The Great Wall of Milk Tea: Why Chinese F&B Brands in Southeast Asia’s Are Built Different
A quiet revolution is unfolding: Chinese F&B brands are taking over Southeast Asia.
Between the golden arches and green Starbucks sirens, a new army of brands has emerged—from Yunnan, Zhengzhou, and Jianyang. With names like Chagee, Mixue, and Haidilao, Chinese food and beverage brands have embarked on one of the most aggressive and successful international expansions in modern retail history. This isn’t just rapid growth—it’s a masterclass in strategic market entry, cultural adaptation, and operational excellence forcing established chains to rethink their playbooks.
Extraordinary Expansion Pace
Mixue opened its first overseas store in Hanoi in 2018 and has since exploded to over 4,000 stores across 11 countries. Haidilao, the premium hotpot chain, began internationally in 2012 and now operates 115 locations in Singapore alone.
Bubble tea newcomers like Chagee have captured younger demographics with trendy, Instagram-worthy experiences and strategic celebrity partnerships—inviting K-pop stars like I-DLE’s Minnie to grand openings, creating massive buzz with fans waiting 7 hours in the rain. This demonstrates how these brands masterfully leverage pop culture for viral marketing moments.
While other chains typically test markets cautiously over years, Chinese brands scale across multiple countries simultaneously, suggesting a fundamentally different strategic approach.
The Hidden Trade Advantage: ACFTA
Behind the rapid expansion and aggressive pricing lies a powerful but overlooked advantage: the ASEAN-China Free Trade Agreement (ACFTA). This trade framework, implemented in 2010, has fundamentally tilted the competitive landscape in favor of Chinese brands.
Before ACFTA, Chinese goods faced an average 12.8% tariff entering ASEAN markets. After implementation, this plummeted to just 0.6%—a 95% reduction applying to 7,881 product categories covering 90% of traded goods. For Chinese F&B brands, this means virtually everything they need—tea leaves, fruit concentrates, packaging materials, equipment—can be imported from China at near-zero tariff rates.
The Cost Structure Revolution
Consider the mathematics: A brand like Mixue importing $100,000 worth of supplies monthly would have paid $12,800 in tariffs before ACFTA. Today, that cost drops to just $600. This $12,200 monthly saving can be passed to consumers through lower prices or retained as profit margin—either way, it creates an insurmountable competitive advantage.
Meanwhile, European or American chains importing similar supplies still face standard tariff rates, making their cost structure inherently less competitive.
Strategic Supply Chain Mastery
Chinese F&B brands exploit these advantages strategically. Many maintain centralized production of concentrates, syrups, and key ingredients in China while establishing local preparation facilities in ASEAN markets. This hybrid approach optimizes cost efficiency and quality control while maximizing ACFTA’s tariff reductions.
With China-ASEAN bilateral trade reaching $722 billion in 2022—nearly one-fifth of ASEAN’s global trade—the shipping routes between China and Southeast Asia operate at massive scale, driving down per-unit logistics costs. Chinese F&B brands get preferential access to some of the world’s most efficient trade corridors.
Competitive Pricing Power Unleashed
These structural advantages translate directly into pricing power that reshapes entire market segments. While a Starbucks coffee costs $7-10 in Singapore, Chinese bubble tea brands offer comparable quality and experience for $2-3. This isn’t just efficient operations or lower labor costs—it’s the compound effect of systematically lower input costs across every aspect of their supply chain.
The Takeaway
Chinese F&B brands in Southeast Asia have combined viral marketing, cultural adaptation, and strategic trade advantages to create an unprecedented expansion model. Their success demonstrates how understanding and leveraging trade frameworks like ACFTA can create sustainable competitive advantages in international markets.
At Vintage Management, we offer consulting services to people who want to expand their businesses while staying on the right track, like the Chinese F&B brands mentioned in this article. If that’s you, contact us for a private discussion.
