The Price of Longjing

A Major Error In The Reporting of Longjing Prices and What the Real Prices Were in 2014

Every year there is much talk about the price of Longjing, 2014 being no exception. Most of the talk is hype, reporting the extraordinary prices that some Chinese businessman or government official has spent for Longjing. However, these “reports” never have any relationship to the real price of Longjing. This year the Chinese media reported a one-third reduction of price for Longjing, and the American tea media, namely The World Tea News, have repeated this story. But the story is completely false. If you are expecting to see a price reduction in Longjing, Don’t hold your breath. It didn’t fall this year. It never has happened, nor will it ever. Let me explain why, and why the Chinese media would even manufacture such a story.

Longjing is certainly the most famous tea in China; it was a favorite of Qing Emperor Qian Long (the eighteen tea bushes he owned still exist as a tourist attraction) and Mao Zedong, who served the tea to Nixon during his visit in 1972. Fabled as legendary, Longjing (translated as “Dragon Well”) is a green tea.  The tea has been known in the West since at least the 18th Century. It comes from the mountains over looking West Lake in Hangzhou. A place so beautiful that the Chinese believe it is proof on earth that Heaven exists.

The details of its making are very defined and illustrate ten distinct hand movements that are executed over the three stages of frying by the tea maker. In order to judge the finished product, tea makers focus on four characteristics: smell, color, appearance of the leaf, and taste. To add to the Longjing’s specific characteristics, its production area is also limited and clearly defined. Suffice it to say, the price for this tea has always been high throughout its long history. This would explain why it is probably the most counterfeited tea; even the worst fakes still command high prices in America and Canada by sheer virtue of the name.

It should come as no surprise that the purpose of the Chinese media is largely to serve as an instrument of propaganda for the Chinese government. The purpose of the Chinese press reporting the fall of 30% in the price of Longjing is to show corruption reform measure instituted by Xi Jinping, China’s new leader is working. In the past, the officials spent enormous amount of money on extravagant dinners, expensive gifts, expensive cars, and other luxury items that support the appearance of a rich lifestyle, setting them apart from common people. Xi Jinping banned that practice last year. Tea fell into this ban as a luxurious gift. Officials paid high prices for bragging rights to for tea they reportedly paid a lot for. They were buying at inflated retail prices not wholesale, using government expense accounts; prices only people spending other people’s money would pay.

The price of Longjing became worthy as an example of the governments austerity measure because of Longjing’s fame as a luxury product. To point out a drop in price underscores the success in Xi Jinping’s reform. The idea that that Longjing was so sought after by government officials was so vast it would destroy the Longjing market. There was in fact a major drop in price in one market in China. However, the dropping price in question is that of Beijing retail operations, where spending is conspicuous and is so inflated it an anomaly in the national market. In contrast, the price in Hangzhou for Longjing tea has not decreased, never has, and it never will, despite what the media both here and in China have reported. Inflation has been a constant in China as the economy grows, and as the consumer market grows, so does the demand for Longjing tea. Longjing is sought after enough that its price is not dependent on a single buyer, or even a single demographic like the armies of government officials.

It is easy to get confused when you take into account that the reporters did their price research in Beijing and inferred that there had been a price drop in Hangzhou. They did their reseach at Ma Lian Dao, what some people call the Beijing Wholesale Market. This is like calling Costco a wholesale market. While it is true that you can buy some tea a little bit cheaper than the price charged at a Beijing tea shop or tea house, Ma Lian Dao’s prices are a poor representation of actual wholesale prices paid to producers. It should be noted that a few years ago a survey taken of the customers that buy tea there suggested that 80% of the customers were being cheated. The reporters inferred that there had been a price drop in Hangzhou.

So let’s look at the real wholesale prices for Longjing tea, at least the first tea of the year, which is the most prized. The tea that is harvested before the Qing Ming Festival which usually falls I the first week of April.

As in everything in China, prices being paid are bent, one way or the other, by the closeness of the relationship between buyer and seller. A relationship in China can only be developed by personal interaction, over a long period of time. Confucius established the social complications of the buyer and seller 2500 years ago in China, just as the Greeks for us around the same time established the theories of government and law. So when we start to talk about prices, relationships are important things to keep in mind and the hardest thing for Americans to understand. The foundation of business practices is based on a completely different cultural basis. The prices that I am talking about in this article are the average prices paid by buyers in strong relationships with their sellers; weak relationships will pay more, and very close relationships may pay less. This is true all across China, but for the purposes of this article will just be focusing on Hangzhou, the home of Longjing.

