Outwith: Devastation left by Pu'er madness of green tea bubble

SAUDI Arabia has its oil. South Africa has its diamonds. And here in China's temperate south-west, prosperity has come from the scrubby green tea trees that blanket the mountains of fabled Menghai County.

Over the past decade, as the nation went wild for the region's brand of tea, known as Pu'er, farmers bought minivans, manufacturers became millionaires and Chinese citizens ploughed their savings into black bricks of compacted Pu'er.

But that was before the collapse of the tea market turned thousands of farmers and dealers into paupers and provided the nation with a very pungent lesson about gullibility, greed and the perils of the speculative bubble.

"Most of us are ruined," said Fu Wei, 43, one of the few tea traders to survive the implosion of the Pu'er market. "A lot of people behaved like idiots."

A pleasantly aromatic beverage that promoters claim reduces cholesterol and cures hangovers, Pu'er became the darling of the sipping classes in recent years as this nation's nouveaux riches embraced a distinctly Chinese way to display their wealth, and invest their savings. From 1999 to 2007, the price of Pu'er, a fermented brew invented by Tang Dynasty traders, increased tenfold, to a high of $150 a pound for the finest aged Pu'er, before tumbling far below its pre-boom levels.

For tens of thousands of wholesalers, farmers and other Chinese citizens who poured their money into tea leaves, the crash of the Pu'er market has been nothing short of disastrous. Many investors were led to believe that Pu'er prices could only go up.

"The saying around here was 'It's better to save Pu'er than to save money'," said Wang Ruoyu, a longtime dealer in the tea-growing region of Yunnan Province. "Everyone thought they were going to get rich."

In the mountainous Pu'er belt of Yunnan, a cabal of manipulative buyers cornered the tea market and drove prices to record levels, giving farmers and traders a heady taste of the country's bubble. Now they are experiencing its bitter aftermath.

At least a third of the 3,000 tea manufacturers and merchants have called it quits in recent months. Farmers have begun replacing newly planted tea trees with staples such as corn and rice. In Menghai, the newly opened six-storey emporium built to house hundreds of buyers and bundlers is a lonely place.

"Very few of us survived," said Fu, among the few tea traders brave enough to open a business in the complex, which is nearly empty. He sat in the concrete hull of his shop, which he cannot afford to complete, where cobwebs cover his shelf of treasured Pu'er cakes.

Among those most bruised by the crash are the farmers of Menghai County. Many had never experienced the kind of prosperity common in China's cities. Villagers built two-storey brick homes, equipped them with televisions and refrigerators and sent their children to schools in the district capital. Flush with cash, scores of elderly residents made their first trips to Beijing.

"Everyone was wearing designer labels," said Zhelu, 22, a farmer. "A lot of people bought cars, but now we can't afford gas so we just park them."

Back at Menghai's forlorn "tea city", Chen Li, surrounded by what he said was $580,000 worth of product he bought before the crash, described the manic days before Pu'er went bust. Out-of-towners packed hotels and restaurants. Local banks, besieged by customers, were forced to halve the maximum withdrawal limit.

"People had to stand in line for five hours to get the money from the bank, and you could often see people quarrelling," he said. "Even pedicab drivers were carrying tea samples and looking for clients on the street."

Despite the downturn, he remains one of the few optimists in town, confident that now so many farmers have stopped picking tea, prices will eventually rebound. "The best thing about Pu'er," he said with a showman's smile, "is that the longer you keep it, the more valuable it gets."

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