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2.4 Jurnal International Judul 2 PDF

This document discusses a Chinese milk tea brand called Mixue exploring expansion into the US market. It analyzes Mixue's current marketing strategy and performance in China. It also examines Gong Cha, a similar Taiwanese brand that has found success in the US, to identify strategies Mixue could adopt. Key differences between the Chinese and US markets that may impact Mixue are different consumer preferences and a more competitive landscape with established Taiwanese brands. The document concludes Mixue will need to adapt its brand image, supplier chains, and franchise management to succeed in the US.

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0% found this document useful (0 votes)
387 views8 pages

2.4 Jurnal International Judul 2 PDF

This document discusses a Chinese milk tea brand called Mixue exploring expansion into the US market. It analyzes Mixue's current marketing strategy and performance in China. It also examines Gong Cha, a similar Taiwanese brand that has found success in the US, to identify strategies Mixue could adopt. Key differences between the Chinese and US markets that may impact Mixue are different consumer preferences and a more competitive landscape with established Taiwanese brands. The document concludes Mixue will need to adapt its brand image, supplier chains, and franchise management to succeed in the US.

Uploaded by

Riski Rahmad
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Highlights in Business, Economics and Management EMFT 2022

Volume 2 (2022)

Marketing Strategy and the U.S. Market Based on the


Performances of Existing Chinese Milk Tea Brands
Jiaying Zhao*, †
Graphic Design, Rhode Island School of Design, Rhode Island, 02903, United States
*Corresponding author: [email protected]
Abstract. This study aims to discuss and find solutions for Mixue Ice Cream & Tea, a milk tea brand
known for its social media presence and low price in China, regarding its emerging hindrance in the
domestic milk tea market. The hindrance is the increasingly saturated market and heating up
competition among all the brands, which is also a ubiquitous problem for all these brands. By
examining the situation and finding the solutions, Mixue and similar brands can be benefited and
seek further development overseas. This study used data analysis to elucidate the current status of
Mixue and probed a precedent brand with similar problems as a case study to estimate the efficiency
and practicability of certain strategies. The conclusion is drawn after scrutinizing the data and facts
collected: to adapt to the overseas market, Mixue will have to reinforce the management of the
franchisees, expand supplier chains, and adjust brand culture and brand image accordingly to the
local environment.
Keywords: Mixue, Data Analysis, Case Study, Milk Tea, Marketing Strategy.

