Okay, folks, buckle up because we’re about to dive into a story that’s as refreshing and invigorating as a perfectly brewed cup of tea – and trust me, in China, tea is serious business. We’re talking about CHAGEE, or 霸王茶姬 in Mandarin, a name that might sound a bit like a royal decree mixed with a caffeine kick. And guess what? This tea titan from the East is setting its sights on the West, specifically the good ol’ US of A, with a planned IPO on the American stock market.
For those of you who haven’t been keeping tabs on the ever-evolving beverage scene in China, CHAGEE is not just another bubble tea joint. It’s a phenomenon. Born in the southwestern province of Yunnan, known for its breathtaking landscapes and, you guessed it, exceptional tea, CHAGEE has exploded onto the scene, becoming a major player in China’s fiercely competitive “new tea” market. Think of it as the Starbucks of tea, but with a distinctly Eastern flair and a story that’s as compelling as the brew itself.
Now, you might be thinking, “Another tea brand? What’s the big deal?” Well, hold your horses. This isn’t just about tea; it’s about ambition, grit, and a founder’s journey that reads like a modern-day fairytale, or perhaps a “rags to riches” story straight out of a Hollywood script, maybe even a Chinese version of “The Pursuit of Happyness.” And with CHAGEE filing for an IPO in the US, it’s clear they’re not just aiming for a local splash; they’re going global. So, let’s steep ourselves in the story of CHAGEE, explore its meteoric rise, and understand why this Chinese tea brand is about to test its mettle on Wall Street and potentially charm American palates.
From Yunnan Backstreets to Nasdaq Dreams: The Unlikely Rise of Zhang Junjie
To truly understand CHAGEE, you have to understand the man behind the brand, Zhang Junjie (张俊杰). His story is far from your typical corporate boardroom origin story. It’s a narrative etched with hardship, resilience, and a relentless drive to succeed against all odds. Imagine someone with a background so challenging it makes your daily commute seem like a walk in the park. That’s Zhang Junjie.
Born in Yunnan, Zhang’s early life was marked by profound adversity. Tragically, both his parents passed away when he was just ten years old. This devastating loss threw him into a world of instability, and for seven years, he lived as a wanderer, navigating the streets and facing the harsh realities of life without a family or home. This period of his life, from the age of 10 to 17, was a stark lesson in survival, a far cry from the structured education and family support that many of us take for granted.
Incredibly, by the time he reached 18, Zhang was functionally illiterate. In a nation placing immense value on education, and in an era where literacy is almost universally expected, this was a significant hurdle. Yet, instead of succumbing to his circumstances, Zhang saw this as a challenge to overcome. At the age of 17, seeking a path forward, he began working at a chain tea shop called “Da Wei Milk Tea” (大维奶茶). It was here, amidst the clinking of cups and the aroma of tea leaves, that his life began to pivot.
Working in the tea shop, Zhang was confronted with his illiteracy daily. Menus, recipes, order sheets – everything was a jumble of incomprehensible characters. Driven by a fierce determination to not be held back by his lack of formal education, he began to teach himself to read. He would arrive at the shop earliest and leave latest, dedicating himself to mastering pinyin, the romanization system for Mandarin Chinese, and painstakingly learning to recognize characters, all in order to perform his job effectively.
His dedication and work ethic were undeniable. Starting as a humble shop assistant, Zhang’s capabilities quickly became apparent. He rose through the ranks, demonstrating a knack for operations and management. From shop assistant, he became a shop manager, then a regional supervisor, and eventually a regional operations manager for Yunnan province. He was learning the tea business from the ground up, mastering every role from serving customers to managing staff and overseeing regional operations. He absorbed knowledge like a sponge, compensating for his lack of formal schooling with practical experience and an insatiable thirst for learning.
After three years of dedicated service, an opportunity arose. A struggling franchisee of Da Wei Milk Tea was looking to sell their shop. Zhang, despite lacking substantial capital, saw potential. He negotiated a deal, offering a slightly higher price than the asking rate, but with the condition of deferred payment – a testament to his persuasive abilities and the trust he had built. He scraped together what little savings he had and took over the struggling tea shop.
