咖啡，來自茶的故鄉：為何外來農產品在普洱茶的發源地蓬勃發展 - 政大學術集成

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(1)國立政治大學亞太研究英語碩士學位學程 International Master’s Program in Asia-Pacific Studies College of Social Sciences National Chengchi University 碩士論文 Master’s Thesis. 立. 政治大. ‧ 國. 學 ‧. 咖啡，來自茶的故鄉：為何外來農產品在普洱茶的發源地蓬勃發展 Coffee from the Land of Tea: Why a Foreign Cash Crop is Flourishing in the Home of Pu’er Tea. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. Student: Julia Simancas Ortiz de Zárate Advisor: Tang, Ching-Ping. 中華民國 103 年 7 月 July 2014.

(2) 國立政治大學亞太研究英語碩士學位學程 International Master’s Program in Asia-Pacific Studies College of Social Sciences National Chengchi University 碩士論文 Master’s Thesis. 立. 政治大. ‧ 國. 學 ‧. 咖啡，來自茶的故鄉：為何外來農產品在普洱茶的發源地蓬勃發展 Coffee from the Land of Tea: Why a Foreign Cash Crop is Flourishing in the Home of Pu’er Tea. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. Student: Julia Simancas Ortiz de Zárate Advisor: Tang, Ching-Ping. 中華民國 103 年 7 月 July 2014. i.

(3) 咖啡，來自茶的故鄉：為何外來農產品在普洱茶的發源地蓬勃發展 Coffee from the Land of Tea: Why a Foreign Cash Crop is Flourishing in the Home of Pu’er Tea Student: Julia Simancas Ortiz de Zárate Advisor: Tang, Ching-Ping. 立. 治政國立政治大學大. ‧ 國. 碩士論文. 學. 亞太研究英語碩士學位學程. ‧ er. io. sit. y. Nat. A Thesis. n. a l Master’s Program in v Submitted to International n i Asia-Pacific Studies Ch. engchi U. National Chengchi University In partial fulfillment of the Requirement For the degree of Master in China Studies. 中華民國 103 年 7 月 July 2014. ii.

(4) Acknowledgements First, I would like to thank my thesis advisor, Professor Tang Ching-Ping, for his guidance and advice.. Thanks to all the kind and warm people I met during my research in Yunnan. Special thanks to all the workers at the Coffee Industry Development Office in Pu’er for their priceless help and time. My biggest thank you is for Chen Hongqing, who introduced me to all the people and all the fun in Pu’er. This research would not have been fruitful without his help.. 立. 政治大. Yunnan kafei with me during my years in Kunming.. 學. ‧ 國. An immense thank you to all the beautiful people who shared infinite cups of. ‧. To mamá and papá, for their unconditional support and endless patience.. sit. y. Nat. er. io. And last, but never least, to my dearly loved and missed abuela Carmen, who. n. served me my first cup of coffee. a. iv l C n hengchi U. iii.

(5) Abstract In the land of Pu’er tea, coffee growing is emerging as a powerful industry. The fast development of coffee production in the past five years is a reflection of the efficient role of the local government in policy formulation, attraction of investment and support. Nevertheless, the economic impact of coffee in Pu’er is not significant enough to explain the government’s efforts to develop this industry. Increasingly more farmers and entrepreneurs are entering the business motivated by stories of success. This study aims to understand the current organizational structure of coffee production in Pu’er, the role that government. 治政大 officials, companies and farmers play in the development of the industry, and 立 the real motivations behind such coordinated effort. This research is based on ‧ 國. 學. qualitative data gathered on site through interviews and participatory. ‧. observation. Due to the lack of previous research on Yunnan coffee, this study aims to provide a general notion of the current situation and future development. Nat. sit. y. of coffee industry in Pu’er, with a focus on strategies employed and motivations.. er. io. It concludes by suggesting that the achievements in local coffee business can be. n. almost entirely attributedato v government in the l the involvement of iPu’er. n. C. h ewant development of this industry. They h i Uan exclusive product to boost n gtoc create domestic sales and improve the image of Yunnan in China and the world. Finally, this research will examine the potential future repercussions of such fast growth, particularly the environmental impact of intensive coffee cultivation.. Keywords: Yunnan, Pu’er, coffee, agriculture, local government, environment. iv.

