Tailored strategies for each region, Chabaidao's determination to go global.

Since the beginning of 2023, Chabaidao has officially embarked on its overseas expansion. Surprisingly, instead of choosing Southeast Asia as its test field for going global, Chabaidao has set its first stop in South Korea - a new and challenging high-threshold market.

Localization has become the biggest challenge and determination for Chabaido. Facing the differences in overseas fruits, the unfamiliarity of local consumers with fresh fruit tea, and the world's most stringent testing standards, in order to maximize the restoration of the product's taste, the Chabaidao team has experienced particularly difficult difficulties before the opening of the global flagship store.

With many efforts, Chabaidao has quickly brought a stunning response to the South Korean market. Even some South Koreans specially fly from Busan to Seoul just to pack a few cups of Chabaidao. Beyond South Korea, Chabaidao's global strategy is also being gradually realized. Up to now, Chabaidao has opened 13 stores overseas, including 7 in South Korea, 2 in Thailand, 2 in Australia, and 2 in Malaysia.

And all the stories start with a mango.

Finding That Mango

A few days before the opening of the first store in South Korea, the Chabaidao overseas team almost went crazy for a mango.

As a classic and popular product of Chabaidao, Mango Sago with Pomelo is one of the core fruit raw materials, and its taste even determines whether a cup of Mango Sago with Pomelo is restored enough. Before the opening, Wang Huan, the overseas CEO of Chabaidao, has been looking for mangoes similar to those in Chinese stores in the local South Korean market. "We almost searched the entire market," but he found that only mangoes from Thailand are available in South Korea - Chinese Mango Sago with Pomelo never uses Thai mangoes, which are sweet but lack aroma.

The mangoes do not meet the standards, and the opening is imminent, with time being tight. At the same time, after a large number of South Korean consumers learned that Chabaidao is landing in South Korea, they spontaneously urged on social media, "When will you open? When will the Mango Sago with Pomelo come?"

This kind of expectation also puts great pressure on Wang Huan. If the mango cannot be found, the store cannot open. He found the R & D director and tried to coordinate. But Chabaidao has extremely strict requirements for quality control. "If we can't make a real Mango Sago with Pomelo, even if I put my phone number out to be scolded, I won't put it on the market," the R & D director's attitude is firm.

"Otherwise, let's not serve Mango Sago with Pomelo in South Korea?" The other party threw out an option to Wang Huan.

Wang Huan knows that Chabaidao is not Chabaidao without Mango Sago with Pomelo, but a not delicious Mango Sago with Pomelo is even less likely to represent Chabaidao. As the first stop of Chabaidao's going global, at that time, all eyes were focused on the progress of the first store in South Korea. When time pressure and principle bottom line are both in front of him, what Wang Huan can do is to try his best to find mangoes, even until the last moment.

Until the countdown to the opening, the team finally found an apple mango from South America. It has a moderate acidity, and when combined with sweetness, it will exert a good flavor. At that time, there were less than 48 hours left before the official opening.

The R & D department finally approved this mango, and everyone was ecstatic. But only Wang Huan himself knows the various tastes behind it. Before the opening, Wang Huan has been prepared to face the worst result. He even wrote a user apology letter with the title - Sorry, We Don't Have Mango Sago with Pomelo.

This is the story of the landing of Chabaidao's first overseas store in South Korea. Up to now, Chabaidao has opened 7 stores in South Korea. The seventh store, which opened at the end of November, has an area of nearly 170 square meters and is also the largest store that Chabaidao has opened overseas so far, similar in size to the standard store of Starbucks, which focuses on scene consumption.

Why Choose South Korea Instead of Southeast Asia?

Wang Huan observed that although South Korea is a coffee-consuming country, "iced Americano is deeply rooted in the hearts of South Koreans," but the local perception of milk tea still remains in the era of non-dairy creamer. The fresh-cut fruit tea represented by Chabaidao has a great first-mover advantage in products. In addition, there is no leading brand in the market. When Chabaidao landed in South Korea, the total number of local milk tea stores was only 2,000. In contrast, there are nearly 100,000 coffee shops in South Korea now. "We want to take one cup from the 2 - 3 cups of coffee that South Koreans drink every day," Wang Huan said.