The shop’s poor performance was largely due to its less-than-ideal location. Undeterred, Zhang devised innovative solutions to overcome this challenge. Recognizing the untapped potential of delivery, he pioneered a localized delivery system before the advent of major online platforms. He printed flyers and distributed them to nearby businesses, residential buildings, and offices, advertising phone orders and promising prompt delivery. He also ingeniously partnered with a small store near a local elementary school, a high-traffic area for students. Initially met with resistance, Zhang convinced the store owner to try selling 50 cups of his tea on consignment, promising to take back any unsold cups. By lunchtime, all 50 cups were sold out. The next day, the store owner requested 100 cups.
Under Zhang’s management, the once-failing tea shop was revitalized, achieving daily revenues of 8,000 to 9,000 RMB – a significant turnaround. This venture became his first pot of gold, earned through sheer hard work, street smarts, and an entrepreneurial spirit that refused to be quenched. He had proven to himself that he could not only survive but thrive in the competitive world of business.
While successful, Zhang’s ambitions extended beyond running a single franchise. He envisioned creating his own tea brand, but contractual obligations and relationships with Da Wei Milk Tea hindered this. He then took a detour, joining a robotics company in Shanghai. This move, seemingly unrelated to tea, was strategic. In Shanghai, a bustling metropolis and a hub of innovation, he witnessed the explosive growth of brands like Heytea (喜茶) and Lelecha (乐乐茶). He realized the window of opportunity in the upgraded tea market was rapidly closing. The entrepreneurial fire in his belly was reignited.
He reconnected with friends who had backgrounds in the tea industry, individuals he had met at a Shanghai catering exhibition. Pooling their resources, they scraped together just over a million RMB. Among over fifty potential brand names, they chose 霸王茶姬 – CHAGEE – a name that resonated with them and tested well in informal polls. In Kunming, they rented a small, 40-square-meter loft for a modest 2,500 RMB per month (a space they would later buy as a symbolic reminder of their humble beginnings). They embarked on a nationwide tour, visiting over 50 well-known tea chain brands, absorbing best practices and innovative ideas. This culminated in the birth of the first generation of CHAGEE, a brand built on a foundation of borrowed wisdom and a vision to create something uniquely their own.
When Zhang Junjie first pitched his business plan to investors at XVC, it was described as “not well-written.” Yet, within it, three core sentences stood out, revealing his grand vision: “To become a brand known to all young people in China,” “To become the best choice for 实体 investors and entrepreneurs in China,” and “To become CHAGEE of 100 countries in the world.” During this time, he even approached a design company, seeking a discount by offering 5% equity in exchange for a 150,000 RMB design fee. The design company’s dismissive retort, “If you can’t even afford 150,000 RMB, how can you talk about 100 countries?” only fueled Zhang’s determination to prove them wrong.
Hu Boyu, the founder of XVC, recounted his initial meeting with Zhang, noting that when Zhang mentioned he had “never gone to school,” Hu initially assumed he meant university. It was only later, during a whiteboard presentation where Zhang used pinyin for many characters, that Hu realized the full extent of Zhang’s lack of formal education – no primary or secondary schooling whatsoever. Despite this, Hu was astounded by Zhang’s business acumen. He described a late-night conversation where Zhang’s understanding of business models, management insights, and competitive strategies surpassed even that of many seasoned CEOs he had encountered. Zhang had a clear vision for the future, including short-term and long-term competitive solutions, and even identified specific high-level executives he planned to recruit to replace the existing team. He had already attracted key executives from Heytea to join his fledgling brand. Hu concluded that Zhang was not just capable of winning battles, but of “winning battles continuously.”
XVC’s investment in CHAGEE underscored a powerful lesson: formal education is not the sole determinant of entrepreneurial success. The ability to make sound decisions, build effective organizations, and relentlessly pursue a vision can stem from lived experience and innate talent, qualities Zhang possessed in abundance.
A consumer industry investor who has met numerous founders of fresh tea brands noted that Zhang Junjie stood out as the most ambitious, most focused on scaling and expanding the business. A CEO of another tea brand observed that while many individuals from humble backgrounds, upon achieving financial success, often become more conservative, Zhang, after making CHAGEE a leading brand in Yunnan, defied this trend. Even amidst the uncertainty of the pandemic, he pushed for aggressive expansion. His defining characteristic, they suggested, was “the courage to start over from scratch if he failed.”
From a 17-year-old tea shop apprentice in 2010 to founding CHAGEE in 2017, Zhang Junjie’s journey was compressed and transformative. In just seven years, he transitioned from a grassroots worker to the owner of a burgeoning tea empire. And in the subsequent seven years, CHAGEE expanded from a single shop in Kunming to over 4,500 stores across China and overseas. His story is a powerful testament to the triumph of the human spirit, a real-life embodiment of the “Chinese Dream,” and indeed, a compelling narrative that echoes the themes of perseverance and success found in movies like “The Pursuit of Happyness.”
