The Giant Beneath the Fissure: The Rise of Ba Wang Cha Ji

By Jiaxiang Shi

Edited by Jing Liu

At long last, the capital markets have been granted the long-overdue IPO of Ba Wang Cha Ji. On March 6, 2025, China's securities regulator approved the company's filing to list in the United States.

Over the past eight years, this milk tea shop that started from a corner of China's southwest has grown into a ready-to-drink tea enterprise with 6,500 stores and an approaching public listing. Especially in the last two years, Ba Wang Cha Ji's store count has multiplied several times over, while its GMV has surged by tens or even hundreds of times.

A celebrated consumer company is often born alongside a product that transforms its industry: Starbucks founder Howard Schultz introduced the caffe latte at his sixth store; Pop Mart's Wang Ning secured exclusive rights to Molly in 2016; for Hey Tea, it was the多肉葡萄 (Very Grape Cheezo) that countless rivals would later copy.

Ba Wang Cha Ji does not fit this mold. Though it too has a blockbuster product — the伯牙绝弦 (Boya Juexian), which sold 230 million cups in a single year — its product profile can hardly be called original.

Ba Wang Cha Ji's true rise stems from a comprehensive victory of a modern consumer company. As one consumer investor put it, throughout history traffic and product excellence have rarely coexisted. "Naixue and Hey Tea tried to catch both and failed. Chayan Yuese chose not to try. Ba Wang Cha Ji was the only one that actually caught both."

This may have something to do with a fate-altering round of financing; or with the relentless pursuit of "total standardization"; or with the window of opportunity for fresh milk tea made with original tea leaves. But ultimately, it comes down to founder Zhang Junjie.

"The public loves a heroic entrepreneur. Zhang Junjie is looking more and more like a warlord," the same consumer investor said of him.

A close friend of Zhang's recalled that four years ago, when Ba Wang Cha Ji had barely a hundred stores averaging monthly revenues of just over 100,000 RMB, people sneered at his ambition to become the "Eastern Starbucks." "Ninety-nine out of a hundred people didn't believe it." Today, the company has firmly positioned Starbucks as its potential rival.

A prominent investor once compared the business environments of China and Japan, noting that Japan believes in "everyone in their proper place" — innovation comes from large corporations, so there is virtually no VC market. But China believes more in the ancient cry: "Are kings and nobles born, not made?"

Ba Wang Cha Ji is a story of "Are kings and nobles born, not made?"

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A Decisive Round of Financing

Fate was rewritten at the end of 2020.

By then, Ba Wang Cha Ji had already begun turning a profit. According to sources familiar with the matter, the company's GMV exceeded 200 million RMB that year, with net profits surpassing 10 million. "Every month they called me back to Kunming to collect money," recalled a former core member of Ba Wang Cha Ji's leadership.

But a divergence emerged. Zhang Junjie later revealed in a private setting that some shareholders believed Ba Wang needed only one more year of expansion before selling their stakes or bringing in professional managers — while he insisted on reinvesting profits to keep growing.

At the time, Ba Wang Cha Ji actually had four partners with equal shares, and no single controlling owner. In that same private setting, Zhang mentioned that the other shareholders offered to buy him out at a 50 million RMB valuation, while he countered with a price more than double theirs to buy out the others instead. This meant an opening of tens of millions of RMB.

At this point, Ba Wang Cha Ji was neither here nor there: over 200 stores nationwide, but concentrated mainly in Yunnan, Guizhou, and Sichuan, with monthly per-store sales of less than 200,000 RMB (a Mixue Ice Cream & Tea location generates roughly 100,000 RMB monthly) — far behind Hey Tea.

This was when XVC appeared. Founded in 2016, this early-stage VC found that China's new-style tea financing wars had already reached their late stages: Hey Tea was valued at over 16 billion RMB, Chayan Yuese was being snapped up by dollar funds, and Naixue was on the verge of its Hong Kong IPO.

But for XVC, whether Hey Tea, Chayan Yuese, Guming, or Cha Bai Dao — these companies were already beyond VC range. Ba Wang was one of the few still in early financing stages.

In a later public document, XVC recalled that Ba Wang Cha Ji already had the highest brand recognition in the Kunming region at that time. And when store density increased, Ba Wang's same-store sales didn't decline — they kept growing at double-digit rates. This meant the business was replicable.