1. Introduction
1.1 Research background
Mixue Bingcheng, also known as Mixue Ice Cream and Tea, is a Chinese milk tea brand founded
in 1997, which has gained huge social media fame in China since the promotion of several successful
online marketing campaigns in 2018 [1]. This series of campaigns consists of an earworm theme song,
a refreshing new brand visual identity including an adorable mascot, and many TikTok trends related
to Mixue for people to collaborate with. The continuous triumphs ignited numerous sensational
discussions on Mixue and won over many customers. As a result, Mixue further consolidated its status
in the Chinese milk tea industry and even became the forerunner of the “Sinking Market”—the market
refers to the cities in China that are below 2rd-tier and the rural districts, and altogether, they form a
large portion of the China’s population [2]. Mixue is also planning to launch its Initial Public Offering
(IPO) in years to come; if succeeded, Mixue will be the third Chinese milk tea brand to enter the stock
market [3].
With its great success in marketing and the gradually saturated domestic market, Mixue started
expanding into the overseas market in Southeast Asia. Because of its products’ affordable prices and
good flavors, Mixue began to thrive even outside China. Until this day, Mixue has established over
1,000 stores in Southeast Asian countries, especially Indonesia and Vietnam [4]. However, the size
of the SouthEast Asian market is limited, and emerging local brands can threaten Mixue. Therefore,
Mixue must find an even bigger region to explore for its brand and business growth.
Because of the rapidly growing international student body from Asian countries and the rising
interest in Asian cultures, the United States has become a tempting stage full of opportunities for
many Asian merchants—Mixue is no exception. From Asian-centric films such as Parasite, Crazy
Rich Asians, and Everything Everywhere All at Once to k-pop groups such as BTS and BLACKPINK,
these successes present an undeniable truth: the Asian community’s presence in the U.S. mainstream
media has become more and more prominent. This can also be interpreted as the Asian population’s
influence broadening in the U.S. market. The most significant reason for this rising awareness of
Asians and Asian culture is the exponential growth of the Asian population in the U.S. According to
Technomic, the Asian population in the U.S. has grown 72% since 2000 [5]. Along with the
population growth, the number of Asian restaurants also increased correspondingly as the Asian
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flavor started to appeal to more communities, the demand for more authentic Asian food and more
variety in the food choices surfaced. On top of that, many Americans also believe that Asian food is
much healthier than American food. Within the parameter, the consumption of tea is believed by
many to be the key to a healthy Asian diet [6]. This belief, accompanied by milk tea’s tastiness, led
many Americans to fall in love with milk tea. Meanwhile, the increasing population of Asian
international students and Asian immigrants added more momentum to the growing demand for milk
tea. It will benefit Mixue to enter the U.S. to establish its publicity and customer base right now.
Nevertheless, how to promote its brand in a new market will be the most urgent problem for Mixue
to solve—if Mixue wants to re-create its glory success. Mixue’s distinctive success in China is the
outcome of the following three components: 1) Chinese netizens’ preference for vulgar and kitsch
content; 2) Mixue’s mascot, the Snow King, has the image to be a good source for chatting stickers;
3) most importantly, Mixue priced way below the average milk tea price in the market, which is
around 15~20 RMB. When Mixue is promoted in Southeast Asia, these regions have the advantage
of having large Chinese populations in their local demographic compositions and sharing similar
preferences for tastes as Chinese milk tea consumers. Hence, the marketing strategy was not altered
much in the SouthEast Asian campaigns, and even the stores there look exactly like Mixue’s stores
in China. However, the three key components that led to Mixue’s success in the Asian market may
be impeded in the U.S. market by 1) different content preferences of netizens—will the American
netizens get what is funny about Mixue’s online campaigns? 2) whether or not the Snow King will
be as well received as it was in China; 3) Mixue’s ability to control the price in a different continent
with more expensive ingredients and labor.
Besides, Mixue was most familiar with the “Sinking Market”, and how to adapt to a different
commercial environment will be difficult for Mixue to overcome. Firstly, the customer’s composition
will be different. Secondly, there will also be many Taiwanese brands with more marketing
experience in the U.S. and have already adapted to fit with the U.S. market. The U.S. milk tea market
is undoubtedly a more complicated realm for Mixue than the Chinese market is. If Mixue copies its
past marketing strategy, there will be risks of contradicting what the U.S. market expects and wants
from Chinese mainland milk tea brands like Mixue.
1.2 Research framework
To more accurately assess Mixue’s potential in the U.S. market and research for possible
adaptations it can obtain, this study will be focused on analyzing Mixue’s current marketing strategy.
Moreover, this paper supports the suggestions with content analysis on overseas marketing and online
marketing, alongside a case study of a Taiwanese milk tea brand called Gong Cha to further examine
the suitable ways to adapt from the Chinese milk tea market to the U.S. market. This study highlights
the differences between the Chinese milk tea market and the U.S. market. Additionally, this study is
also aimed to examine the importance of social media and online promotions for brands when
expanding into a foreign market and appealing to new customer groups.

2. Methods
This study examines Mixue’s current online marketing strategy’s compatibility with the U.S. milk
tea market. In order to obtain a conspicuous conclusion to this question, there are two main objectives
taken for evaluation:
1) An analysis of Mixue’s domestic marketing strategy and what Mixue has achieved from such
strategy.
2) A research conducted on an existing foreign brand in the U.S. milk tea market and comparing
it with Mixue.
The former task is accomplished by analyzing existing data related to Mixue’s brand performance,
and the latter is conducted by conducting a case study of Gong Cha.

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2.1 Data Analysis


Data analysis is learning information and extracting useful contents from collecting and analyzing
statistical and quantitative data. In this paper, the specific data that will be collected and analyzed are
regarding Mixue’s financial performance and the efficiency of Mixue’s social media activities. To
inspect Mixue’s financial gain, this study shows the brand’s sales growth and market share size [7]
over the years. In addition, the quantitative growth of the overall Chinese milk tea industry is also
taken into consideration, such as the accumulative Chinese milk tea market size, the market share
percentage of different milk tea brand tiers [8], and the regional distributions of milk tea stores in
China [9]. The evaluation of Mixue’s social media presence and influence will be done by looking at
Mixue’s follower numbers on different social media platforms, and the view counts of Mixue’s
uploaded contents. The correlation between these two data sets provides an overview of how Mixue’s
marketing strategy affects its financial performance.
2.2 Case Study
The case study of Gong Cha in this study aims to compare GongCha’s marketing strategy with
Mixue’s to acquire insights into the compatibility of Mixue’s marketing strategy and the U.S. market.
The brand Gong Cha is chosen as the study subject because of its similar background to Mixue and
its noteworthy achievement in the U.S. milk tea market [10]. A comparative review of Gong Cha and
Mixue’s brand backgrounds and company information presents the two brands’ similarities and
variances. Then, an examination of Gong Cha’s marketing strategy in the U.S and a comparison of
this strategy and Gong Cha’s domestic marketing strategy are procured. This step is for learning Gong
Cha’s efforts to adapt itself to the U.S. market [11-12]. In the end, with insights into the similarities
and variances between Gong Cha and Mixue and an apprehension of Gong Cha’s adaptations for the
U.S. market, a set of tentative suggestions will be made for Mixue’s future expansion into the U.S.
market.