(6) TABLE OF CONTENTS Acknowledgements ................................................................... iii Abstract ...................................................................................... iv Table of contents........................................................................ v List of figures and tables ........................................................... vii 1. Introduction ........................................................................... 1 1.1 Introduction and overview .............................................. 1 1.1.1 Coffee in the global economy and China ............. 1 1.1.2 Pu’er overview ...................................................... 2 政治. 大. 1.1.3 Pu’er coffee 立development ..................................... 3. ‧ 國. 學. 1.4 Purpose of the research ................................................... 6 1.5 Literature review ............................................................. 7. ‧. 2. Research model ..................................................................... 13. Nat. sit. y. 2.1 Research framework ....................................................... 13. a. er. io. 2.2 Methodology ................................................................... 13. n. v 2.2.1 Fieldwork .............................................................. 14 l ni Ch. U i e h n c g 3. Results ................................................................................... 17 3.1 Introduction ..................................................................... 17 3.2 Actors .............................................................................. 18 3.1.1 Government ........................................................... 19 3.2.2 Companies ............................................................. 22 3.2.3 Farmers .................................................................. 27 3.3 Successful strategies ....................................................... 30 3.3.1 Land expansion ..................................................... 30 3.3.2 Raising quality standards ...................................... 35 v.

(7) 3.3.3 Coffee promotion .................................................. 38 3.4 Motivations ..................................................................... 42 3.4.1 Focus on domestic sales ........................................ 43 3.4.2 Exclusivity ............................................................ 45 3.4.3 Poverty alleviation ................................................ 47 3.4.4 Environmental protection ..................................... 49 3.5 Future developments ....................................................... 50 3.5.1 Certification .......................................................... 50 3.5.2 Tourism.................................................................. 52. 治政大 3.5.3 Environmental problems ....................................... 53 立 ‧ 國. 學. 4. Analysis ................................................................................. 57 5. Conclusion ............................................................................. 69. ‧. 6. References ............................................................................. 71. n. al. er. io. sit. y. Nat. Appendix ................................................................................... 77. Ch. engchi. vi. i Un. v.

(8) List of figures and tables. FIGURE 1 General structure of the global coffee-marketing chain............. 7 FIGURE 2 Total coffee consumption in China, 1998-2012 ......................... 41 FIGURE 3 Virtual water content of a cup of tea or coffee ........................... 55. TABLE 1. Coffee bean prices for Nestlé (Pu’er), 2004-2013...................... 28. TABLE 2. Coffee cultivated area in China, 2008-2012 ............................... 31. TABLE 4. 學. ‧ 國. TABLE 3. 治政大 in Yunnan in 2012...... 31 New area expanded and yield for coffee 立 Cultivated area, yield, exports and foreign exchange for coffee in Yunnan in 2012 ...................................................................... 32 Area, yield and output of tea in Pu’er, 2008-2012 ..................... 33. TABLE 6. Codes and references of the interviewees .................................. 77. ‧. TABLE 5. n. er. io. sit. y. Nat. al. Ch. engchi. vii. i Un. v.