After due diligence, XVC quickly convened its investment committee and decided to help Zhang Junjie buy out the other shareholders' stakes while completely replacing the existing management team.

According to Anyong Waves, Zhang Junjie expected a post-money valuation of 700 million RMB. XVC didn't negotiate. "Once you decide to invest, you don't haggle over small differences. If it eventually reaches 70 billion, there's no difference between 500 million and 700 million," one Ba Wang Cha Ji investor said.

In the end, XVC invested over 100 million RMB — the largest single initial commitment in their history. They added another round later and now hold nearly 20% of Ba Wang Cha Ji. XVC founder Boyu Hu once said that this single IPO could "pay back roughly twice all the money we've ever invested in our entire history."

There was an interesting episode: when meeting with investors, Zhang Junjie even proposed leaving Ba Wang Cha Ji to start a separate brand called "Milk Tea Mobilization," a low-price milk tea chain priced slightly above Mixue.

An early Ba Wang executive recalled for Anyong Waves that Zhang staying on "was a collective decision." In retrospect, the others' swift exits may have been the optimal choice — otherwise, Ba Wang Cha Ji as it exists today would never have come to be.

Also participating in this round was Fosun. Another VC, Congbi Qiushi, entered several months later.

By then, Ba Wang had only added a few dozen stores, but the valuation had doubled from the previous round.

Capital was indeed one of the keys to Ba Wang Cha Ji's fate-defying transformation. Looking back, the timing of Ba Wang's fundraising was blessed with "heavenly timing and earthly advantage": late 2020 was the eve of consumer investment's peak before its precipitous fall. "It got the last wave of cheap money while money was still cheap," one consumer investor said.

But more important was the "human factor": only Zhang Junjie, already harboring ambitions of "opening in 100 countries" at that time, dared to promise VCs scale.

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Expansion, At All Costs

With provisions secured and over 300 million RMB in fresh funding, Ba Wang Cha Ji rapidly began expanding.

The first stop was Chengdu. In June 2021, Ba Wang Cha Ji relocated from Kunming to Chengdu, securing prime real estate on Chunxi Road — the city's best location — at annual rent in the millions. The management team grew from a handful to 200 people.

Those close to Zhang Junjie say that many companies and brands had cash during the pandemic, but none were expanding aggressively — all were playing defense. Only he "dared to spend the most."

This was not a common mindset in the conservative offline food and beverage industry.

At the time, Ba Wang's internal discussions repeatedly emphasized that without scale, you couldn't even sit at the table. "Get to 1,000 stores no matter what" was set as the target to reach by end of 2022.

But the process was not smooth sailing. Shortly after the Chunxi Road store opened, sales at older stores in Yunnan and Guangxi temporarily declined. The first Xi'an store was positioned on the Grand Tang Mall, but foot traffic and visibility fell short of expectations. Song Wei (pseudonym), former general manager of Ba Wang Cha Ji's Shaanxi branch, told Anyong Waves that Ba Wang opened five stores in Xi'an in quick succession, but the market had virtually no awareness of the brand, and they were consistently losing money.

This didn't stop Ba Wang's expansion. Around 2021, to attract franchisees, Ba Wang Cha Ji offered 100 spots per province with waived franchise fees, brand usage fees, and a free equipment set — renovation costs were also half of what they are now.

The headquarters prepared franchise manuals covering every detail from initial client contact to final contract signing: when signing contracts, they required "photos + copy + Moments posts" to create urgency among prospective clients, and "if it's an existing franchisee opening another store, the copy should be highlighted to be persuasive to new clients."

But one industry veteran emphasized to us that even during this accelerated store-opening phase, Ba Wang never lowered its site selection standards.

One Ba Wang employee gave an example: between two locations just 10 meters apart, Ba Wang would "spare no expense" to secure the one with better exposure. An early franchise manual shows that Ba Wang refused to open street-side stores that would hurt the brand, nor would it take corner locations, basement floors, or spaces above the third floor in malls.

The effects of expansion were immediate. According to Anyong Waves, in 2021, Ba Wang Cha Ji's GMV doubled from the previous year, but the company swung from profit to loss, with losses exceeding 10 million RMB. Ba Wang attempted to raise another round at the time but was unsuccessful.

By end of 2022, Ba Wang had entered nine central and eastern provinces including Zhejiang, Jiangsu, and Guangdong, moving from its previous tier-2 to tier-5 city focus into first-tier strongholds Guangzhou and Shenzhen.

