in Hangzhou. On the right, leaves near Mrs. Li’s home in Dragonwell

With such wild demand for brand name teas, and large factories that can buy certifications and seals from the local authorities, the temptation is enormous to make fake versions of tribute teas. How else can you satisfy demand? The big workshops know that much of the tribute tea they market isn’t even opened or consumed. This convergence of market forces almost guarantees that not only are most Chinese consumers getting fake, off-brand, and often polluted versions of famous teas, but certainly so are most consumers outside of China. Most tea sold as Tieguanyin isn’t even grown from Tieguanyin varietal tea. Usually it is the more robust and easier to cultivate Benshan varietal growing well outside of Xiping or Daping village.

Daping Tieguanyin Tea Leaves-7316
Tieguanyin varietal growing in Master Zhang’s fields

This is something to be truly concerned about. Companies across the world make claims that their tea is authentic this or that, tribute grade, precious and rare. Yet, how many of them even know who picked the tea? When standards and seals of authenticity are simply commodoties available at the right price, the connection that matters is the relationship of trust with real individuals who stand by their craft one hundred percent.  If a tea company cannot name the tea farmer or the supervising tea master, then they either don’t want to reveal the truth, or they just don’t know because they bought from a larger distributor and have to trust the distributor’s word. It is one thing to buy a knock-off Gucci handbag from a market. It is something else entirely to drink a knockoff. If your supplier doesn’t even know where your tea is from, how do you know it is safe to drink, let alone worth the price demanded?

Choosing Another Path

The intensity of a 1.3 billion person domestic tea market means that international tea companies like us a face difficult choices. The first choice would be to capitalize on the name recognition of famous brands and workshops, supplying their teas to the international market at a substantial markup, even knowing that they are may be fake or low quality substitutes. Sadly, this is the most common path. So many businesses feel that they must fill their catalogue with each one of the top ten famous Chinese teas or their collection won’t be complete. They want the variety but don’t have the sourcing infrastructure to support that kind of a collection.

The second option is to learn more about Chinese domestic demand and source outside of the most sought after brands. A lower price point is no guaranteed indicator of lower quality – it simply indicates that, for whatever reason, the intersection of the markets supply and demand curves is at a more affordable price. Quality can only be determined through tasting and smelling.

For example, the Chinese domestic market favors the top famous teas, and within those top teas, the domestic market generally seeks very light tea with extremely subtle flavor and a long sweet aftertaste. Flavor and body are secondary qualities of lesser importance. Complexity is not nearly as valued as purity of sweetness and grace of texture.


The Chinese palate dictates the price of these teas. We often find that the most rewarding and interesting teas to us and to our customers around the world often fall outside of the Chinese preference. For example, an ideal Chinese green tea should be almost colorless and flavorless, building only in its aftertaste with a pure, focused and unadulterated vegetal tone to contrast its natural sweetness. In contrast, we tend to enjoy green tea that has thick body, nutty undertones, more complexity and crisper texture. This actually works out in favor of our customers because Chinese domestic demand for these teas is lower. We are able to source hand-picked, high-elevation spring-fed tea harvested at the beginning of the season and carefully processed, but we can do so without competing with the domestic market. Truly authentic Dragonwell at the very top of the quality scale is exactly the same in leaf to bud ratio and hand labor demand as Laoshan Green, but we can source the He Family’s Laoshan Green for much less money.


Direct & Transparent Sourcing

Our goal in sourcing is to seek out farmers who are doing incredible work, but aren’t yet appreciated by the domestic market because their teas fall outside of the mainstream. Our friends in Laoshan and Master Han in Qianjiazhai are great examples of this. Two stand out counterexamples are Mrs. Li in Dragonwell and Master Zhang in Anxi. Mrs Li is a well-respected farmer in Dragonwell, cultivating her  family’s high elevation Lion’s Peak tea that is sought after by business officials. Her family has made enough money selling Dragonwell that they are semi-retired, living in a lovely home and driving a BMW. Mrs. Li still picks tea every season, but only in the spring – not the autumn. We met her while researching tea culture in China, and she was interested in supplying us as a cultural exchange. Every year, she allows us to acquire a small amount of her Dragonwell at cost. Her only request is that we share it. Mrs. Li is tired of all of the fake Dragonwell that ruins the Dragonwell name. As a matter of honor, she wants people outside of China to see what her village is capable of. She could sell to Chinese government officials, and she does in small amounts, but she chooses to work with us because of her pride in her tea. That exceptional circumstance allows us to source, if only for a couple months, tea that would normally be bought up for $1000 a pound, and share it with tea lovers.