Just avoiding the red ocean does not mean it is easy. Chabaidao has almost no previous experience to copy. What lies before it is a new and challenging high-threshold test. At the same time, the overseas team also made a rather bold decision - to choose Gangnam District for the first store. In the past, many tea drink brands would open their first store in the Chinese community, relying on domestic popularity to play a safe card for going overseas. But Gangnam District is different. It is a gathering place for high-end business districts in Seoul, with a majority of local residents. This also means that Chabaidao has set the most stringent test for itself at the first stop.

Since the first day of Chabaidao's going overseas, Wang Huan has known that localization is the most important and difficult part of going overseas. Making drinks that meet the local market demand and consumer tastes is one of the most important tasks of the team, and that mango is just the beginning.

In order to successfully achieve localization in the South Korean market, behind the scenes, Chabaidao has made many efforts tailored to local conditions - in terms of products, Chabaidao has 3 - 5 SKUs that are exclusively developed according to local preferences. Wang Huan remembers that the team once used Hallabong oranges to make drinks, which made South Korean consumers feel fresh and loved. In terms of naming, the team also racked their brains. For example, for Jasmine Fresh Milk Tea, Chabaidao named it "Mori Latte", which is more similar in pronunciation to the Chinese name, instead of using the pronunciation that is the same as "Jasmine" in Korean. Up to now, "Mori Latte" has become a category representative in South Korea.

It even includes the establishment of a tea drink maker training system. Going overseas is not only limited to the brand and products, but the acceptance of culture is also a subtle part. There are no real tea drink makers in South Korea, so Chabaidao decided to train a group of them and establish a professional tea drink maker training, examination and promotion system, which not only improves professional skills, but also makes the industry education and future standardization a step further.

"Now many South Koreans think that being a tea drink maker at Chabaidao is a very honorable thing," Wang Huan said.

"A Most Valuable Tea Drink Brand"

Chabaidao has quickly brought a stunning response to the South Korean market.

With local efforts, local consumers quickly accepted and fell in love with the category of fresh fruit tea. In the existing stores, the proportion of local South Korean consumers exceeds 80%. Many stores have long queues, and young South Koreans like to hold a cup of Chabaidao and take pictures in front of the store. Wang Huan remembers that even some South Koreans specially fly from Busan to Seoul just to pack a few cups of Chabaidao.

The Korea Daily Economic News commented on the sensation that Chabaidao has brought to the local area - a most valuable tea drink brand.

Behind this are the efforts of Chabaidao's overseas team. Overseas, facing the huge differences in regional culture, consumption habits and market environment, if Chinese tea drink brands want to establish their own barriers, they must become hexagonal warriors with comprehensive development in products, image, brand, supply chain, operation and organization, and none of them can be missing.

Among all the levels, the supply chain is the most difficult one. Currently, Chabaidao has chosen a cross-border + local strategy, with fresh milk and fresh fruits purchased locally, and packaging materials, frozen products and core raw materials relying on cross-border transportation. Relying on the scale purchasing of more than 8,000 stores in China, Chabaidao has a cost advantage that local brands do not have overseas.

And these packaging materials made in China, due to their higher quality than the local standards, have once made Chabaidao an educator in the South Korean tea drink market. When Chabaidao uses the three-channel tube in South Korean stores - a straw designed to be flat to reduce the flow rate of milk tea - many South Korean consumers have never seen it and mistakenly think it is a stirrer. "Every time we serve, we will tell the users that using the three-channel tube to drink fresh milk tea can better taste the tea and milk aroma, and we have to repeat this many times every day," Wang Huan said.

In addition, Chabaidao currently uses a double-layer hollow paper cup in South Korea, which is both heat-insulating and cold-insulating. "Even the local Starbucks does not use this."

