China Bubble Tea Boom Creates New Billionaires: Sichuan Baicha Baidao Set To Go Public

The bubble tea, commonly referred to as ‘Boba,’ has evolved beyond a mere trend in China; it’s now a lucrative business venture that has spawned numerous billionaires. The most recent addition to this list is Sichuan Baicha Baidao Industrial Co., the third-largest bubble tea chain in the nation, poised to go public amid intense competition.

What Happened: The bubble tea industry in China has spawned at least six billionaires in recent years. Sichuan Baicha Baidao Industrial Co., also known as Chabaidao, is set to start trading on Apr. 23, reported Bloomberg.

The company aims to raise over $300 million, which would be the largest Hong Kong listing since November. This would increase the net worth of founders Wang Xiaokun and Liu Weihong to $2.7 billion, based on their 73% stake post-IPO.

However, the future of other Chinese bubble tea makers remains uncertain due to increased competition and a slowdown in China’s economic growth. “The market is not giving this sector as lofty valuations as before,” said Kenny Ng, a strategist at Everbright Securities International.

Zhang Hongchao and Zhang Hongfu, brothers who founded Mixue Bingcheng in Henan province in 1997, are among two other billionaires in the bubble tea sector. Mixue Group, which also operates a coffee brand, positions itself as the world's second-largest beverage chain by store count. It boasts over 32,000 outlets in China and 4,000 in 11 other countries, mostly neighboring ones.

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Bubble tea, which originated in Taiwan in the late 1980s, has seen a surge in popularity across China, with thousands of brands vying for customers. Baicha Baidao, established in 2008, has over 8,000 shops across China and recently opened its first international outlet in Seoul.

Despite China’s economic slowdown, Baicha Baidao’s sales grew by more than 56% between 2021 and 2023, reaching 5.7 billion yuan ($787 million), according to the company’s IPO prospectus.

Why It Matters: The rapid growth of the bubble tea market in China is indicative of the country’s evolving consumer preferences and the rise of a new generation of entrepreneurs. However, this boom comes at a time when China’s economy is facing challenges, including a decline in exports and a crackdown on debt defaulters.

Moreover, the surge in the bubble tea market is occurring amid a predicted decline in luxury sales in China, and a significant drop in Swiss watch exports to the country.

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