3. Results
3.1 Mixue’s Domestic Market Performance
Currently, Mixue Ice Cream and Tea runs its stores through franchising, and the franchising fee
for opening a Mixue store ranges from 7,000 RMB to 11,000 RMB, which is dependent on the tier of
the cities that the stores are planned to be located. There are currently over 10,000 Mixue stores in
China, and the average price for Mixue’s products is around 6 RMB, which is within the lowest range
of tea drink prices in the Chinese market. For instance, Mixue’s signature Motian Cuicui Ice Cream
cone only cost 1 RMB each, whereas McDonald’s ice cream cone costs 5 RMB. Corresponding to its
pricing, Mixue is referred to as the low-end brand in the Chinese milk tea market, and chart 1.
provides a specification of how milk tea brands in China are categorized based on pricing.

Table. 1. Brand Categorization of Chinese Milk Tea Market Based on Pricing


Brand Tier Low-end Brands Mid-end Brands High-end Brands

Pricing 1~10 RMB 11~19 RMB 20 RMB and above

Mixue Ice Cream Chabaidao Nayuki


Examples and Tea, Alittle Tea Heytea
Gu Ming Gong Cha Lelecha

Among the mentioned three tiers, the low-end and mid-end brands dominate the Chinese milk tea
market with a total market share of over 80%, which comprises 49% mid-end brands and 33% low-
end brands, leaving only less than 20% of the market to the high-end brands. Mixue has the largest

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market share among the low-end and mid-end brands, around 11% of the Chinese milk tea market.
Two pivotal factors lead to this predominance: Mixue’s number of stores and the range of distribution
of these stores. Mixue’s amount of stores exceeds 10,000, and this number is even greater than the
sum of CoCo and A little Tea’s total store numbers in the China market. Moreover, Mixue’s store
distribution includes all aspects of locations and mainly condenses within 2-nd-tier and 3rd-tier cities.
Mixue’s low price allows it to survive under varied circumstances by being affordable to most
consumer groups in China.
Mixue’s boom of stores results from its successful marketing campaign launched in 2019.
According to Mixue’s official website, the first 10,000 stores of Mixue were accumulated throughout
the past 21 years, from 1997 to 2018. However, after the 2019 marketing campaign, an additional
5,000 stores were opened just in the past 3 years, from 2019 to 2022. Another perspective to
demonstrate Mixue’s tremendous online influential power is by looking at its followers and views on
mainstream Chinese social media platforms. On China’s biggest video website, Bilibili, Mixue’s
official account has over 7 million followers, and content created based on Mixue’s theme song can
attract over 100 million views. On Douyin, a short video application, about 6000 million users view
the content daily, making it the current most popular content platform of all Chinese social media.
Mixue has over 35 million followers on Douyin, and almost every single post of Mixue can reach 10
million views. These data indicate that Mixue’s influence on the internet was efficiently converted
into real-life brand values and significant financial gains.

Figure 1. Milk Tea Store Distribution in China


3.2 Gong Cha’s Brand Background
Gong Cha was founded in Taiwan in 2006, and the brand culture evolved from the tribute tea that
people would offer to the highest guests in traditional Chinese customs. Gong Cha has been known
for its quality in the choice of tea leaves and their excellent service and quickly spread out all over
Asia pacific areas. Just like Mixue, Gong Cha is also run by franchising. In 2012, a capitalist named
Martin Berry acquired franchising rights for South Korea from Gong Cha and later partnered with
Unison Capital to purchase the entire brand. From this point on, Gong Cha started to expand into 20
more countries, and soon in 2013, Gong Cha entered the U.S. market by first stomping its foot in
Fremont, California. Nowadays, Gong Cha has over 1,500 stores worldwide, and its brand valuation
is around 600 million dollars.
3.3 Gong Cha’s Global Market Strategy
According to Gong Cha Singapore’s brand director, Cheong Zhaoyong, the incentive for Gong
Cha’s overseas expansion is a spontaneous response to “the Asian pop-culture wave which is now
sweeping through the Western markets”. Unlike Asian milk tea consumers, who value milk tea brands
more on the quality and price of the products, the American consumers’ desire to purchase milk tea