Context is important here: Chayan Yuese was actually riding higher at this point, but the company was not expanding rapidly. "The market that Chayan cultivated, Ba Wang captured," one person close to Chayan said bluntly.

One early investor who looked at Ba Wang had a puzzle: Ba Wang's average price was 3-4 RMB higher than Chayan's — why would the market accept this? Perhaps the only explanation is that consumers' desire to drink fresh milk tea made with original tea leaves outweighed their price sensitivity.

Ba Wang's aggressive strategy rapidly captured the market that Chayan Yuese had spent eight years cultivating.

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Replicable

A typical day for a Ba Wang Cha Ji back-of-house staff member goes like this: At 8:30 AM, open the tea brewing machine, pour in 60 grams of Jasmine Snowbud, dispense 2,100 milliliters of hot water, steep at 80 degrees Celsius for 7.5 minutes, then add 750 grams of ice cubes, stir until melted and skim the foam. This yields about 3 liters of Jasmine Snowbud tea broth — Ba Wang Cha Ji's greatest secret, the raw material for making Boya Juexian.

By rough calculation from the recipe, one large cup of Boya Juexian with standard ice and light sugar uses 280ml of Jasmine Snowbud tea broth; one batch makes about 10 cups. During peak hours, a batch is used up in three to four minutes.

Multiple Ba Wang Cha Ji store staffers estimate that at least six out of every ten cups sold are Boya Juexian. In 2023, it sold 230 million cups. (Hey Tea's Very Grape Cheezo sold 150 million cups over six years of popularity.)

The tea industry has a saying that "there's only a three-year glory period," but one Ba Wang Cha Ji employee believes the company has broken this curse. Internally, Zhang Junjie often says, "We're not making delicacies — we're making the rice and noodles of the milk tea world."

Data shows that at least since 2019, Ba Wang Cha Ji's top five SKUs have consistently accounted for over 50% of sales.

But in fact, Ba Wang's menu was not always so simple. They once借鉴 (borrowed from) Naixue's Tea and made European-style bread. Around 2018, when Ba Wang Cha Ji had just begun expanding beyond Kunming, they hired European bread masters with high salaries and even equity options.

European bread had high labor costs and short selling windows — unsold inventory from the same day became waste. An early executive told Anyong Waves that the bread strategy ultimately lost millions. This also made him realize: "Following others has no vitality."

Stores were gradually closed, eventually contracting back to Yunnan, Guizhou, and Guangxi. "When brand power is weak, you can only radiate to neighboring provinces," the above executive said.

Fruit tea accompanied Ba Wang Cha Ji for even longer. In Ba Wang's second year, fruit tea-focused Hey Tea and Naixue were still the hottest names. But Ba Wang gradually realized that compared to the milk tea industry, fresh fruit supply chains were far more complex. For example, in October 2019, when Ba Wang Cha Ji launched a strawberry tea, the East China and Guangxi regions had to delay rollout due to climate differences.

To solve this, the above early executive said, Ba Wang tried centralized fruit purchasing with national distribution — later discovering that losses exceeded profits. This was called "the stupidest decision we ever made."

Forced to allow franchisees to source fresh fruit independently, the problem remained unsolved: fruit sweetness and texture could not be standardized.

To address similar issues, Hey Tea used a relay system across production regions, sourcing from Anhui, Yunnan, and Jiangsu respectively to ensure year-round fresh strawberry availability. Very Grape Cheezo's 150 million cups sold owed partly to grapes being easy to cultivate with continuous harvests across seasons.

Among new-style tea brands, Guming had the largest fruit procurement scale, adopting a strategy of building warehouses before opening stores — but at the cost of still being unable to expand to most northern cities, including Beijing.

Zhang Junjie once revealed in a private setting that in its founding year, original leaf fresh milk tea accounted for only 30% of Ba Wang's offerings; the next year it was 60%; not until 2020 did original leaf fresh milk tea exceed 90%. But even that year, more than half of the 20 new products launched were still fruit teas.

After bringing in capital, Ba Wang Cha Ji retained only a small amount of fruit tea — but completely eliminating them was a decision no less difficult than Hey Tea's price cuts. "Although data-wise it was already at 90%, cutting fruit tea would reduce franchisee revenue by 10%, and franchisees still had profit margins from self-sourcing," one Ba Wang investor told Anyong Waves.