(9) 1. Introduction 1.1.. Introduction and overview. 1.1.1. Coffee in the global economy and China According to legend, the word “coffee” may have originated in the Ethiopian region of Kaffa, known as the birthplace of coffee. While it is believed that the Arabs began its cultivation and use as early as the nineteenth century, coffee did not make its way to Europe until the early seventeenth century. Since then, coffee has become the number one beverage in the world in terms of production, consumption and economic value. Currently, one fourth of the world’s total population consumes almost 2 billion cups of coffee every day. Coffee is also the second. 政治大. most valuable commodity exported by developing countries and an important generator of. 立. rural employment and income. The world’s total area for coffee cultivation is around 11 to 13. ‧ 國. 學. million hectares, the average total production is 8.82 million tons, and sales reach up to US$ 30 billion; the global coffee industry employs over 250 million people (Fairtrade, 2012;. ‧. & Pu’er city, Coffee Industry Development Office [Pu’er Coffee Office], 2013).. Nat. sit. y. Coffee is grown in the tropical region that spans the globe 23 degrees north and south of. io. er. the equator, comprising around 80 countries in South and Central America, Africa, and Asia. The world leaders in production of green coffee beans are Brazil, Vietnam, Colombia,. n. al. Ch. i Un. v. Indonesia and Ethiopia. Traditionally, Latin America has been considered the main coffee. engchi. producing region in the world. In the last years, coffee production seems to be shifting towards Asia. In 2010, Vietnam surpassed Colombia as the world’s second exporter.. Simultaneously, for over two decades coffee consumption in Asia has experienced the most dynamic development in the world, growing a 4.9 percent since 2000 (International Coffee Organization, 2014). Along with lifestyle changes and improved economic standards, coffee consumption has successfully entered markets that were traditionally exclusive to tea consumption, such as China.. Currently, Asia is a market of increasing potential for coffee growers, producers and consumers. In light of these developments, China has also decided to jump on the coffee bandwagon. In the past five years, coffee production in Yunnan province grew at spectacular. 1.

(10) speed, becoming China’s main coffee producing region and potentially emerging as one of Asia’s main areas of cultivation, processing and branding. The combined effort of government policies and leadership, international investment and assistance, and farmer motivation is the key for the creation of a specialty coffee industry in Yunnan that aims to provide for the increasing domestic market and to serve as an effective tool for poverty alleviation.. Although coffee is grown in other provinces of China, Yunnan is undoubtedly the main producing region in the country. Located in China’s Southwest border, Yunnan is endowed with the perfect conditions to grow coffee. It is one of the northernmost coffee regions in the world (Blackmore & Keeley, 2012, p. 94). Yunnan’s main growing areas are located in. 政治大. southern and southwestern Yunnan, in the regions of Pu’er, Xishuangbanna, Wenshan, Baoshan, Lancang and Dehong, among others. This study will focus on the development of. 立. coffee industry in China’s largest coffee producing area and trading centre: Pu’er city.. ‧ 國. 學. 1.1.2. Pu’er overview. ‧. Also known as Simao from 1950 to 2007, Pu’er city is located in Yunnan’s southern region,. Nat. sit. y. at a relatively short distance from the borders with Myanmar, Laos, and Vietnam. It is a. io. er. prefecture-level city 1 made up of nine autonomous counties and one district. It spans approximately 45,385 square kilometers, the equivalent to one eighth of the total area of. n. al. Ch. i Un. v. Yunnan, making it the biggest prefecture-city in Yunnan. It has a population of around 2.57. engchi. million, out of which ethnic minorities account for 61 percent of the total. Pu’er city is home to 26 different ethnic groups, of which 14 have inhabited the land for generations.. Located in northern latitudes between 22 and 24 degrees, the Tropic of Cancer runs through Pu’er, endowing the region with a humid subtropical warm climate all year-round. It has over 28 percent of Yunnan’s total tropical area. Temperatures are between 15 and 20 degrees Celsius; the average annual total precipitation ranges from 1,100 to 2,780 millimeters; and every year there is an average of 1,873 to 2,206 hours of sunlight. Current forest density in Pu’er ranges between 67 percent (Zhu, 2012, p.4) and 70 percent (S01; & G02, March 18, 2014). These distinctive natural attributes, along with an average altitude of 1,400 meters This study will follow the denominations used in the region. The terms “prefecture” or “Pu’er” refer to Pu’er city as a prefecture, and “city” or “Simao” is used to indicate the province capital (Simao district). 1. 2.

