Why European car manufacturers serve as a cautionary tale for Japanese manufactuers of green tea powder

You’ve no doubt seen it: the bright green latte in the hand of the person ahead of you in the queue. Matcha soft-serve, matcha cheesecake, the limited-edition matcha KitKat. Matcha is everywhere right now. What was once a ceremonial powder whisked in Kyoto tea rooms has become the flavour of the decade.

The global matcha market was worth around $5.1 billion in 2025 and is forecast to nearly double to $8.9 billion by 2033. Asia Pacific still drinks the lion’s share, but the growth is everywhere: coffee shop menus, dessert counters, supplement aisles, and the feeds of every wellness influencer with a bamboo whisk and a ring light.

Japan, understandably, has been enjoying the moment.

In 2024, the country exported 5,092 tonnes of matcha, up 18.7% on the year before. Export value climbed 25.9% to roughly $185 million. The US, Germany, Malaysia, Thailand and Taiwan led the buying. Demand has run so hot that revered houses like Ippodo and Marukyu Koyamaen have had to cap sales because Japanese tea production simply couldn’t keep pace.

A shortage, in other words – the good kind of problem, if you’re the only one who can make the stuff. But that’s exactly the kind of assumption that will get Japanese matcha in hot water if they aren’t careful.

Enter the dragon

The twist in this tale is that matcha isn’t originally Japanese at all.

It was born in China, flourished during the Song Dynasty, and only later crossed the sea to Japan, where it was refined into the tea ceremony we now think of as quintessentially Japanese. For centuries, that origin story was a footnote. China let the tradition lapse while Japan made it an art form and, eventually, an export. Then, China decided it wanted the footnote back.

In 2018, matcha production ramped up in China’s Guizhou Province, a high-altitude, mist-wrapped region in the country’s southwest that turns out to be excellently suited to growing the tencha leaves matcha is milled from. The playbook is familiar to anyone who’s watched China enter an industry: invite Japanese experts to share advanced production techniques, build a very large factory, and then switch on mass production.

Tongren, the city at the centre of it all, now calls itself the matcha capital of China and hosts what’s billed as the world’s largest single-site matcha factory. 

In 2024, Tongren’s matcha output topped 1,200 tonnes and over 300 million yuan in value. China shattered its own prediction that it would produce 5,000 tonnes of matcha in 2025. The country produced an eye-watering 12,000 tonnes instead (according to the 2026 China Matcha Industry Development Report), or around 70% of global output.

And then there’s the detail that should make Japan sit up and pay attention: earlier in 2025, Guizhou matcha achieved its first large-scale export to Japan, competing directly, on Japanese soil, with Japanese matcha. 

Chinese matcha isn’t beating Japan’s finest ceremonial grade (at least, not yet). But it doesn’t need to. It only needs to be good enough for the cheesecake, the latte and the KitKat – the vast, hungry middle of the market – at a price Japan can’t touch. And that is what it’s excelling at.

Where have we seen something like this happen before?

A cautionary tale from Chery

“So what?”, I hear you ask. Why does it matter that China is getting better at making matcha? 

It matters because once the Chinese set their minds to something, they usually get it done with an efficiency that leaves their competitors in the dust. Take, for example, the Chery story that played out on our own shores in the early 2000s. 

If you can’t remember what a Chery QQ looked like, then you’re in good company. Chery’s first attempt at entering the South African car market with their run-of-the-mill compact hatchback was anything but memorable. Those unlucky few who do recall the QQ (perhaps through painful lived experience?) remember it only for its worst features: dismal build quality, patchy after-sales support and non-existent resale value. By 2018, Chery took the hint and packed up their South African operations. 

But they didn’t go home – instead, they went to Frankfurt, Germany and set up an advanced European R&D centre. You may be shaking your head in dismay at this point, wondering how the same car brand that bounced off the South African market without leaving a dent could dream of cracking Europe.

But cracking Europe was never the plan. The plan was to go in, observe and learn. Chery’s location in Frankfurt was within reach of some of the world’s most respected automotive engineers and a supply chain famous for its efficiency and precision. All they had to do was watch and take notes.

In late 2021, as the fog of the pandemic started to lift, Chery re-entered South Africa with the velocity of an asteroid. Gone were the hatchbacks; instead, they brought the Chery Tiggo 4 Pro and quickly followed up with the Tiggo 7 Pro and Tiggo 8 Pro. In less than 5 years, they’ve managed to go from market entrant to claiming the 7th position in the top 10 car sales stats in South Africa, holding 4.6% overall market share. For reference, Ford, which has been in the country since 1923, holds 5.4% market share.

Chery and their QQ may have left in disgrace, but they returned with designs that felt less like knock-offs and more like contenders. All of a sudden, those European legacy brands that Chery was looking to as tutors are in real danger of getting knocked off the podium. 

China takes the world

The Chery story isn’t a fluke. It’s a template that is playing out across the global car industry at a scale that makes what happened in South Africa look like a warm-up act.

For decades, Chinese automakers learned patiently from their Western joint-venture partners, absorbing everything about how a modern car gets designed and built. Meanwhile, their government committed to an ambitious 20-year plan to develop electric vehicles (perhaps this is the part the West underestimated?) and stuck to it with a discipline that quarterly-earnings capitalism struggles to match. 

When the world reopened after the pandemic, Western executives lifted their heads and discovered that the race had already been run. Chinese manufacturers were spinning out new cars on development cycles of 20 to 24 months against the West’s 40 to 50 months, with mature technology reaching showrooms in half the time, at roughly 30% lower materials cost and 30% lower capital expenditure. 

Watch a Chinese EV brand set up dealerships in Germany today, on the home turf of Mercedes and BMW, and you’re watching the Chery playbook run at continental scale.

Matcha do about nothing? 

It’s tempting to file the current matcha craze under “passing wellness fad” – a flavour that’ll fade the way kale chips and cronuts did. And maybe the froth will settle, but that’s not really the point. The point is the pattern.

Chinese matcha in 2026 looks a lot like the Chery QQ of the early 2000s, or the first tentative Chinese EVs a decade ago: not quite there, a little bit cheaper than the original, easy to dismiss. The mistake – the expensive, market-losing mistake – is to keep dismissing it. Because the Chinese approach to any industry it decides to enter is remarkably consistent – learn from the best, build at scale, undercut on price, then return better than anyone expected.

They will keep improving until “good enough for the latte” becomes “good enough, full stop”.

Japan still makes the finest matcha in the world, just as Germany still makes exquisite cars. But with economic pressure squeezing consumers from every side, will that be enough to outrun the waking dragon?

The next time you buy a matcha product, take a proper look at the packaging. There’s a rising chance that the magical green powder inside travelled not from a hillside near Kyoto, but from a misty mountain factory in Guizhou.

The student, it would appear, is becoming the teacher.

About the author: Dominique Olivier

Dominique Olivier uses her love of storytelling and ideation to help brands solve problems.

Her first book, Lessons from Loss, has been published by Penguin Random House.

She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting.

You can learn more about her work at dominiqueolivier.com and she can be reached on LinkedIn here.