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The Custom of Guanxi and What It Means to You

Three years ago I was in a small tea shop in Hangzhou. The shop probably doesn’t get a lot of foreign visitors. The shopkeeper took one look at me and assumed I wasn’t too bright and had money to burn. 

So he was busy brewing samples of 3rd rate teas for me while I played a game I like to call, “bring out the good stuff.” 

We were interrupted when a car pull up out front. Through the open doorway I saw a hulking shiny black Chinese sedan with tinted windows. A chauffeur, complete with white gloves, stepped out.

The shopkeeper immediately forgot I existed. He rushed to the door to welcome the driver while simultaneously bowing to an unseen person in the back seat.

While the driver waited beside the door with his hands behind his back, the shopkeeper scurried to a back room. He emerged with a box covered in blue-green silk woven with an elaborate flower pattern. The silk box was protected by a sleeve of shiny gold material and replete with official-looking stamps. He  placed this package in an elegant silk bag and tied the whole thing up with gold ribbons.

He handed the package to the driver. The driver passed it to someone inside. The driver returned with a thick envelope filled with cash for the shopkeeper. (No wonder the shopkeeper had forgotten I existed!)

I’d just witnessed someone purchasing tea for a Chinese custom called “guanxi.”
I asked the shopkeeper what tea the driver had purchased. He replied that it was not available for purchase as it was a custom order by a long time customer. I said I understood but, just out of curiosity…

Eventually I came to know that the customer had purchased the famous Dragon Well tea. (I’d kinda’ guessed that) and for a little over 1 lb. of loose tea had paid a jaw-dropping equivalent of about $4,300.

Transactions like this happen all over China in the Spring and they go a long way in explaining why it’s so difficult to buy high quality Dragon Well tea in North America.

Domestic tea consumption in China falls largely into two categories. Teas intended for daily consumption in the average person’s home and guanxi. Guanxi teas are the teas that will be wrapped elaborately and presented to bosses, government officials, business partners, key customers etc as a means of currying favor (or as an acceptable form of bribery).

(Side note: When I was young, my dad worked in sales in the oil industry down in Texas. I remember well around Christmas time stacks of cases of expensive liquor temporarily lining the corridor of our house. I guess dad would have understood the concept of gaunxi.)

Guanxi has a huge effect on the price of your tea and the quality of tea available in North America. To understand why, let’s picture a more familiar scenario.

Imagine you want to give a bottle of wine to someone wealthy and you really need to make a good impression. While you know this person collects wine, rumor has it they’re more of a vanity collector than a real connoisseur.

You visit your local wine shop and ask the proprietor for a recommendation. She gives you two suggestions. One she describes as a great tasting wine from a little known vineyard at quite a reasonable price. The other is produced by a famous French or California vineyard that even you have heard of and costs $500. Which one do you go with

Wait, before you answer, I forgot one important detail. You’re buying this bottle of wine with your corporate expense account and your boss said, “Sky’s the limit, just make it count.”

Under those circumstances, I think most people would go for the $500 bottle. It’s sure to impress and it’s not your money. Why take a chance on a lesser known wine?

The same phenomenon happens when someone in China shops for a tea for guanxi. Price is no object and they don’t want to take any chances on a less-well-known tea. Almost all teas purchased for the purpose of guanxi are from the official list of China’s Top Ten Famous Teas and almost all of the high quality tea of these types goes to this purpose.

Ironically, most of this tea is not even consumed. The expensive package is carefully preserved. The official stamps of authenticity duly noted and the gift is passed up (or down) the line to another recipient. Yes, re-gifting is not just for ugly sweaters! Eventually the expensive tea likely ends up on a shelf next to dozens of similar beautiful packages.

Because they are so well known, the Chinese teas in greatest demand abroad are also the top ten or so famous Chinese teas. But, since almost all of the good stuff is being sold for insane prices domestically for guanxi, how is the export demand to be met?

Well, it’s satisfied through a bunch of small and not-so-small quality compromises.

First, tea can be harvested periodically all the way to early Autumn. With each harvest the quality of the tea declines but it’s still technically Dragon Well.

Second, the inflated price of Dragon Well teas is a huge lure for large commercial producers. By adding fertilizers and converting to machine processing they can greatly improve productivity and yield.

Lastly, other provinces in China (and as far away as Taiwan) are happy to produce Dragon-Well-style teas and most North American consumers are none the wiser. No one knows the exact numbers but I estimate more than 90% of the Dragon Well tea sold in North America falls in this last category.

Of course, most North American tea lovers are not going to step up to $4300/lb prices but the Dragon Well name still demands a premium with $10 - $20 an ounce being the normal price range for Dragon-Well-style teas.

I’m not sure that even the sellers of the tea know the mistake they are making. Certainly the big name retailers know. The largest tea retailer in the USA sells more than the entire annual production of authentic Dragon Well! As for small teashop owners, I’ve met more than one who simply did not know the difference. (And, fyi, I’ve learned the hard way not to try to educate them. Talk about an earful! Try telling a proud local teashop owner her tea is not authentic.)

You would think that, with such a high demand product, growers of Dragon Well tea would be sitting pretty. I have met some small farmers who are indeed doing very well for themselves. But, for the majority of small farmers growing authentic Dragon Well tea, things are not so rosy. In my next post I’ll try to explain that paradox.
If you’d like to get in on our crowd-funding project for a start-up community farming cooperative that’s is producing some of the world’s best 100% organic Dragon Well tea, here’s the link to pre-order.

I explained more fully in an earlier message.

In short, exclusively for our Insider’s Club, I’m taking pre-orders for the first Spring harvest (April 5th this year). I’ve negotiated to buy direct from this farming cooperative up to 44 lbs. of world-class Dragon Well tea. (This is real guanxi-worthy tea!) If you pre-order you’ll enjoy this amazing green tea at the wholesale price (now and for any future order of this harvest if we have any left after the pre-order phase).

At as little as $5.43/oz it’s an amazing deal and you’ll feel good about doing something to preserve the craft of artisan produced teas.
I’m taking pre-orders until July 6th only. After that, any of this tea I’m able to buy for our regular site will be offered at full retail. Please, don’t miss out!

The information provided on our site is for informational purposes only and is not intended as medical advice nor to replace medical advice from your physician.
* Our products have not been evaluated by the United States Food and Drug Administration and are not approved to diagnose, treat, cure or prevent disease.

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