(11) above sea level, are perfect for the production of quality coffee. Moreover, according to official data, Pu’er still conserves enough natural land resources —more than 10 hectares available for coffee cultivation— to continue with this fast development of coffee industry (Pu’er Coffee Office, 2013). In 2012, the gross domestic product (GDP) of Pu’er amounted to CNY 36.69 billion, of which 30.8 percent belonged to primary industry, 36.4 percent to secondary industry, and 32.8 percent to tertiary industry; per capita GDP was a mere CNY 14,286. These numbers rank very low in comparison with the rest of the country and also for Yunnan; in fact, in terms of per capita GDP, Pu’er is positioned in the lower rank of all regions in Yunnan. Tea, forest products, electricity and mining are the major industries of the prefecture, accounting for over. 政治大. 70 percent of the total output value of the manufacturing sector (Pu’er Economic and Social Development Report, 2012). While still rather insignificant in economic terms, the fast. 立. development of coffee production currently taking place in Pu’er will transform this industry. ‧ 國. 學. into a powerful engine for the region.. ‧. 1.1.3. Pu’er coffee development. Nat. sit. y. Coffee was first introduced in Yunnan in 1892, when French missionaries brought seeds of. io. er. Arabica coffee and successfully cultivated them in different counties of Yunnan province, including Lancang and Jiangcheng counties in Pu’er. For several decades, coffee was grown. n. al. Ch. i Un. v. in Yunnan only for self-consumption. It was not until the 1950s that coffee was cultivated in a. engchi. bigger scale and considered a tradable commodity. In the mid-1990s, Yunnan became China’s largest producer of coffee, and it has continued growing at a rapid speed ever since. In 2012, coffee growing in Yunnan reached over 66,000 hectares of area, accounting for over 70 percent of the national area for coffee cultivation, and 83 percent for China’s total production (Zhu, 2012, p.3). Pu’er is the largest coffee producer in Yunnan and hence the main coffee factory of China. There are four distinctive periods in the development of coffee industry in Pu’er (Pu’er Coffee Office, 2013, pp.7-8): experimental cultivation from the mid-1950s to the mid-1980s, large-scale cultivation from the mid-1980s to the end of the twentieth century, production shrinking from 1999 to 2007, and fast development from 2007 until now. In 1956, Pu’er city introduced coffee grown in Hainan, and planted 225 kilograms in Jiangcheng, Simao, Menglian and Jingdong as trial. In Jiangcheng they also constructed a. 3.

(12) coffee farm and planted over 16 hectares of coffee. In 1961 they harvested one thousand kilograms of coffee beans. However, shortly after, coffee production stagnated due to pests and diseases, lack of technology, and poor management skills. In spite of that, during the Cold War years Pu’er and Yunnan served as providers of coffee for countries in the Soviet Block that were avid consumers of the drink but could not grow coffee themselves or buy it due to sanctions and embargo from the West (G02, March 18, 2014). This small-scale coffee supply was nevertheless insignificant for the development of the industry. Deng Xiaoping’s 1978 Reform and Opening Up policy switched focus in the country from hard labor to economic profitability. Farmers were now encouraged to develop the economy to improve their lives and eradicate poverty. In Pu’er, the government targeted coffee as one. 政治大. of the main crops that could help farmers increase their incomes and escape poverty. In order to push that industry, in 1987 the local government contacted the factory of Nestlé in. 立. Dongguan (Guangdong) to establish economic cooperation, and to attract technology and. ‧ 國. 學. financial investment. After negotiations with the government, Nescafé (Nestlé’s coffee brand), along with the United Nations Development Program (UNDP), agreed to help Pu’er grow. ‧. quality coffee and in 1988 a large-scale coffee plantation was inaugurated. One year later, Nescafé formally commenced to experiment with coffee cultivation; they brought seeds for. y. Nat. sit. trial, foreign experts to train farmers and control quality standards, new technologies,. al. er. io. pesticides and fertilizers, and, most importantly, they set up a protective price of CNY 12 per. v. n. kilogram (G02, March 18, 2014). Owing to the success of these measures, Nescafé concluded. Ch. i Un. a long-term sales agreement with Pu’er city that would help develop this industry at a faster. engchi. speed. To complement these measures, several coffee institutions were established for the management and organization of coffee development. Only ten years after those measures were set, the total area of coffee cultivation expanded from little over 1,050 hectares to 12,134 hectares. Unfortunately, an intense frost that hit Pu’er in 1999 severely affected coffee trees and production. Additionally, world coffee prices decreased dramatically, reaching lows of CNY 8 per kilogram. Not surprisingly, the combination of a natural disaster and price drop led to the loss of motivation from farmers and companies in the region. Many farmers decided to cut down their coffee trees and grow other crops like tea instead (G02, March 18, 2014). Consequently, the area of cultivation suffered a drastic decrease. The lowest was reached in 2006, with only 7,800 hectares of coffee. 4.