As CHAGEE gears up for its anticipated IPO in the US, the journey is far from over. But for Zhang Junjie, who started with so little, the trajectory is nothing short of remarkable. Born in 1993, he is just 31 years old as of 2024, with a career trajectory that is only just beginning. His story is a potent reminder that in the world of business, as in life, sometimes the most compelling successes are born from the most unlikely of beginnings.
Brewing a Storm: CHAGEE’s Rise in the Fierce Tea Market
The Chinese “new tea” market is a battlefield. It’s a vibrant, dynamic, and incredibly competitive landscape where brands constantly innovate and jostle for consumer attention. In this arena, CHAGEE has not just survived, but thrived, carving out a significant position and becoming one of the most talked-about brands. To understand CHAGEE’s success, we need to look at the key ingredients in its recipe for growth: strategic positioning, product innovation (or perhaps, strategic product focus), marketing prowess, and a relentless drive for standardization and expansion.
CHAGEE entered the market at a crucial juncture. By 2017, the “new tea” wave was already gaining momentum, with brands like Heytea and Nayuki’s Tea (奈雪的茶) leading the charge, primarily focusing on fruit-based teas and cheese-topped brews. These categories, while popular, were becoming increasingly crowded and competitive. Zhang Junjie, with his keen sense of market dynamics, recognized the need for differentiation. He opted for a path of “错位竞争” – differentiated competition.
While fruit teas and “dessert-like” tea drinks dominated, Zhang saw an opportunity in “原叶鲜奶茶” – original leaf fresh milk tea, often referred to as “tea latte.” At the time, only a few brands, notably Teahouse (茶颜悦色), were focusing on this category, and Teahouse’s regional presence was still largely confined to Changsha. Zhang’s vision was to create an “东方星巴克” – an Eastern Starbucks – bringing the essence of Eastern tea culture to a global audience.
The “tea + milk” combination mirrored the familiar “coffee + milk” concept, appealing to a similar consumer base seeking a refreshing yet slightly indulgent beverage. Furthermore, with the rise of China’s global influence and cultural confidence, tea, a cornerstone of Chinese culture, was poised for international appreciation. Compared to fruit teas, original leaf milk teas offered greater supply chain standardization and quality control, crucial for building a scalable, global brand. As Zhang himself articulated, aiming for tea lattes positioned CHAGEE to become a truly global enterprise.
Central to CHAGEE’s product strategy is the “爆品战略” – blockbuster product strategy. While CHAGEE offers a menu of over 20 items, priced mostly between 15-20 RMB, a significant portion of its sales comes from just a few key products. Remarkably, 70% of sales are attributed to only 3-4 items, with the flagship product, “伯牙绝弦” – jasmine green milk tea – alone accounting for about 30% of total sales. In 2023, jasmine green milk tea sold over 230 million cups, a staggering figure that underscores its blockbuster status.
This product focus is deliberate. Zhang believes that every successful brand needs a classic, foundational product, akin to Coca-Cola’s classic cola, Starbucks’ latte, or McDonald’s Big Mac – items that have anchored brand identity and remained bestsellers for decades. For CHAGEE, jasmine green milk tea is that anchor.
To create such a “classic” product, Zhang emphasized three crucial criteria: high standardization, universal appeal, and high repurchase rate. Jasmine green milk tea, a jasmine green tea latte, ticks all these boxes. Its simple ingredient structure – tea, milk, and optional sugar – lends itself to high standardization. The tea base, jasmine green tea, has broad appeal across different regions in China. The flavor profile is designed to be refreshing and not overly sweet, encouraging repeat purchases.
Jasmine green milk tea has undergone over ten iterations, with continuous refinements to the tea blend, jasmine sourcing, and other aspects. Zhang’s focus is on creating a product that consumers can enjoy daily without palate fatigue.
Beyond product and positioning, CHAGEE has masterfully leveraged “社交货币” – social currency. Brands, in essence, become social currency, reflecting consumers’ identities, values, and aspirations. Heytea’s initial rise was partly fueled by its status as a social currency, with young consumers eager to queue, purchase, and share photos on social media. CHAGEE, learning from Heytea’s playbook, understood the importance of social buzz.
