Trendy teahouse brand creates a stir

Chain founded by the daughter of China's Hotpot Queen is expanding abroad after receiving 100 million yuan in funding

Liao Weijia, the daughter of China's so-called "Hotpot Queen", is planning to expand her chic teahouse chain with the help of one of the country's major e-commerce players.

NenLyuTea, meaning tender green tea, has already whetted customers' taste buds with its trendy Starbucks-style outlets in Southwest China.

Recently, founder Liao announced she had received more than 100 million yuan ($15.6 million) in funding from Domking Holdings Ltd to help extend the brand's presence in China and overseas.

"With Domking's resources and experience in chain store management and e-commerce, NenLyuTea will get on a fast track to development," Liao said.

If the new investors are anything to go by, the expansion plans look certain to succeed.

Zhang Zetian, the newly wed wife of JD.com CEO Liu Qiangdong, is the main shareholder of Domking. Zhang, 22, is also known as Milk Tea Sister in China after a photo of her holding a cup of milk tea went viral online in 2009. She married to Liu, the founder of China's e-shopping giant, on Aug 8.

Domking's other major shareholder is Miao Qin, a former COO of McDonald's in China and previously CEO of the buffet chain Golden Jaguar. Miao and Liu both went to Shanghai's China Europe International Business School.

The collaboration with Liao, president of NenLvTea, will create an interesting business mix. She opened her first tea shop five years ago in Chongqing, known as the Hotpot City of China.

Liao is the only daughter of Hotpot Queen He Yongzhi, the founder and president of the Little Swan hotpot chain of stores, where she is vice-president.

Established in 1982, Little Swan is one of the most successful hotpot chains in China and has more than 300 stores worldwide.

Liao is now hoping to emulate her mother by taking NenLvTea nationally. She owns 10 branches, with seven in Chongqing and three in Chengdu. Six new stores will open by February next year.

"We plan to have 60 teahouses by the end of 2017, reach 100 in three years, and then go public," she says.

Liao also plans to sell tea products on JD.com. The two parties plan to sign an investment agreement this month in Chongqing.

"Domking will hold slightly more shares than us, but we are in charge of the management of NenLyuTea," Liao says. She is still the president and her American husband Joseph Ashizawa remains the CEO.

Due to the fierce competition and high operation costs in big cities, Liao will focus on the market in southwestern China before NenLyuTea expands to Beijing, Shanghai and Guangzhou.

She has the background to be successful. Liao went to the United States at 15 years old and later graduated from the University of Washington in Seattle.

After working at Wells Fargo, a multinational banking and financial services company, she met her future husband Joseph, who was an an aerospace engineer at Boeing. The couple moved to Chongqing to join the family business in 2008.

But like many second-generation children of China's entrepreneurs, Liao disagreed with her parents about how to run the family business. As a compromise, she stayed in Chongqing with her husband, but started a separate company, the NenLyuTea.

As an ancient drink in China, tea plays an important role in people's lives. Traditional teahouses are still extremely popular, but the country's younger set have fewer chic choices.

"We want to fill this blank market of the mid-ranged modern teahouses that meet the needs of young customers," Liao says.

Inspired by the coffee culture in Seattle, the hometown of Starbucks, she decided to sell tea in a modern and innovative way. Her team invented a method of making tea from coffee machines and a series of new drinks and products, such as as Teappuccinos.

The NenLyuTea chain combines Chinese elements with modern design, which offers a relaxing place for customers.

"Our first teahouse opened next to a Starbucks coffee shop," Liao says. "People used to think NenLyuTea was a foreign brand, too."

Nearly 70 percent of the customers are women, and about half of her clients are aged between 20 and 30 years old. "So far, most of my teahouses make a profit," she adds, saying that revenue of NenLyuTea reached 30 million yuan last year.

Miao, the Domking shareholder, is confident that the sector will continue to expand in the years ahead.

"Tea drinks have seen rapid growth across the world in recent years, but this ancient drink needs to be presented in a modern way," he tells Chengdu Economic Daily. "I believe China will be the leader in the global tea drink market."

Like her mother, who turned the Chongqing hotpot into a global business, Liao also has ambitious plans.

"Miao and I share the same dream: To bring Chinese tea culture to the world and become the pioneer of modern tea," she says.

In today's market, there are three types of teahouses. The top-of-the-range outlets are expensive and decorated with dark, vintage furniture. They provide only Chinese tea and the average cost per person is more than 100 yuan.

The second type of teahouse is more affordable. They are usually full of people playing poker and mahjong. The rest are those chain stores on the street, selling bubble tea.

"We young people want to find a quiet, modern and affordable place to have tea," Liao says. "But there are very few such teahouses in China so far."

Most of the Chinese teahouses lack the modern concept of design, brand building and management. "That's one of the reasons why they cannot grow bigger," she says.

All her teahouses are located in shopping malls. But in the future, NenlyuTea will expand to high-end residential areas and commercial districts.

"Our teahouses will be a convenient locations for people to meet," Liao says.

tanyingzi@chinadaily.com.cn