One former core member of Ba Wang Cha Ji's leadership summarized that they'd experienced virtually every problem the tea industry has ever faced — "we just didn't die."

In September 2021, before the Chengdu Chunxi Road store opened, Ba Wang Cha Ji's official account slogan was "Tea fragrance, fruit sweetness, freshness in every sip." Afterward it became "Original leaf fresh milk tea, taste the real tea." By the second half of 2023, Zhang Junjie had reduced fruit tea to only seasonal fruits like lemon and coconut. Between these two points, Ba Wang Cha Ji's per-store sales nearly quadrupled.

This was an important dividing line. It was also the beginning of what Ba Wang Cha Ji would later be repeatedly noted for: "standardization." Zhang Junjie recognized early that "the higher the human involvement, the worse the product standardization."

At the end of 2022, Ba Wang Cha Ji introduced automatic tea-making machines, simplifying staff work to simply scanning codes — the machine dispenses the cup automatically, and unless extra heating is needed, it can be handed directly to the customer. Average serving time was reduced to 8 seconds. On standardization, Chayan Yuese didn't introduce tea-making machines until 2023, and cautiously chose semi-automatic models.

For a founder with ambitions of scale, efficiency may matter more than taste.

On opening day, Ba Wang Cha Ji offered customers special tea ice cubes made from tea broth, ensuring that melting ice wouldn't dilute the tea's flavor — but later discontinued this. One investor once asked why; the answer was that initially, tea stability was insufficient and tea ice ensured quality, "but now stability is high, so it's no longer needed."

Zhang Junjie mentioned in a 2021 interview: "The only supply chain Ba Wang Cha Ji will ever do is tea leaves."

While some peers hesitated, Ba Wang Cha Ji — backed by its blockbuster product and having achieved standardization — needed only to expand, expand, and expand further.

Irreplicable

At Ba Wang Cha Ji's 2023 annual meeting, after the final lottery round had concluded, Zhang Junjie — in a full suit — suddenly asked the crowd below: "Enough?" Employees cheered: "Not enough!"

"Another 100 prizes of 10,000 each!" Zhang shouted.

To some extent, this almost flamboyant scene is a snapshot of where this company stands today.

The past two years have been Ba Wang Cha Ji's most explosive expansion phase. A Shanghai franchisee told us in 2024 that their store's daily revenue exceeded 30,000 RMB. When the first Ba Wang Cha Ji opened in Shanghai, Dianping ignored it; Zhang Junjie had to call Dianping himself to ask why it wasn't listed.

A Ba Wang technical frontend supervisor told Anyong Waves that after the 2023 business explosion, the existing IT department could no longer support operations, and headcount grew by a "large proportion" — to the point where he couldn't recognize all the people under him.

This growth myth has attracted much envy. But replicating it is not easy.

Followers admire Ba Wang; the blockbuster product has become consensus for original leaf fresh milk tea. "If you haven't grasped this, you may not even be a player in this industry," said one tea CEO focused on original leaf fresh milk tea. The best example is Jasmine Milk White, named directly after its best-selling item.

But blindly copying Ba Wang is impossible. The above tea brand has a multi-ingredient grass jelly dessert drink accounting for over 10% of sales; because it doesn't fit the base tea strategy, they internally want to discontinue it, but "it's not something you can just adjust" — brand growth needs such traffic-driving items.

This tea CEO also said that even if fruit tea sales may not surpass base tea, consumer demand cannot be ignored; they still must launch fruit tea in summer and push strawberry in winter.

Today is no longer 2017 when Ba Wang Cha Ji started out. Relying on its franchise system, it has already occupied the best locations in every province. And according to sources close to Zhang Junjie who spoke with Anyong Waves, Ba Wang's 2024 marketing spending was "at a level unseen in China's tea market."

Yet even with such momentum, some consumer investors don't consider themselves to have "missed" Ba Wang. Faced with "coffee or tea," they still favor the former. And one view widely held in the tea industry is that when buying coffee, consumer expectations are fixed, but for tea, consumers tend to favor the new and tire of the old.

Ba Wang Cha Ji launches fewer than 5 new products annually, "because Zhang Junjie believes not innovating maximizes profit, letting consumers remember your strengths," one source familiar with the matter revealed.