It is worth noting that the Chinese name of this tea is not “茉莉花绿茶”(jasmine green milk tea) but “伯牙绝弦”(Boya Breaks His Strings). This is an ancient Chinese idiom story. It tells the story of a zither player in the Warring States Period of China who cut the strings of his zither and stopped playing after his most loyal listener died. This significantly increased the popularity of the milk tea on social media.
Zhang recognized that brand power needs time, content, and strategic development. CHAGEE prioritized creating a “名品” – famous product – before becoming a “名牌” – famous brand. However, CHAGEE’s journey to becoming a famous brand has been marked by accusations of “模仿式营销” – imitation marketing.
Early on, CHAGEE’s brand identity and product naming showed similarities to Teahouse, which pioneered the “国风” – national style or Chinese style – milk tea concept. Later, in 2021, CHAGEE’s brand upgrade, including its logo and packaging, drew parallels to Starbucks. Moreover, CHAGEE’s packaging and cup designs have, at times, been seen as “碰瓷” – literally “touching porcelain,” meaning to subtly imitate or allude to – luxury brands like LV, Dior, GUCCI, and Chanel, creating visually similar designs.
While this “imitation” strategy has been controversial, it undeniably generated significant social media attention and discussion. Consumers playfully commented on acquiring “Dior and LV” for the price of milk tea, and social media was flooded with posts discussing the brand’s design choices. Whether intentional or not, this strategy amplified CHAGEE’s brand visibility and social media engagement.
Reports indicate that CHAGEE’s marketing budget for 2024 was substantial. While not the first to introduce original leaf milk tea, CHAGEE was the first to aggressively market this concept in 2021, establishing it as a key selling point. In August 2023, CHAGEE further tapped into the health-conscious trend by publicly disclosing calorie information for all its products, reinforcing a “healthier” image. Coupled with a significant marketing budget, these strategies fueled rapid sales growth.
In today’s hyper-competitive tea market, product innovation alone is no longer sufficient. Brand marketing and enhancing social currency have become crucial. CHAGEE, along with competitors like Teahouse, is heavily investing in marketing and brand building. Reports indicate that CHAGEE’s marketing budget for 2024 was in the range of 500 million to 1 billion RMB, with a significant portion allocated to advertising on platforms like Focus Media (分众传媒). Even historically marketing-averse brands like Guming (古茗) have ramped up their marketing spending.
Zhang Junjie’s ambition extends beyond the domestic market. Since the latter half of 2023, he has been actively exploring international markets. “CHAGEE is not just a national brand, but also a global brand,” he has repeatedly emphasized internally.
CHAGEE’s expansion strategy is heavily reliant on franchising. However, its franchise model is distinctive. Zhang implemented a “1+1+9+N” organizational and management model for franchising. The first “1” signifies establishing a wholly-owned subsidiary in each new region before expansion. The second “1” represents opening a directly-operated flagship store in the best commercial location in the area to validate product acceptance and refine the single-store economic model. The “9” refers to opening several joint-venture stores, where investors provide capital but CHAGEE manages operations, separating ownership from operational control. These joint-venture stores serve to standardize operations and refine the economic model before broader franchising. Finally, “N” signifies opening up franchising to a wider pool of franchisees after the initial validation and standardization phases are complete.
CHAGEE’s rapid growth and market buzz have created a high demand for franchises. The initial investment for a CHAGEE franchise, with store sizes ranging from 60-80 square meters, is around 600,000 RMB, higher than brands like Mixue Bingcheng (蜜雪冰城), Teahouse, and Guming. CHAGEE also has stringent franchisee selection criteria, favoring experienced operators with strong financial backgrounds and management capabilities.
Despite the higher investment and stricter requirements, franchise applications have poured in. Franchisees report positive returns, with some estimating payback periods of around 19 months, making CHAGEE franchises highly sought after. CHAGEE’s growth momentum shows no signs of slowing. Zhang Junjie has projected that the company’s 2024 sales would reach 20 billion RMB, and confidently declared, “We will surpass Starbucks China this year.”
Global Tea, Global Ambitions: CHAGEE Goes West
As CHAGEE prepares to launch its IPO in the United States, it marks a significant step in its journey to become a global tea brand. This move underscores its ambition to transcend the domestic Chinese market and establish a presence on the international stage, mirroring its self-proclaimed goal of becoming the “Starbucks of tea.”