(13) After 2007, when international coffee prices started to gradually rise, Pu’er authorities declared coffee an important specialty industry fostered by the government. Moreover, in 2010, the government included coffee as one of the “Three Treasures of Pu’er”, along with Pu’er tea and the noble dendrobium orchid. These measures were aimed at increasing motivation among farmers and entrepreneurs to resume the fast development of the coffee industry. The response to this campaign resulted in an increase of over 4.5 times of the area cultivated from 2007 to 2010. Due to the growing government involvement, in 2012 Pu’er set up government institutions for the management of the coffee industry —the Pu’er City Coffee Industry Development Office— both in Simao district and in every county in Pu’er city. These offices play an important role in the development of new guidelines and projects, the. 政治大. training in new techniques, and the promotion of local coffee.. 立. Thanks to successful measures and government involvement, Pu’er is now the provincial and. ‧ 國. 學. national leader in coffee production. In 2012, the total area cultivated in Pu’er surpassed 43,000 hectares, which accounted for Yunnan’s 47.18 percent and a 47.03 percent of the. ‧. national total area. In terms of production, in 2012 Pu’er amounted for Yunnan’s 38.4 percent and China’s 38.28 percent. Most importantly, in terms of production value, Pu’er is. Nat. sit. y. responsible for Yunnan’s 50.42 percent and China’s 50.27 percent, more than half of the total. al. er. io. output in both cases. By 2013, there were 118 registered coffee companies in Pu’er city, of. v. n. which 12 were licensed to export. There were 153 peeling factories, 42 hulling factories and 3. Ch. i Un. secondary processing factories. The most famous local brands for coffee beans are Beigui,. engchi. Arabicasm, Manlao River, Kefei and Livesun. For secondary processing coffee, the main brands are Aini, Beigui and Manya. Pu’er has even attracted two main Fortune 500 multinationals like Nestlé and Starbucks to establish permanent procurement stations and contribute to the development of coffee cultivation. Pu’er coffee industry employed a total of 247,500 people, of whom 244.000 are farmers and the remaining are workers in processing, purchasing and services (Pu’er Coffee Office, 2013, p. 9).. By identifying coffee as a unique local industry and with the support of new policies, funding and human capital training, Pu'er government has paved the road for the development of coffee production. The number of new coffee-related companies and factories is increasingly growing and more entrepreneurs are looking at coffee for new business opportunities. Additionally, increasing numbers of farmers are entering the coffee market as a means to 5.

(14) generate higher profits and provide a more stable source of income. Nevertheless, the rationale behind this fast development and the predictions for the future success of this industry are still undefined.. 1.2.. Purpose of research. For many decades, Pu’er has been known internationally for its famous tea. Such a unique local product gave popularity to the region and helped improve the lives of the farmers. While Chinese coffee is yet far from achieving international recognition, this crop is increasingly significant for the local economy. If the fast growth of the past five years is sustained, it is plausible to presume that locally produced coffee will gain recognition and. 政治大. boost sales significantly. Considering that coffee production in Yunnan remains rather underdeveloped, an early analysis of this specialty industry could potentially help tackle the. 立. most problematic areas and identify the key elements for the successful take off of coffee. ‧ 國. 學. growing, processing and branding in Pu’er. What is more, the early study of this booming business will help foresee the potential repercussions of an uncontrolled development of the. ‧. coffee industry.. Nat. sit. y. The aim of this study is to put in perspective and to analyze the different actors involved in. io. er. the development of the coffee business in Pu’er. Through personal observation and extensive research, the following chapters will examine the motivations and interests of all actors. n. al. Ch. i Un. v. involved —government, farmers, domestic companies and multinationals—, their goals and. engchi. strategies, their role in the local coffee chain, and the potential setbacks they may encounter in the next years. The role and intentions of the government on fostering this industry will be the focus of attention.. The goal of this descriptive research is to set a solid base for future studies on coffee in the region, particularly from a social sciences perspective. By identifying and dissecting the main agents of development, this study will ease the task of allocating specific responsibilities and goals to each actor for the correct development of the coffee industry. This research will attempt to foresee areas of success, aspects in need of improvement, and potential threats to the environment and the industry. But most importantly, this research will serve as a significant English language source for the presentation and promotion of a challenging new industry in a region with great investment potential.. 6.