By comparison, in the first nine months of 2023, Guming launched 107 new products, not to mention the coffee industry's pursuit of trends — Luckin introduced 102 new products that same year.

Sources close to Zhang Junjie also mentioned to us that "price could be Ba Wang's Achilles' heel": Luckin, with its "morning coffee, afternoon tea" slogan, has entered the light milk tea赛道 (track) in familiar fashion, splurging on 100 million cups of 9.9 RMB light jasmine milk tea; there's also甜啦啦 (Tianlala)'s "Clear Breeze Jasmine White" original leaf fresh milk tea, replicating Boya Juexian at half the price.

After the start of 2025, Ba Wang's store expansion pace has finally begun to slow.

History Has Turned the Page

In December 2023, Ba Wang Cha Ji once again entered Changsha, deciding to confront Chayan Yuese — that "hard bone" — head-on. This was also Ba Wang's key mission for 2024. One Ba Wang mid-level employee once told us: "This is a battle for industry position, and a battle for dignity."

But at least for now, Chayan Yuese remains resilient, and continues densifying its presence. Even with superior site selection and scale, newly opened Ba Wang Cha Ji stores see sparse crowds.

When Ba Wang Cha Ji moved its headquarters to a standalone modern building in Shanghai, Chayan Yuese — squeezed into more space in the Zhongtian Plaza in Changsha — still resembled a traditional food and beverage company more: the plaza's ground floor was a "Shenzhen North phone repair shop," with only the third, fourth, and partial top-floor offices belonging to Chayan. At noon, unable to fit into elevators, employees often had to take the stairs.

In earlier years, Ba Wang Cha Ji's greatest concern when expanding outward was that Chayan would open to franchising. And Ba Wang entered every city under the banner of "Chayan substitute." In an early pitch deck, it positioned itself as: national layout, rapid position-securing; as for Chayan, that was a cautiously expanding regional brand.

Many people had urged Lü Liang to expand to first-tier cities, but he always said his internal capabilities were insufficient. One Chayan employee said that when Chayan expands to new cities, they first dispatch regional managers for inspection, and regional managers basically grow up through the ranks of staff, store manager, and senior store manager — a process that may take over five years. Before announcing Suzhou in July 2024, Chayan had not entered a new city in a year.

Corporate strategy is ultimately a reflection of founder personality. Hey Tea founder Nie Yunchen is a demanding product manager; Lü Liang is similarly product-focused. One Chayan employee said Lü Liang still spends most of his time on product, often staying in R&D until 10 or 11 PM. But in some people's view, Zhang Junjie "thinks more about business model" and is "less picky about taste."

The two companies' goals also reveal their founders' differences: Ba Wang's slogan is Eastern Starbucks, while Lü Liang prefers Nestlé, which has lived for 159 years.

Character determines fate. A founder's character determines a company's fate.

Many investors' interpretation of Zhang Junjie is that perhaps because he once had nothing, he craves success more, "wants to make things bigger more," and cares more about whether he can sell Boya Juexian "in 100 countries."

"This is a multiple-choice question," one person close to Chayan repeatedly told us. "Chayan chose to eat bite by bite, but that doesn't mean the rice in the pot is necessarily yours — because someone took the whole pot."

In fact, Chayan came infinitely close to fully owning that pot countless times. One early executive recalled that in the second half of 2019, when social media rumors spread that Chayan would open to franchising, he received at least 40 messages that day — "internal, external, all sent to me saying Chayan was franchising." At the end of 2020, Chayan's directly operated store landed in Wuhan, followed by a pop-up at Shenzhen Wenheyou.

But even in early 2022, when Chayan — having temporarily closed stores in concentrated waves three times the previous year due to repeated COVID outbreaks — sought external financing, Lü Liang firmly believed that "franchising can't guarantee service."

At that time, Ba Wang — having recently relocated to Chengdu — had just sounded the trumpet of expansion, and was even in the difficult moment of swinging from profit to losses exceeding 10 million RMB.

If Chayan had held Changsha with directly operated stores while opening franchising nationally, with prices a few RMB lower than Ba Wang's, it would have been lethal even in Ba Wang's home turf of Yunnan. "They could have 10,000 stores by now," the above executive said. "This move might not have been good or bad for Chayan, but it would have been fatal for Ba Wang."

"Now history has turned the page," he said.

Image source: Ba Wang Cha Ji official website