Make room Starbucks and McDonald's. China's Mixue and other brands win fans in Southeast Asia

HONG KONG -- Chinese food and beverage brands are gaining ground across Southeast Asia, offering alternatives to big name American chains and expanding Beijing’s commercial and cultural influence in neighboring economies.

The Chinese beverage giant Mixue Group has become the world’s largest F&B chain by number of outlets, overtaking Starbucks and McDonald’s.

The company, whose brand name Mixue Bingcheng means “Honey Snow Ice City,” in Chinese, is capitalizing on the region-wide sweet tooth with affordable offerings of ice cream, coffee and bubble tea drinks.

“Even on social media like TikTok and others, there is a joke that any empty shophouse would soon turn into a Mixue store,” Rahma Yuliana said, referring to a popular saying in Indonesia, where Mixue has more than 2,600 outlets.

The single mother, who runs an online business, takes her daughter for afterschool treats that won't drain her wallet, such as a cup of brown sugar milk tea that costs $1.10, about one-third cheaper than similar offerings by rival Taiwanese tea chain Chatime. An ice cream sells for as little as 50 cents, undercutting McDonald’s.

As of September, Mixue Group had over 45,000 stores carrying its Mixue tea drinks, ice creams and Lucky Cup coffee products, more than the store numbers of Starbucks and McDonald’s, industry analysts reported. About 40,000 of those are in China.

More broadly, by December, Chinese F&B brands had opened over 6,100 outlets in Southeast Asia, Singapore-headquartered research firm Momentum Works reported. India and Vietnam account for roughly two-thirds, while there are relatively more Chinese brands in Singapore and Malaysia, which have sizable Chinese-speaking populations.

Nearly all of Mixue's stores are franchises that the company supplies with ingredients for drinks like Creamy Mango Boba, Mango Oats Jasmine Tea and Coconut Jelly Milk Tea.

Apart from Mixue, other market stars include hotpot giant Haidilao, Fish With You sauerkraut fish restaurants, and well-known beverage brands such as Luckin Coffee, Heytea and Chagee.

Mixue's shares have doubled from their IPO price since their March 3 trading debut in Hong Kong.

Momentum Works CEO Jianggan Li said Chinese businesses are actively seeking new growth in Southeast Asia after facing fierce competition in their home market.

The push by food and drink retailers has raised awareness that China has more to offer than just cheap electronics.

The companies are well-equipped, using automation to enhance their efficiency, and adept at online marketing, Li said. Big Western brands sometimes take a long time to find local partners and develop long-term plans. The Chinese F&B companies are “much more impatient," he said.

In Thailand’s capital Bangkok, Chinese entrepreneur Siya Han has invested over $1.37 million in 12 Mixue stores and about 10 other outlets selling spicy broth bowls, sauerkraut fish and fried chicken steaks in about six years. Outlets in shopping malls take time to recover costs due to huge rent deposits, she said, but her other outlets typically break even within six months to a year, excluding their lease guarantees.

“If you open Chinese restaurants slowly, you can't survive,” she said.

In the Malaysian capital of Kuala Lumpur, Chinese sauerkraut fish chain Fish With You vice president Liu Liujun also spotted opportunity in Southeast Asia’s large ethnic Chinese population and growing economies.

The brand’s $235,000 investment in one of its Malaysian outlets paid off in just nine months, with lines out the door almost daily, said Liu, who oversees the company's overseas expansion across the region.

A customer, Victoria Kovalan said the new Chinese brands made it easier for her to try new cuisines. “It’s opened up our palates,” she said, referring to the popularity of Sichuan hotpots, known for their spicy flavors.

Vietnamese student Nguyen Thu Hoài in Hanoi initially was skeptical about Mixue as a Chinese brand but has become a regular customer, she said, won over by its affordability and better-than-expected quality.

The expansion of Chinese food and beverage brands is part of a broader trend where Chinese goods are no longer seen as merely cheap but as having real value, said Gordon Mathews, a professor of anthropology at the Chinese University of Hong Kong.

Recalling the cultural influence from McDonald’s global expansion, Mathews said he visited its first outlet in southern China’s economic hub of Guangzhou in the 1990s, where a clerk told him, “I want to go to America.”

If Chinese food brands exploded worldwide, they might have that influence, though the impact remains to be seen, he said.

“China does have an uphill struggle to obtain soft power, but it’s doing an excellent job with its products,” he said.

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Thian reported from Kuala Lumpur, Malaysia and Ji reported from Bangkok. Associated Press journalists Eileen Ng and Syawalludin Zain in Kuala Lumpur, Edna Tarigan and Andi Jatmiko in Jakarta, Indonesia, and Hau Dinh and Aniruddha Ghosal in Hanoi, Vietnam, also contributed to this report.