There's change brewing in China. In a country steeped in millennia-old traditions of drinking tea, the younger generation in fast-developing coastal provinces is switching to coffee as part of their drive to embrace Western tastes.

As the legions of converts sip their trendy brews, coffee retailers from Taiwan are building up a major presence in the Chinese market, hoping to cash in by weaning more and more mainlanders off tea.

"Chinese tastes are constantly changing, which is especially clear in white collar workers aged between 20 and 40 who live in the fast developing cities," said Gao Youzhi, head of the business planning division of Taiwan's SPR Coffee.

When SPR opened its first store in the northern coastal city of Qingdao in May 2001, most of the customers were foreigners or people from Taiwan and Hong Kong, Gao said.

Since then, the firm has opened 87 more outlets and mainland Chinese customers now occupy half the seats in its stores he said. SPR's sole investor is Taiwan businessman Lee Chien-li, who has extensive real estate holdings in Qingdao.

Taiwanese-backed companies like SPR are among a growing number of foreign cafe chain stores entering the Chinese market including US based The Coffee Beanery, Japan's Manabe Coffee and the ubiquitous global market leader, Starbucks.

Taiwan investors hope to repeat the rapid growth of coffee consumption in their home market where local and foreign chains have proven a huge hit. Despite their common culture, coffee drinkers in China and Taiwan seek different experiences, forcing retailers to tweak their business plans. "In Taiwan, people prefer express stores where they can grab and go. But in China, they like to get a seat inside so they can buy a coffee and stay the rest of the day." said Jennifer Chien, investment relations manager for President Chain Store Corp.

President Chain-along with group flagship UNI-President Enterprises operates 38 Starbucks stores in Shanghai as part of a joint venture with the US coffee retailer. The venture aims to open five to ten stores per year.

Starbucks has 100 stores across China in separate ventures with President and local partners.

Making a visit worthwhile is important in Chain, considering the average cup of coffee at Starbucks costs about 20 Chinese yuan ($2.40), while the average monthly income is only around 1,000 yuan.

That's why the coffee retailers are staying close to where the money is. They are located in major cities along the east coast such as Shangai, Beijing and Guangzhou.

"We must be in markets which have a certain GDP and Shanghai has the highest GDP compared to other urban centres," said President's Chien referring to per capita gross domestic product.

Long term, the rewards could be huge for coffee retailers if they succeeded in weaning even a tiny percentage of China's 1.3 billion people off tea.

Per capita roasted coffee consumption in China is estimated at around a gram based on data from the International Coffee Organization (ICO), which promotes coffee around the world.

In Taiwan it is 300 grams per person, while Americans consumer an estimated four kilo grams per year. The ICO estimates domestic consumption in China is growing by 20 per cent a year.

Courtesy: The Indian Express 9th March, 2004.

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