Seven Cups found that wholesale prices had not dropped when we bought tea this year. I was there before the tea harvest had begun and heard rumors that the price might drop, not from tea people but from a government connected banker. When I subsequently asked tea people, they all said the rumors were ill founded. They talked about how costs had risen, especially after the record high temperatures last summer, which required abnormally heavy irrigation to prevent damage to the valuable bushes. Weng Sunqin, the daughter of 85-year-old Weng Shangyi, told me that for twenty days straight they stretched out a hose to their seven mu gardensprayed water from 4pm until 9am the next morning. In addition to the price of water going up, so does everything else, from electricity to labor, every year.

I wanted to get up to date information about prices as I wrote this, so I spoke to Zhang Liying, one of the tea scholars at the Chinese Tea Culture Research institute. She also owns a very small, exclusive tea shop, and teaches tea culture classes. Not only does the institute compile a broad range of data about Chinese tea in general, but because the institute is in Hangzhou, Longjing is a tea all of the scholars are particularly aware of. I also talked to Weng Sunqin, a producer and member of one of the 150 families that provide the best tea from Lion Mountain, which includes Weng Jia Shan (Weng Family Mountain) named after her family.

I also spoke to Mary Lou Heiss, because her company was named in the World Tea News article, and asked her if she had paid a lower price for the Longjing she recently imported. She told me that the price she paid was very similar, maybe a tiny bit higher than last year, and expressed the opinion that Longjing prices have been very stable the last couple of years. She also told me that she had not been contacted or interviewed about the story.

The Longjing growing area in Hangzhou is very small and is divided into three general areas. The highest wholesale price is paid for tea from Weng Jia Shan, named Shifeng Longjing. The average price this year was 3500 RMB per jin for the traditional cultivar that existed before the Mao era. For the Longjing #43 cultivar the price was 2500 RMB per jin (A jin is 500 grams, a little bit more than a pound). For Mei Jia Wu tea, from that area was 2800 RMB per Jin (A dollar is 6.18 RMB so 3500 RMB would be $566.72).

Outside of the tea growing areas listed above,The largest growing area in the general Hangzhou region is located in a place called Funying. The price of the best Funying tea is around 1500 RMB. It is very likely that if you are a tourists, or an unknowing buyer, this is the tea that you will be offered in places like Longjing or Mei Jia Wu villages. The best Fumying Longjing is good enough to be acceptable to most buyers. I have had a lot of very expensive tea around the West Lake area tea houses, that was not as good as the best Funying Longjing. Of course, tea sold as Longjing can come as far away as Sichuan and be sold in Hangzhou.

I want to impress upon people that all of the authentic Longjing tea gets sold every year without fail or exceptions. Producers establish the price the market will bear, with an eye towards keeping customers. This requires them to raise prices when they do based on cost. Longjing should have been more expensive than it was this year, just because of the expensive summer last year, which was exceptional. If it happens again this year, it will go up next year, and it will be reasonably understood in the Chinese market.

With the limited production area and the vast market for Longjing, it is a safe bet that the price will not go down. It is just basic economics. Losing a big customer like government officials buying with government money is not big enough to make a dent in Longjing prices. It also doesn’t mean that they will stop buying Longjing as a gift, it only makes Longjing a more meaningful gift when the person receiving it thinks it came from the giver’s pocket. I am sure that the restricted officials will find a way to work the system, as evidenced by our own government system, where no matter what the regulation, officials find a way to make things work for their benefit.

For the consumers interested in getting authentic tea, it will continue to be hard. Most people aren’t obsessive about getting the real thing. Who can blame them?, Even mediocre Chinese tea is pretty good, and if you like the tea you get, so what. Nobody drinks really good, authentic champagne and eats French Truffles everyday. I drink tea everyday, and could drink the real thing, but I don’t. Some things need to remain special.

Neither the Chinese or American press knew the Chinese tea market well enough to realize that this story was blatantly false. The tea community needs good information, especially when it affects an important market negatively. No body wants to be asked by their customers why your price has not fallen by a third, as reported by the World Tea News, because the editorial staff is not knowledgeable enough to spot an article that was so recognizably wrong. This kind of reporting can have a negative effect on the market. Maybe it’s meaningless because few people care or are paying attention, which is usually the case.

By Austin Hodge