A Chinese boy visiting Shanghai from the US for summer break is enjoying "tea freedom," with drinks costing about 40 yuan less than in the US, offering more variety and faster delivery options. In contrast, New Yorkers queued for two hours for a Chagee Holdings Limited drink, making headlines, and in Seoul, flagship stores of the same brand in Gangnam sparked long waits, with some orders taking over three hours during peak times. This contrast highlights how Chinese tea brands, honed through intense domestic competition in product quality and value, are now going global, evolving from "product export" to "system export," with untapped profits overseas.

According to CBNData data, by the end of 2025, China had 478,000 milk tea shops, equating to one shop per 3,000 people. Domestic price wars have reached extreme levels: Chagee Holdings Limited saw its net profit margin drop from 18% to 12%, and new store openings fell 64% year-on-year in the third quarter of this year. While brand awareness and store counts rise, profits are declining, signaling an industry-wide shift. As domestic competition intensifies, brands are strongly motivated to seek growth abroad, where markets with low penetration offer "scarcity dividends." With limited brand supply, local consumers lack choice and haven't formed price-sensitive habits, enabling brands to set prices based on local supply and demand, free from domestic "floor price" pressures. Globally, Chagee Holdings Limited operates 345 overseas stores, yet its overseas GMV grew over 75% for three consecutive quarters, outpacing domestic growth. Higher prices have not dampened consumer enthusiasm, proving the commercial viability of selling more expensively and successfully abroad.

Chagee Holdings Limited benefits from advanced product iteration, supply chain, store operations, and digital capabilities honed through fierce domestic competition, which are still leading in many overseas markets. Tea is a highly standardized, easily replicable category with a light store model, naturally suited for international expansion. Growing global preference for tea over coffee offers a significant market gap. The US milk tea market, defined as a "developing market," grows at 9.1% annually, with potential for 5-10 times expansion, and no single brand holds over 5% market share, leaving the landscape unformed.

By 2026, at least 44 Chinese tea brands will operate nearly 15,000 stores overseas. The shift is from product and single-store experiments to system competition, encompassing product, supply chain, store SOPs, franchise systems, and digital operations. Brands are replacing product exports with brand exports, facing challenges like supply chain management, franchisee oversight, and capital management as stores multiply. Overseas expansion paths are becoming more layered: Southeast Asia offers realistic scaling due to proximity, similar habits, and established franchise ecosystems, while the US and Europe are brand heights and long-term must-enter markets for validating international capabilities and building global mindshare. The evolution from "provide a collection account" to "integrate store collections, franchisee splitting, supply chain payments, headquarters fund pooling, and currency management" indicates a shift from store competition to operational system competition, raising entry barriers.

In 2026, Chagee Holdings Limited will focus not on store numbers but on validating business models in key markets. In the US, consumers understand fruit tea and bubble tea but are unfamiliar with recent innovations. The entire business environment, including site selection, approvals, construction, labor, taxes, and supply chains, requires adaptation. Similarly, Southeast Asia's diverse countries vary in consumption, demographics, religion, and business rules, making it unwise to simply replicate proven Chinese products. Compliance is a major hurdle; the US franchise market, regulated by FDD, requires 1-2 years for applications. Some brands risk "first board, then ticket" through brand authorization, leading to penalties. In June 2026, Chagee Holdings Limited terminated authorization with five key stores in New York and Los Angeles, including four in New York that lost trademark rights via court injunction, with one near Columbia University deemed an unauthorized infringer.

The main challenge is managing multi-store, multi-entity, multi-payment, and multi-currency operations. Successful brands prioritize deep local product and organizational adaptation, not just translating menus, but redoing local consumer research, labor, site selection, and supply chains. They also front-load digital and financial infrastructure, designing accounts, collections, invoices, and reconciliation mechanisms from the first store batch. While tea brand globalization appears to compete on product and traffic, it fundamentally relies on supply chain stability. Brands adopt different supply chain strategies: Chagee Holdings Limited adopts a full-chain self-production model, with core materials produced in-house and global cold chain delivery, establishing local warehouses in eight countries. Others use a "dual-track supply" for tea bases and syrups from China, while localizing cups and straws. Some brands build regional warehousing networks, partnering with local giants like Sysco for core ingredients to reduce fresh fruit spoilage. Regardless of the path, the core principle is to calculate supply chain costs comprehensively, considering logistics, tariffs, storage, spoilage, and stability, as requirements change drastically from one store to one hundred. The goal is to create a global supply system that maintains product standards while leveraging local resources. Globalization is not about how many countries a brand enters, but whether it can establish a new, viable business logic after leaving its home market. This is the true math behind the "two-hour queue."