(15) 1.3.. Literature review. From the tree to the cup, the long journey that each bean takes is a reflection of the socioeconomic and political implications of the coffee trade. This path, the “coffee value chain”, is the basic unit of study for the analysis of this business, including the actors involved, the value added to the beans along the way, and the marketing strategies used to expand or shorten this chain. Thus, most literature on coffee economics and social impact makes use of the coffee chain as the axis of argumentation (Oxfam, 2002; Talbot, 2004; Petit, 2007; Tucker, 2011; Garza Treviño, 2014).. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i Un. v. FIGURE 1: General structure of the global coffee-marketing chain. SOURCE: Ponte, 2002.. 7.

(16) Talbot reviews different approaches to the structure of the commodity chain (2004, pp. 7-11). Earlier, the chain was depicted as a dual unit that reflects both the hierarchical geographical structure of other commodity chains —poor peripheral countries that deal with coffee growing and initial processing— and the specific nation-state structure of the chain. Thus, this approach suggested that coffee trade is regulated within the producing countries, but under the limitations imposed by other nations located on the other end of the chain. A later review of the commodity chain distinguishes three dimensions: an input-output structure; a geographic distribution and a distribution among firms; and a governance structure. On the whole, the coffee value chain is a geographically differentiated process in which the role of all the states, firms, markets and consumers involved in the coffee trade determine the value, length and directionality of the chain.. 立. 政治大. Probably the main focus of analysis in recent studies is the new developments and changes in. ‧ 國. 學. the traditional coffee value chain. These variations can be due to new demand or offer (specialty coffee, fair trade, organic), government intervention, or market and power forces.. ‧. Undoubtedly, for many decades now the main problem in the coffee value chain is the unequal distribution of incomes, reflecting the “asymmetrical character of power in the global. Nat. sit. y. coffee value chain” (Petit, 2007, p. 230). In other words, the traditional knowledge that coffee. al. er. io. cultivation can help reduce poverty and improve the economies of the South has been. v. n. challenged by recent changes in policy, market and technology, along with the constant risk. Ch. i Un. of the coffee price cycle. It is in this new set of circumstances that farmers of developing. engchi. countries become the weakest link of the chain, while importers, traders and consumers benefit from the change of balance (Oxfam, 2002; Talbot, 2004; Petit, 2007; Tucker, 2011). Producing companies are now earning less than half of what they used to receive a decade ago; on the contrary, the value of sales in consuming countries in the early 2000s exceeded twice the value in the 1980s (Petit, 2007, pp. 230-231).. In the two decades between the 1960s and the 1980s, coffee saw a booming period. Authors indicate that the drastic removal of the quota system from the International Coffee Agreements (ICA) in 1989 resulted in the current instability (Talbot, 2004; Neilson, 2007; Garza Treviño, 2014). Without the support of the ICA to raise and stabilize coffee prices, the market dropped and it led to the current status of instability and uncertainty due to continuous price cycles. Unequal distribution of incomes is the main root of this “paradox of coffee 8.

