Can a zealous teahouse chain be China's answer to Starbucks?

In the global race to dominate the lucrative beverage market, coffee has long reigned supreme. Starbucks turned a simple cup of java into a cultural ritual, building an empire on a caffeinated lifestyle.

But in China, a challenge is rising – not from beans, but from leaves.

Meet Chagee, or Bawangchaji in Chinese. It's a new-style brand that's reinventing traditional tea culture for the modern age. And with its successful debut on April 17 on New York's Nasdaq exchange, the brand is brewing ambitions that stretch far beyond its home turf.

Founded in Yunnan in 2017, Chagee is no ordinary milk tea brand. It calls itself a "new-style tea beverage brand," but that barely scratches the surface.

Think: part premium teahouse, part boutique coffee shop, part minimalist lifestyle label. Its sleek stores, uniformed staff and curated menu evoke a sense of deliberate design, a familiar echo for anyone who's stepped into a Starbucks Reserve outlet.

The marketing strategy is working. Chagee has expanded at a staggering pace, operating 6,440 teahouses by the end of 2024, including outlets across Southeast Asia. In the prospectus for its initial public offering, the company reported 2024 net revenue of 12.41 billion yuan (US$1.7 billion), with net profit surging 213 percent from a year earlier. These are numbers that investors and even the biggest names in the coffeehouse industry can't ignore.

Chagee's IPO in New York is the largest US listing for a Chinese consumer brand since 2021. The company raised about US$411 million by selling 14.7 million American depositary shares priced at US$28, the top of the expected range. In their trading debut on Thursday, the shares (ticker symbol: CHA) ended the day at US$32.44, valuing the company at about US$6.2 billion. The market was closed on Friday for a holiday.

Chagee isn't chasing Starbucks by accident. Its brand strategy is intentional and tight. Instead of seasonal gimmicks, it focuses on a limited lineup of just 19 core beverages – mainly brewed milk teas made with real tea leaves. Three signature drinks alone account for over half of its sales. This "do-a-few-things-but-do-them-well" model recalls Apple marketing more than that of bubble tea competitors.

But Chagee's secret ingredient may be cultural storytelling.

The name Bawangchaji is a nod to the Peking Opera classic "Farewell My Concubine." The logo features a huadan, an archetypal female character traditionally played by a male actor in times gone by. The storytelling branding is a bit reminiscent of the Starbucks, which took its name from a character in Melville's "Moby Dick" and drew its logo from the mythology of sirens whose sweet songs lured sailors to shipwreck.

Chagee outlet interiors balance East Asian aesthetics with restrained modern touches. It's a branding steeped in identity and one that resonates with younger consumers who crave both global style and local soul.

That cultural confidence may be its biggest edge, or its biggest test, as it pushes abroad. So far, it's found a firm footing in Southeast Asia, where tea culture is familiar. But its sights are now set on the ultimate prize: the US market. Chagee has said that it plans to open its first US outlet in a Westfield Century City mall in Los Angeles later this spring.

That won't be easy. In America, tea has yet to become a common lifestyle choice; it's still mostly seen as either a wellness drink or a coffee alternative. Chagee will have to do more than serve good tea; it must redefine what tea means to a Western audience. That involves educating consumers, building new rituals and tweaking formats without losing its essence.

Fortunately, the timing might be ideal.

For starters, there are now about 4.7 million people of Chinese descent living in the US, according to the latest census estimates. And Gen Z consumers in the US, no matter what their ethnicity, are globally tuned-in, visually driven and authenticity obsessed.

Chagee's minimalist aesthetics, photogenic packaging and cultural backstory are tailor-made for the Instagram age. And its price point, akin to Starbucks, positions it as an accessible luxury.

Still, the challenges are real. Competitors like HeyTea and Nayuki are expanding globally. Coffee chains like Luckin are undercutting on price. And Chagee's reliance on a few star products, while efficient, leaves little room for error if trends shift quickly. Innovation will be key but so will discipline.

There's also geopolitics to consider. A Chinese consumer brand going public must contend with regulatory scrutiny and shifting public sentiment abroad. For Chagee, exporting tea means exporting culture. That requires translating not just flavors and names, but also rituals and values. Western consumers prize speed and convenience. Chagee offers ceremony and meaning. Can the two meet in the middle?

Yet what Chagee offers is genuinely new. For decades, global beverage trends have been stuck in remix mode – more caffeine, less sugar, new syrups, same game. Chagee's proposition is different: tea not just as a drink but as a narrative of heritage, bottled, branded and made shareable.

What makes Chagee compelling isn't just what it sells; it's what it stands for. In an era where consumers seek experiences with depth and design, Chagee sells a taste of modern China that is confident, stylish and steeped in tradition.

If Starbucks can successfully export American coffee culture to the world, why can't Chagee do the same in reverse and make Chinese tea culture cool?

The brand may still be writing its early chapters. But the question is no longer whether Chinese tea can go global. Rather, it's who will lead the charge. And Chagee may be well positioned to do just that.

(The author is an adjunct research fellow at the Research Center for Global Public Opinion of China, Shanghai International Studies University, and founding partner of 3am Consulting, a consultancy specializing in global communications. He has no conflict of interests to declare.)