The decision to list in the US, specifically on Nasdaq or the New York Stock Exchange, is strategic. It provides access to a deeper capital pool, enhances international brand recognition, and aligns with its global expansion aspirations. The timing is also opportune, following the successful Hong Kong IPO of Mixue Bingcheng (蜜雪冰城), another major player in the Chinese beverage market, which defied initial market skepticism and saw a surge in stock prices.
CHAGEE’s global ambitions are not new. As early as 2018, just a year after its founding, CHAGEE established an overseas division, signaling its intent to expand beyond China. Its initial foray into international markets focused on Southeast Asia, particularly countries with significant Chinese diaspora populations and a familiarity with tea culture, such as Malaysia, Thailand, and Singapore. By early 2025, CHAGEE had already established a substantial overseas presence, with over 100 stores across these countries.
The next frontier is the United States. In late 2024, reports emerged that CHAGEE was planning to open its first US stores in California, specifically in Irvine and Los Angeles, targeting a spring 2025 launch. California, with its large Asian American population and trend-setting consumer market, is a logical entry point.
To support its global expansion and ambitious IPO plans, CHAGEE has been strategically strengthening its leadership team. In late 2024, CHAGEE reportedly poached Huang Hongfei, McDonald’s China’s CFO, to become its CFO. This high-profile hire, along with the recruitment of supply chain and product executives from companies like DJI, Heytea, and Gong Cha, signals CHAGEE’s readiness for the complexities of global operations and public market scrutiny.
CHAGEE’s expansion strategy is not just about geographical reach; it also involves continuous innovation and adaptation. In early 2025, CHAGEE launched a new store format called “霸王茶姬·超级茶仓” – CHAGEE Super Tea Warehouse – with the first store opening in Shenzhen. This new format incorporates bakery products priced in the 15-26 RMB range, aiming to enhance the social and experiential aspects of the brand, perhaps taking cues from Starbucks’ broader cafe concept. CHAGEE is also investing in automation, with automated tea extraction equipment deployed in some stores, improving efficiency and standardization, reducing serving time to as little as 8 seconds per cup.
In February 2025, CHAGEE launched a sub-brand called “第二杯茶” – Second Cup Tea – focusing on ready-to-drink “traditional Chinese pure tea.” This sub-brand, positioned to compete with brands like Oriental Leaf (东方树叶) and Suntory, offers “tea-style Chinese” and “tea latte” options, priced between 10-20 RMB, targeting a more accessible price point and a grab-and-go format. The first Second Cup Tea store opened in Shanghai, with plans for about 30 stores in Shanghai initially, and no immediate franchising plans for this sub-brand.
Despite its rapid growth and ambitious plans, CHAGEE faces challenges. In early 2025, CHAGEE was embroiled in a health controversy related to an ingredient called “Ice Borlang,” raising concerns about food safety and health perceptions. While industry experts defended “Ice Borlang” as a safe and legitimate food additive, the controversy highlighted the risks of public perception and the need for robust quality control and communication.
Competition remains intense. CHAGEE faces established rivals like Heytea, Nayuki, and Mixue Bingcheng, as well as emerging brands. Coffee chains like Luckin Coffee (瑞幸咖啡) have also aggressively entered the light milk tea market, intensifying competition. The “new tea” market is entering a phase of “质价比之争” – quality-price ratio competition – where consumers are increasingly demanding high quality at competitive prices. CHAGEE’s “Super Tea Warehouse” format, with its higher operating costs, also raises questions about its financial sustainability if rapid expansion drives up operating expenses.
Zhang Junjie’s ambition to surpass Starbucks China in sales by 2024, while bold, faces headwinds. Starbucks China itself has experienced revenue declines in fiscal year 2024, reflecting broader challenges in the Chinese market. While CHAGEE has reported impressive GMV growth, some analysts point to potential declines in same-store sales in the latter half of 2024, suggesting that maintaining rapid growth and profitability in a saturated market will be increasingly challenging.
However, CHAGEE’s journey from a small Yunnan tea shop to a global brand with a planned US IPO is a remarkable achievement. Its success story, rooted in Zhang Junjie’s resilience, strategic vision, and relentless execution, is a compelling narrative in the dynamic world of Chinese consumer brands. As CHAGEE ventures into the US market and seeks to charm American consumers, the world will be watching to see if this “Chinese tea Starbucks” can indeed brew up a storm on Wall Street and beyond.
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