(17) production” (Tucker, 2011, pp. 95-97). Although coffee is a relatively good source of income for farmers in many developing countries —or at least in comparison with other less profitable cash crops—, its price instability and unfair profit distribution generates a system in which farmers can not escape poverty, but neither can they abandon coffee for another crop after years of hard work and dedication. Some of the poorest and most inequitable countries in the world heavily depend on coffee trade. It could be then argued that coffee dependency, instead of providing a source of income and investment, is an anchor that impedes poor countries from further developing their economies through coffee export.. The high degree of volatility of this commodity manifests in the coffee cycle. These cycles are characterized by long periods of low prices followed by a shorter booming period. Tucker. 政治大. argues that this phenomenon is mainly caused by two factors: unforeseeable changes in coffee supply and the difficulty to match supply and demand (2011, p. 114). Demand and. 立. supply are difficult to match because farmers that plant new coffee trees motivated by. ‧ 國. 學. growing demand and high prices will not harvest the cherries after at least three years. Unless external forces control the market, oversupply leads to the fall of prices, coffee surplus, and a. ‧. loss of the capital invested by growers. Considering that prices tend to remain low for several years, farmers may encounter difficulties to repay loans and keep their land; eventually, they. y. Nat. sit. will cease the cultivation of coffee, leading to a massive decrease in supply and subsequent. al. er. io. higher prices (Talbot, 2004, pp. 35-37). The impact of coffee cycles greatly depends on. v. n. factors such as political strategies in producing and consuming countries, weather conditions, and social stability.. Ch. engchi. i Un. Finally, along with the unequal distribution of profits and the price cycle, coffee growers also face a decrease in coffee prices caused by the battle of prices among companies. In an attempt to lower costs while maintaining a consistent taste, coffee multinationals searched the market for cheaper suppliers that, undoubtedly, offered a product of lower quality. Farmers lowered the quality of their coffee in order to attract purchasers from all over the world. As a result, the general quality of coffee decreased considerably, reaching alarming lows in the 1960s (Talbot, 2004, p. 198).. Considering the aforementioned obstacles for coffee growers, in the past decades the industry has focused on shifting the coffee value chain, either changing the course of interaction between stages, adding new links, or removing old ones. Neilson argues that “product 9.

(18) differentiation has allowed lead actors in the supply chain to construct entry barriers to protect their profit streams, shaping a new institutional environment, particularly with regard to the governance of quality” (Neilson, 2007, p. 189). The bulk of the current research on coffee industry explores these different alternatives to traditional coffee production that aim at improving the lives of farmers, reaching higher quality standards, and protecting the natural and social environment (see Taylor, 2002; Neilson, 2007; Petit, 2007; Bacon, Ernesto Mendez, Gomez, Stuart, & Flores, 2008; Garza Treviño, 2014). Talbot refers to this phenomenon as “forward integration” (2004, p.12): taking control over one of the links in the chain and increasing the share of profit in a stage by improving the quality and value in that stage. Among these innovations, it is worth mentioning the addition of new technologies, the production of new forms of coffee (selling green beans, roasted, grinded or instant coffee. 政治大. instead of just parchment), the focus on high quality specialty coffee, the promotion of brands and place-quality associations, and the introduction of new forms of cultivation that protect. 立. the environment and the rights of farmers.. ‧ 國. 學. It should be noted that many authors emphasize the importance of what Neilson refers to as. ‧. “turn to quality” (Neilson, 2007, p. 189). In other words, the current focus is to upgrade the standards of coffee and to create geographical associations to quality coffee. Brand and. y. Nat. sit. geographical association to quality are two main strategies to increase sales and ensure a. al. er. io. steady supply. Product identity through “romantic place imagery” (Neilson, 2007, p. 189) or. n. catchy slogans, product differentiation and product innovation are the main “rents” —profits. Ch. i Un. v. resulting from changes in the chain— in the current coffee industry (Talbot, 2004, p.19).. engchi. After the coffee crisis and the sharp decrease in quality, many coffee consumers are willing to pay higher prices to drink coffee of higher quality. It is thus argued that this turn to quality and the production of specialty coffee are excellent ways to impulse the coffee industry. However, not all authors agree with specialization. While most authors advocate specialty, fair trade and organic coffee as the means to raise prices, Petit (2007, pp. 254-255) argues that those alternatives present several limitations and, while they can be potentially successful in smaller quantities, the majority of coffee sold will still consist of non-differentiated coffee. Therefore, in order to obtain greater profits in the sale of regular coffee, it is necessary to raise quality standards and consistency.. Fair trade and environmental-friendly coffees are the latest trends in adjustments of the value chain. While development agencies, NGOs and governments actively support the growth of 10.

