Chinese tea chains expand presence in coffee-loving Korea

A Chagee store in China / Courtesy of Chagee

HONG KONG — Chinese tea brands are accelerating their expansion into Korea, driven by intensifying competition at home and rising demand for healthier beverages in a market long dominated by coffee.

Chagee, known for its milk tea and branding inspired by traditional Chinese culture, said it planned to open three stores in Seoul in the second quarter, marking its first expansion into East Asia outside China.

The company operated 7,338 teahouses as of last September and has built a significant presence across Southeast Asia, including Indonesia, Malaysia, the Philippines, Vietnam, Singapore and Thailand. In the third quarter of 2025, its overseas gross merchandise value rose 75.3 percent year-on-year to 300.3 million yuan ($43.6 million), according to its latest available data.

More Koreans, aided by Beijing’s visa-free policies, are traveling to China where they become familiar with tea-based beverages infused with fruit, juices, vegetables and dairy products, prepared freshly on site.

Choi Yong-hee, a graduate student based in the university district of Sinchon in Seoul, where Chagee plans to open one of its outlets, is among those consumers. He first encountered the brand during a family trip to Shanghai last October.

“What I liked about Chagee was that the milk tea wasn’t too strong and was fragrant, making it easy to enjoy. I haven’t been able to find milk tea like this in Korea,” Choi said. “I’m glad I can have it more often now.”

Korean tourists pose in Yuyuan Garden in Shanghai, Jan. 6. Xinhua-Yonhap

Social media is fueling the trend, with users sharing menu recommendations and reviews. Google Trends data shows that searches for “Chagee tea” in Korea have risen 110 percent over the past three months.

For years, Taiwan’s Gong Cha dominated Korea’s milk tea market. Founded in Kaohsiung in 2006, the brand entered Seoul in 2012. In January 2017, Gong Cha Korea acquired its Taiwanese parent company, making the brand Korean-owned. As of 2024, it had 836 outlets nationwide.

In a market where coffee has long held overwhelming popularity, no tea brands have achieved comparable success beyond Gong Cha.

However, tea-based beverages are gaining ground as a healthier alternative to coffee for Koreans, analysts say, and Chinese tea brands are looking to capitalize on the trend.

Auntea Jenny, a bubble tea chain founded in Shanghai, registered its franchise operations in Korea last month, a necessary step before launching franchising stores, local news agency Newsis reported. The company opened its first Seoul store in October.

Another industry player, Chabaidao, entered the Korean market in 2024 and now operates around 20 stores, while rivals HeyTea and Mixue have reached six and 14 outlets, respectively.

People drink coffee at a cafe in Busan in May 2025. Korea Times photo by Lee Han-ho

Analysts said the push into Korea reflected a broader Asia-Pacific expansion drive as China’s “new-style tea” market becomes increasingly saturated.

Shanghai-based consultancy Triunity said in May that annual growth in the sector slowed from 44 percent in 2023 to 19.7 percent in 2024, and was projected to fall to 12.4 percent in 2025.

The Chinese brands have already built momentum in Southeast Asia, their first overseas market due to geographic proximity and stronger acceptance of Chinese labels. Mixue and Chagee expanded their store networks in the region by 80 percent between 2019 and 2024, according to a July report by Euromonitor International, while both identified Southeast Asia as a key growth driver in initial public offering filings.

The playbook — rapid expansion in prime retail locations, competitive pricing, introduction of localized flavors and leveraging celebrities to drive awareness on social media — has proved effective and is now being replicated in other markets, according to Moqian Sun, founder of marketing and consulting strategy firm The Harvest.

“Consumers across APAC are already highly receptive to tea-based drinks, which makes it easier to replicate proven business models,” Sun said.

However, long-term success would depend on how well brands localized their offerings, as well as their ability to manage supply chains and maintain consistent store quality, she added.