Chabaidao now has 22 warehouse and distribution centers and 17 operation management centers in China, enabling it to quickly respond to the needs of global stores. In China, Chabaidao's current logistics capacity has achieved the unity of efficiency and three-temperature distribution. It can not only achieve the distribution capacity of twice or more per week for 97% of stores, but also achieve daily distribution in core cities. Overseas, following the principle of proximity, every day, the raw materials needed in South Korea will be sent from the Shanghai warehouse, while the Guangzhou warehouse is responsible for distributing the raw materials to the stores in Southeast Asia.

In addition to the supply chain, another important advantage of Chabaidao is its product R & D and innovation ability. The ability to launch new products is one of the core capabilities that differentiates new tea drink brands. Currently, 70% of Chabaidao's product formulas are self-developed, which not only increases the replication threshold of the products, but also deepens the moat of the brand's going overseas.

Chabaidao adheres to a policy of one country, one strategy. Every time it opens up a new market, it will look for and screen suitable candidates to become national partners. Wang Huan, who is currently the overseas CEO of Chabaidao, was previously responsible for the South Korean market. Wang Huan has lived in South Korea for more than ten years and has a deep understanding of the local tea drink market, and is also full of curiosity and enthusiasm for the Chabaidao brand. In 2022, Wang Huan actively approached Wang Xiaokun, the chairman of Chabaidao, and the two hit it off and decided to bring Chabaidao overseas.

Wang Huan said that except for product adjustments that need to be confirmed by the R & D department, in local marketing and operations, the headquarters has given a lot of delegation of authority, allowing overseas stores to respect local users and markets as much as possible. One example is that the visual exposure of Chabaidao in the past was almost confirmed and unified by the headquarters, but the South Korean store soon found that South Koreans who have never been exposed to fresh-cut fruit tea often mistake the counter display full of fresh fruits as a fruit store.

After communicating with the headquarters, the South Korean team made some local changes to the exposure. They made business cards for each fruit in the display cabinet and wrote "Starting from cutting fruits" in Korean. They also spent a lot of effort to show the process of product production to let local consumers understand what fresh-cut fruit tea is.

What impressed Wang Huan the most is still the food safety testing in South Korea. South Korea has the world's most stringent food and drug testing. The raw materials involved in the milk tea category are numerous and complex, and raw material contamination may occur in every link. Even products that pass the testing in the Chinese headquarters with South Korean standards may fail the testing due to the transportation process.

He described it as "the most tormenting period for the team". Later, the team found that except for the contamination problems caused by the objective environment, most of the raw materials used by Chabaidao in China almost passed the testing in South Korea at one time. "In other words, all the products that can be sold in Chinese stores today can be sold in the strictest South Korea. In fact, Chinese consumers are very fortunate."

The most tormenting process has resulted in the most inspiring result. Wang Huan still remembers that when Taro Balls passed the South Korean testing, everyone excitedly shouted collectively, "We can finally sell Taro Ball Milk Tea in South Korea."

Chabaidao's Overseas Expansion Steadily

"When we successfully enter a country with a high entry threshold with high-quality products, South Korea has a large number of Southeast Asian and European and American tourists every year. As long as we establish a foothold in this market, it will definitely have a catalytic and accelerating effect on the future internationalization," Wang Huan said.

Due to cost and competitive advantages, the currently opened stores in South Korea have obvious advantages in operating profit margin and investment return cycle. According to Wang Huan, the repurchase rate of consumers in South Korean stores has reached 45%, among which 18 - 35-year-old female users who pursue a healthy and low-calorie diet are the typical high-repurchase group of Chabaidao.

The long queues in front of Chabaidao stores have also attracted the attention of a large number of local South Korean franchisees. Up to now, the number of people queuing up to join has exceeded 300. Currently, all overseas stores of Chabaidao are directly operated. "Only after the business model and store model are fully operational will we consider franchising in sequence. In the selection of franchisees, we will pay more attention to the localization ability, hoping that franchisees can better understand the