Overseeing the world’s largest tea industry with a gross output of US$23.4 billion (2016), China’s Minister of Agriculture Han Changfu wants Chinese tea producers to seize the window of opportunity provided by One Belt One Road (Obor) and increase export volume. Besides serving as a vehicle to promote traditional Chinese culture, China hopes to alleviate the industry’s overcapacity problem — supply is about 13% above demand. However, this is much easier said than done. Chinese tea export has been stagnant at least since 2010. The country’s tea export in 2016 was 328,000 tonnes, only 3,000 more than the previous year. Why is this happening?

Despite being the world’s number one tea exporter, China’s tea industry is oriented towards domestic consumption. In 2016, Chinese tea production was 2.35 million tonnes, with 14% exported.

There are 496 million regular tea drinkers in China, or 36% of the total Chinese population. Per capita, tea consumption has risen steadily in the recent two decades along with improvements in living standards. According to the UN Food and Agriculture Organization, between 2000 and 2002, annual per capita tea consumption was 0.37 kg. A decade later, that number nearly tripled to 1.04 kg. In short, China’s domestic market can absorb enough of the supply to keep most tea producers financially afloat.

Rising labor costs and unprofitable prices in overseas markets are other factors keeping Chinese tea merchants from heading abroad. Tieguanyin, a premium variety of Chinese oolong tea, is priced at 133 yuan per kg in Russia — the world’s top tea importer. But the same variety can be sold many times higher on the domestic market.

Rising labor costs in recent years add to the concern. Urbanization is reducing the number of available workers in hilly villages where most tea plantations are found. Depending on the location, a day’s earnings is about 200 yuan for most tea plantation workers, who on average pick 10 kg of fresh leaves that weigh 2 kg after drying. Processing and packaging will add another 50 yuan. Not to mention shipping costs and customs duty. The unit price for a kg of quality Tieguanyin should be at least 250 to 300 yuan. Export, therefore, is an unprofitable, even loss-making business.

China’s tea industry has received some very bad press in recent years. In 2012 and 2016, Greenpeace released damning reports on banned pesticide residue discovered in exported Chinese tea. Although subsequent academic studies concluded pesticide residue hazards were below the safe limit, irreparable damage to Chinese tea’s reputation was already done. Before 2006, only a few state-owned enterprises were allowed to export tea, and they did not pay attention to developing a global brand synonymous with quality. The fledging Chinese brand-building effort was seriously frustrated.

Culture conditions consumer preferences, which in turn shape the types of goods supplied. This especially rings true in the food and beverage industry. Tea consumption habits in China and the Confucian cultural sphere are very different from the rest of the world — leading to an industry that caters to the distinct Chinese taste. While Chinese tea drinkers sip their loose leaf in a relaxed manner, the rest of the world prefers to brew a quick and easy tea bag. The Chinese value the natural color, aroma, and taste of their tea. But elsewhere in the world, people add condiments such as milk and sugar to obscure these natural characteristics. While the Chinese favor green tea, which constitutes around 60% of annual production, other countries overwhelmingly opt for black tea. In a nutshell, it is hard for a domestically oriented industry catered to a particular taste to suddenly change direction.

While it is easy for the Minister of Agriculture to wax lyrical about the need for Chinese tea to “penetrate broader and deeper into the world,” the reality on the ground is much more complicated. At the moment, it makes more sense for Chinese tea producers to “stay home” than “go out.”