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is more likely from their curiosity for novelty. Therefore, when making decisions on the distribution
of stores, Gong Cha intentionally positions the stores sparsely, so there will be long queues in every
store, which can attract more curious customers to purchase. Also, limiting the number of stores
allows Gong Cha to attentively monitor the quality of every cup of milk tea each store sells. Since
milk tea’s main target customer group is the Asian community, most Gong Cha is located in different
cities in Asian-predominant areas such as Chinatowns and Ktowns. To allow the company’s capital
to better monitor the overseas sectors, Gong Cha also established 5 “master franchising sectors”
across the United States to support franchisees, consolidate Gong Cha’s corporate presence, and set
up an exemplar.
As for digital and social media marketing, Gong Cha uses digital media to leverage its customers’
experiences. Gong Cha recently developed a mobile application for customers to order even when
not inside the store. This application allows customers to avoid lingering in queues and to customize
their orders in terms of sweetness and toppings more conveniently. Such a strategy prevents
customers from getting distracted by other brands as if they wandered on the streets or ordered from
a platform carrying multiple brands.

4. Discussion
4.1 The Similarities Between Mixue and Gong Cha
Besides originating from the same region, Mixue and Gong Cha share the same selection of
products, mainly boba milk tea and fruit tea. The two brands also have their signature products to
differentiate themselves from other brands in the market: for Mixue, the product is the Ice Cream
Cone; for Gong Cha, the milk foam tea. These two brands both have notable brand values that can
easily attract consumers to purchase. More importantly, these two brands are few of the brands that
were established before the boom of the Milk Tea industry—which took place after 2010—yet still
not only survived the brutal competition but also occupied a large portion of the market.
4.2 The Dissimilarities Between Mixue and Gong Cha
However, Mixue and Gong Cha have a fundamental difference in brand positioning. Mixue
stresses how affordable its products are, and Gong Cha’s core value largely relies on its product’s
high quality. On top of that, Mixue’s brand image is vibrant and energetic, while Gong Cha’s is more
sophisticated and elegant. The two brands fall into different brand categorizations, with Mixue being
a low-end brand and Gong Cha being a mid-end brand. The most noteworthy factor that differentiates
Gong Cha from Mixue is Gong Cha’s multinational organizational corporate structure, and this led
to Gong Cha’s success in the overseas market to a great extent.
4.3 Mixue’s Marketing Strategy
Mixue’s marketing strategy played a vital role on Mixue’s road to success. It directly brought
about the 2019 internet sensation for Mixue’s theme song, which infused every inch of the Chinese
social media platforms. Such accomplishment resulted from brainwashing classic tunes, a memorable
character, and most importantly, Chinese netizens’ enormous passion for contagious and funny short
videos. Mixue’s theme song was the perfect raw material for creating one of the Chinese netizens’
favorite kinds of content—the autotune remix videos. This specific content genre is usually made of
snips of audios with unexpected or comedic arrangements. For instance, in the wave of remixing
Mixue’s theme song, some people made videos of their favorite game characters dancing to the beat
and inserted those characters’ lines from the gameplay into random parts of the song.
This trend of remixing Mixue’s theme song might not be intentional in the first place when Mixue
launched the campaign, but later in 2020, Mixue followed up with an in-store challenge, which was
to sing the theme song to store staff in public, and the reward was a free cup of drink. A huge number
of people did the challenge and posted the footage online, and this circulation of content eventually
even boosted more enthusiasm from the public towards Mixue.
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Although overseas social media users are prone to viral content as well, several variables can shake
the compatibility of Mixue’s online marketing strategy with overseas netizens. First, whether the
overseas netizens will be intrigued by this format of audio remix videos and the design of the character
is not certain. Secondly, re-creating a past trend will automatically reduce the novelty and excitement
that originally came with it in the first place and may even appear as “overdone” or “boring”. In
addition, another important aspect of Mixue’s marketing strategy is its low price. Whether or not to
carry that low price into the new market, and if so, how Mixue can accomplish such a task are all
crucial for Mixue to consider. Hence, this study proposes several marketing strategies in which Gong
Cha has proven successful. Mixue can learn from experiences and points out some aspects that need
to be paid extra attention to.
4.4 Suggestions for Mixue
This study now presents several suggestions to improve Mixue’s marketing strategies for overseas
expansion from the perspectives of both the consumers and the corporate management. To summarize
the overseas marketing experiences from Gong Cha, what will be applicable for Mixue and its future
expansion into the western market are:
1) To include foreign capitals and investments.
2) To consolidate the master franchise’s extensive management and authorities.
3) To adapt brand positioning so it can befit local consumers’ consuming habits and local cultures.
Currently, Mixue’s corporate branches consist of the main brand, Mixue, the chain supplier
company, D·Co, and a large number of warehouses distributed all over China. This lineup allows
Mixue to regulate the process from planting tea leaves to directly selling the drinks to customers,
reducing the excessive budget from acquiring assets from third parties. However, such an advantage
is unavailable overseas, and establishing this supply streamline in a new environment would cost
tremendous money. These additional costs may result in a rise in the price of Mixue’s products, which
will take away one of Mixue’s biggest marketing advantages. Therefore, Mixue can reach out to
existing foreign capitals and local suppliers for the corporation, just like what Gong Cha has done in
its expansion into the Korean market. Unlike many of its competitors, Mixue uses milk powders and
artificial flavorings instead of fresh fruit or fresh dairy products, so it should be easier to transfer the
production process and transport the needed materials from the domestic market to the overseas
market.
However, in order to keep consistency with the authenticity of the brand values and the product
quality, it is also essential for Mixue to be vigilant of the branching sectors overseas [13]. Mixue’s
franchisees are not as regulated and fully controllable as Gong Cha’s franchisees due to the limited
managing range of the central authority. The incidents involved with food safety issues that have
taken place in multiple Mixue stores just in the past years of 2020 and 2021 are due to the lack of
transportation examinations and store inspections from the central regulatory team. Furthermore, the
overseas market is also more sensitive about food safety issues. Thus, Mixue should establish strong
franchising sectors that act with the authoritative power equivalent to the central sector when needed
for inspections and regulations.
Lastly, since western society is used to coffee culture instead of tea culture, the scenario for
western consumers to consume beverages is not the same as the usual perceptive scenarios for milk
tea purchases. For instance, coffee drinkers are more inclined to drink coffee for practical reasons or
as part of their morning routine. Milk tea drinkers drink milk tea more often for socializing with other
people or as a supplement for entertainment, such as when watching a movie or shopping. Therefore,
if Mixue ought to make online marketing campaigns for western audiences, it would be better for
them to specify the scenarios of consuming milk teas. Like how popcorn is deeply connected with
movie theaters, Mixue can try to connect milk tea with movie theaters and shopping malls.
Alternatively, Mixue can try to adapt its stop-and-shop stores into a more cafe-like space. This is also
the tactic that Gong Cha used when trying to open up their market among Korean college students,
who have a great demand for a cafe-like space for socializing and working.

