A Tea Addict's Journal

This story in the Economist has me thinking — what exactly constitutes a scam?  $130 is really not that much, in terms of tea, even in China, especially if the buyer is buying a number of gifts.  So, price itself is really not a determinant.

I think in general, a scam requires two things: price gouging, and false advertising.  Just overcharging people on tea without actual deception is, I think, not quite a scam — it just makes you really expensive.  Someone selling a pencil for $20 is price gouging, but until they promise you that the pencil can do your homework for you, it’s not quite wrong — you’re just paying too much for a pencil.

It is when lies enter the picture when a simple overpriced item becomes a scam.  I think this can be quite overt — this tea is a 1950s Red Label, when it is in fact a 1990s remake of inferior quality.  The consumer is led to think that he is purchasing something he isn’t — that is a scam.  When a cooked/raw mix is being sold as aged raw tea (which happens more than you think) it is a scam.  When an overly roasted oolong is being sold as an aged oolong, that is a scam.  Price, in some ways, does not matter.

Then there are more subtle forms of deception that are a little harder to delineate.  For example, what if someone says a certain tea is particularly high grade, when in fact it is only of medium quality?  What about price discrimination, when the price changes depending on the purchaser?

My general advice for people going to China is that unless they know exactly what they’re doing with tea, don’t buy any.  More often than not, people who don’t know what they’re buying will end up overpaying for stuff that aren’t worth half the price of purchase.  It’s even worse when person A asks their friend, person B, who’s going to China, to buy tea for them.  That’s just like asking for bad tea for a bad price.

Are they being scammed, or are they just sold inferior goods for too much money?  It’s a fine line.  I think of paying $15 for popcorn and a drink at the movie theatre as grossly overpriced, which is why I never do it, but I don’t think it’s a scam, so to speak.  They’re just exercising their monopolistic power within the theatre to stop you from bringing in outside food and thus forced to pay for theirs instead.  For tea, however, there’s no such restriction.  Unless the seller is lying, it’s not technically a scam, but it does make it a bad deal.  So, unless you know what you’re doing, or are willing to take the risks, don’t bother with the source and get it from your local, reputable vendor — let them take the risk of buying bad/fake tea.

I just read a post by Felix Salmon, and I must say the same phenomenon happens a lot in tea as well.  It’s probably also happening with increased frequency.  When you get a story with a tea, the tea somehow, sometimes, anyway, becomes better, or more interesting.  When I talk to friends who are not particularly interested in tea, telling a story has a way of drawing them into a particular drink than if it were simply just some generic “aged oolong”, which does not sound too glamourous.  “Stored for ten years on an organic Taiwanese tea farm”, then you’re getting somewhere.

Most of this, of course, is just some marketing claptrap.  They exist because they sell the teas in question. But then, sometimes there are stories like the old jian of Liu’an that they supposedly found in some medicine shop.  Hard to beat those.

Economists use the concept of “sticky prices” to describe the phenomenon where prices rise or fall slower than they should based on supply and demand, because of various kinds of reasons which I will not cite here.  It happens every day around us, and as tea drinkers, I think we are generally quite familiar with it.

One of the things that took place in the puerh market in the past few years is a sort of normalization after the euphoria of the 2004-2006 “bull” run, so to speak, in which speculation in tea reached fever pitch.  I remember the days when a jian of Menghai cakes, brand new out of the factory, can be flipped for a profit almost instantly and repeatedly.  It was the definition of a bubble — nobody was actually drinking any of this stuff, but everybody was buying and selling it.  If you were the sucker who was left holding the tea when the bubble crashed in 2007, well, sorry, too bad for you.

These days, as I peruse the selection on Taobao, I am seeing a lot of tea that I used to see for a higher or similar price back when I was in China in 06/07.  There are cakes that have remained more or less at the same price for the last four years, and in some cases, prices finally started falling for some of them.  Imagine you’ve been a big buyer during the boom, and you have tonnes of tea…. initially, you wanted to hold on to it, hoping prices will recover.  By now, however, it’s pretty clear that prices are not going to recover, so you are finally trying to offload the tea (since you are probably not going to be able to drink the 10 tonnes of tea you bought) so that you can get some cash back.  I remember predicting, at that point in time, that there will be a lot of decent, few-years-old tea that will be available for a reasonable price in the marketplace as people start to unload their collection.  I think we are finally seeing that happening.

Of course, not all of these tea are good — in fact, many of them are horrid, either due to poor storage or poor initial quality.  Selecting the right tea is key — and selecting them for the purpose that you want it for, be it further storage or immediate consumption.  I think in the next few years though, we’ll see more and more of these 5-10 years old tea hit the market and the “aged” tea prices will finally be more reasonable than they have ever been.  It’s a good time to be a tea drinker.

I find that there are two things that the web will never run out of — puerh cakes purporting to be of Yiwu origin, and yixing pots that are supposedly Qing dynasty.

Let’s just pause for a moment to think — how likely is it that there will be an endless supply of such things on the web?

Take Yiwu tea for example.  I remember in 2006, every cake out there claims to be Yiwu.  Of course, if you’re selling young puerh, you want your tea to be from Yiwu — it’s the most famous of the mountains, and for the most part people have no way of telling if you’re lying or not.  So, you slap the words “Yiwu” on a cake and voila, it’s Yiwu, and you can sell it for 10x what you could if you call it Jiangcheng.  Add words such as “old tree” “wild” and the names of a few villages, instead of just “Yiwu”, and it seems more authentic.  Now you can sell it for 20x the original price.  Never mind that the amount of tea out there that claims to be Yiwu probably outnumber the amount of tea that the whole Xishuangbanna county produced in a year.  It hasn’t stopped people from doing it.  In the last few years producers have gotten more, well, inventive in their claims.  “Yiwu impressions” and that kind of name are now more common.  Consumers have caught on, and so the game has to change for the sellers to stay ahead.

More recently, we seem to be seeing the same thing with Yixing pots that claim to be Qing, at least in the English language world.  Somehow, everybody has a Qing pot to sell, often for the bargain basement price of under $1000.  Many of these so called “Qing” pots are suspect at best, frauds at worst.  A walk around Taiwan or a search online can yield many similar looking pots for a fraction of the price, none claiming to be Qing, and to think that such things can be had for the price on offer, well, I have a whole bunch of Qing pots to sell to you for $500.  When an authentic piece of work can go for thousands in the place where it came from, why would anyone sell it for hundreds online?

Unfortunately I find the tea business to be full of such sorts of schemes and half-truths.  Somehow, there’s always a supply of buyers ready to jump in for things like this.  Be careful out there; tea “masters” abound who are only too happy to take your money from you.