Longjing Tea Mrs Li-7580
Mrs. Li of Longjing Village

For farmers like Mr He in Laoshan Village, they trust us not only to share their tea, but to help them make a name for themselves.  It is our duty to bring honor to Laoshan and to help people around the world respect what Mr. He’s village does, and we take that very seriously. The more people he can introduce Laoshan tea to, the better his family’s future, and the more secure and protected the tea growing region is from development. We have been selling Laoshan Green and Laoshan Black since we started, but they have taken years to catch on because they are outside of the familiar. Hidden gems like Laoshan, and the pride of people like Mrs. Li are what allow us to navigate around the monster of domestic demand without sacrificing quality or charging hundreds of dollars an ounce. This balancing act requires a lot of time in China, staff in China while we are in America, and years of building trust with farmers. It is an expensive and high barrier to entry way to business, but it is the only way that circumvents the pricing pressures of tea gifting in China.

mr he 1 MVI_3608-13
Mr. He in his tea fields

This means that we work with small farmers, or cooperatives like the Dongsa Cooperative in Qianjiazhai, whose incredible work and dedication to wild-picking and hand processing is often buried under the prejudice of the market for brand name pu’er companies and established well-marketed suppliers. It is a bigger risk for consumers to buy tea from a source with which they are unfamiliar. It takes trust in your suppliers, and that trust requires transparency.

Master Han with founding members of the Dongsa Cooperative, Master Zhou and Mr. Li

Partnership: Stability in a Volatile Market

The farmers we work with are grateful to have an audience that respects their tea for what it is – for how it taste, for how it makes you feel – not because of tradition or the whims of the gifting trends for the year. As new laws are passed banning the use of public funds for certain categories of tea buying, the tea market is more volatile than ever. The government will crack down on Dragonwell one year, so everyone buys Tieguanyin and drives up the price. The next year, they crack down on Tieguanyin, so Jin Jun Mei is used for gifting instead. Farmers that have always counted on the $5000 a pound premium for their most precious harvest are left surprised when the market collapses and their work cannot be compensated.

This volatility with anti-corruption crackdowns in the government certainly won’t eliminate the demand for premium product. The Chinese middle class and upper class continue to grow, and personal conspicuous consumption is more and more prevalent. In the short term, the volatility hurts tea farmers, even as the market readjusts. The farmers who have the most freedom to innovate and devote time to quality product are those who can collect a premium for their tea. Commodity tea doesn’t have the margin to give tea farmers breathing room when a market collapses.

Master Zhang in his Tieguanyin fields

Domestic demand in China has driven up prices for years beyond the reach of the international market, and fueled massive fraud and trickery with fake versions of high end and desirable teas being produced for export. Instead of disclosing the source for their teas, many international tea companies simply dress up the tea they sell with exotic, orientalist names to shroud the tea in sexy mystery. At the end of the day, this behavior hurts and stunts the market even more. Consider it: the average American consumer can go to a coffee shop and drink honestly-sourced coffee – they can have a conversation with the barista about the picking & roasting date, about which cooperative the beans are from. The same consumer goes to a tea shop and the standards of quality are so much lower, so murky and confused, that many are turned off of tea entirely. Our industry needs to raise our standards. Yes- it is more difficult to secure quality goods when you are outbid by Chinese consumers, but not impossible.

Daping Tieguanyin Tea Leaves Lily hand-7348 Daping Tieguanyin Tea Leaves Lily hand-7348 Daping Tieguanyin Tea Leaves Lily hand-7348 Daping Tieguanyin Tea Leaves Lily hand-7348

The farmers we work with need a stable international market. The volatile laws about tea buying effect them dramatically, making and breaking fortunes overnight. Our farmer friends and partner need to count on us to guarantee purchase of whole harvests. They can count on us to fund innovation and experimental new teas. They may not be able to count on those few pounds of tea sold for thousands of dollars, but if they can count on solid international partners, they can work to forge a better future for their children as tea farmers.  With solid partnership, they can carve out a sustainable living, whether they farm in a famous growing region or an unknown village.

International tea companies shouldn’t fight Chinese domestic demand. We need to be a stabilizing force in the market, funding innovation through our purchases for any farmers dedicated to quality and sustainability. We need to take risks on new people and help them build their own brands. We need to give tea farmers a reason to do more than produce commodity tea or tea that tailors exactly to gifting specifications. If we do not, we risk losing emerging tea regions to tourism, redevelopment and commodity products. Instead of thinking of Chinese consumers as competitors for the same tea, let’s widen our horizons and think of them as partners in supporting the broader industry, and together we can shape an industry that rewards passionate and dedicated farmers.


Read on for the final piece of our Transparency in the Tea Industry series!  – or start at the beginning for the full story.