How Will Kenya Set Up A Distribution Center In China With Falling Demand For Tea In Asia

Green grass field
Credit: Tea Creative │ Soo Chung

Kenya has ramped up strategies to increase its profit share in China’s booming black tea market by setting to open a distribution center in China’s Wuyishan region. Wuyishan is a famous place where some of the world’s most expensive teas are grown. These efforts have become necessary amid an increasingly dwindling demand for Kenya’s black tea in the Asian economy. 

According to trade statistics, “the value of Kenyan tea exports to China fell by more than a third last year despite the rising popularity of milk tea, which has increased demand for black tea leaves.” Kenya’s Export Promotion and Branding Agency (Keproba) is therefore looking at “a dedicated Centre for Kenya in Wuyi” as part of a strategy to help small- and medium-sized enterprises “get their footings in the vast Chinese market”. Keprobi revealed that “sale of tea in the world’s most populous country, just like other fresh produce, has been hurt by an internal market that has an inbuilt capacity for the supply of commodities and creation of demand for products produced in China.”

Business Daily noted that in 2016, Kenya’s shipments to China amounted to $1.77 million (Sh191.85 million), climbed to $2.5 million (Sh270.97 million) in 2017, and peaked at $4.81 million (Sh521.35 million) in 2018. The 2018 figure then dropped to $3.17 million (Sh343.59 million) in 2019. 

Competing For A Spot In China’s New ‘Gold Mine’

Due to the inability of China’s green tea to be processed to meet the increasing demand for creamy (milk) tea blends, recently, the country’s importation of black tea has skyrocketed. India, Kenya, Sri Lanka Pakistan, Egypt, the UK, Sudan, and Russia have become destination options for importing black tea into China. News reports indicated Sri Lanka exported a record 11.8 million kilos of tea to China in 2019, driven by the rising consumption of milk tea.  

Unfortunately over the years, Kenya has been able to fully take advantage of this booming black tea market in China. China is not among Kenya’s top 10 tea destinations.  It is therefore expected that strategic measures are put in place for the East African giant to benefit.  According to Business Daily, “a Chinese delegation from Fuzhou Benny Tea Industry Company and the China National Forest Industry Federation Ecological Tea visited Kenya in August last year to scout for deals for export of Kenya’s specialty tea.” 

Kenya Seeks To Penetrate China’s Market

As part of efforts to increase and boost exportation of its Agriculture products especially tea to China, Kenya wrote to China seeking to be provided with warehouses for Kenyan goods. The request was sent to the Chinese government through the Kenya Export Promotion and Branding Agency (Keproba), a State body mandated to market Kenyan goods abroad.

According to Keproba, the lack of warehouses for Kenyan goods to China has been one of the major impediments to trade between the two countries, Mwakilishi reported. Keproba’s CEO Wilfred Marube told Business Daily that “Kenya engaged China to provide warehousing facilities and once granted such facilities under developing country assistance programme,” adding that “these facilities would strengthen the distribution of Kenyan fresh produce, such as fruits, flowers, and vegetables that have high perish ability and require advantages of proximity for market circulation.”

It has long been established that for Africa and Kenya to bridge its huge trade imbalance with China, the continent can’t ignore the option of developing and taking strategic advantage of the Agriculture sector for exports. Kenya’s trade deficit with China is currently estimated at over 1.1 trillion shillings (11 billion U.S. dollars).  The country’s exports to China in 2017 were valued at $96.88 million, while it imported $3.79 billion in goods from China. 

How can Kenya better position itself to compete for the boon in China’s black tea market?

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