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5. Conclusion
5.1 Key findings
As a countermeasure to the increasingly saturated Chinese milk tea market, expanding into foreign
markets—especially the comparatively rudimentary overseas milk tea markets in the western sphere
of the world—has destined to be the next stage for many Chinese milk tea brands’ developments.
Mixue is no exception; hence, this paper dissected Mixue’s marketing tactics that led to the brand’s
success and examined the compatibility of such strategies in the mentioned new marketing grounds.
By analyzing these findings, such as Mixue’s domestic market share and statistical performances
on social media, a conclusion of Mixue’s key to its laudable accomplishments can be made: Mixue’s
brand influence in China was achieved through its social media campaigns. At the same time, its large
number and wide range of consumer populations were attracted to Mixue by its low price and fairly
satiable quality of products. After scrutinizing the successful precedent example of Gong Cha, this
study provides several plausible options for Mixue. Mixue’s priority is consolidating its central
sector’s power and extending that power dynamic overseas in management. Mixue will also need to
connect with foreign suppliers to ensure its supply chain keeps up with its low price advantage.
Moreover, Mixue must adapt its brand experience and image for the new audience. The design of
stores and how Mixue presents itself on social media will need some alterations for the western
consumers to understand and eventually become attached to.
5.2 Limitations
This research will be helpful for Mixue and brands alike to see a clear picture of the future
possibilities of the brand, as well as some feasible solutions for possible dilemmas. However, as
mentioned in the previous section, Gong Cha and Mixue diverge to a certain degree, such as brand
cultures and values. Furthermore, the timings in the market’s development and the industry’s
conditions are vastly different. Consumers nowadays are more inclined to get information from the
internet. In a post-COVID19 era, consumers will be more leaning toward the products that can
provide them with more emotional values and are more differentiated from the competitors. Thus,
Mixue needs to be agile and act swiftly in response to the market change.

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