(19) these types of coffee, the opinions of scholars are divided. On the one hand, these sustainable initiatives are beneficial for aspects like environmental protection and health safety; increased incomes; improved education, health, and competitive skills “to face adversities presented in the current capitalist model” (Garza Treviño, 2014, p. 281); better infrastructure; management of production, storage and transportation; access to credit and networks; and increased selfesteem (Taylor, 2002). On the other hand, authors also show concern about the limitations of these practices and their potential to tackle social problems. The most raised question is that of certification (Taylor, 2002; Sick, 2008; Tucker, 2011. While certification ensures minimum prices and premiums, the process to obtain it can be very costly and time consuming, and certification can be revocable. Another problem is that fair trade and organic coffee is considered a niche product sold at very high prices, and thus it is targeted for upscale buyers.. 政治大. The global market share of certified coffee was only around 1 percent in 2010 (Garza Treviño, 2014, p. 282), a reflection of this “yuppie syndrome” (Talbot, 2004, p. 207). Moreover,. 立. authors like Taylor, Garza Treviño and Talbot indicate that currently the supply of certified. ‧ 國. 學. coffee far surpasses the demand (which mainly comes from Europe and the United States), and thus over 80 percent of the total production is sold under regular terms instead of under. ‧. certification privileges. All in all, studies like the one conducted by Bacon et al. (2008) in Nicaragua prove that certification programs are good strategies to confront the coffee crisis. y. Nat. sit. and put in practice the targets established by the United Nations Millennium Development. al. er. io. goals for 2015. The correct implementation of these programs translates into improved. v. n. livelihoods and decreased vulnerability. The involvement of governments can greatly. Ch. improve the success of fair trade and organic strategies.. engchi. i Un. A final aspect of this discussion is the role of governments in the promotion, protection and improvement of coffee industry. The degree of market liberalization varies in each country, but most of the nations enjoy a relatively free coffee market. Some degree of state control is nonetheless necessary. For Petit’s study in Ethiopia (2007), state regulation is vital for quality control, environmental protection and improved export capabilities. Additionally, government support is needed for new infrastructures and services, financial and technological assistance, and research. The role of the state also extends to prioritizing those sectors that are most costeffective and demanded by the market. The research conducted in Papua New Guinea by Orlegge (2010) illustrates the role of the government in the creation of a national coffee industry, and how the lack of state involvement can also lead to the failure of industry expansion and diversification. Government agencies for coffee promotion are in charge of 11.

(20) taking the lead in the development and revitalization of this industry; they “must not become white elephants but be assisted to implement their plans and programs for the sector and attain their objectives” (Orlegge, 2010, p.125).. Whereas research on coffee production is relatively prolific, the issue of coffee production in China has hardly been studied. The majority of research on Yunnan coffee deals with the agronomic aspects of the plant, and most of those articles have been published in Chinese journals of small impact factor. Some articles address the development of coffee industry in Yunnan and Pu’er (see Li, Li, & Luo, 2011, and Zhu, 2012), but their contribution is rather descriptive instead of analytical. Moreover, these articles, all written in Chinese language, tend to be written following a similar narrative —sometimes different texts use identical. 政治大. expressions—, and their length does not exceed 5 pages on average.. 立. Recently, an increasing number of reports on the environmental aspects of coffee growing in. ‧ 國. 學. Yunnan have been written for journals, online magazines and forums. The majority of these articles address the importance of shade trees in coffee plantations (Zhang, Zhou, Li, Yang,. ‧. Bai, & Xiao, 2010) or general environmental issues related to intensive coffee farming (Du, 2007; Dong, 2011; Craves, 2013, Gibson, 2013). Gibson focuses on the “Four D’s of. Nat. sit. y. Yunnan’s Water-Energy-Food Choke Points”: Drought, Dams, Development, and. al. er. io. Deforestation. His analysis is an attempt to link the current boom of coffee production in. n. Pu’er with environmental problems that are taking place now or may take place in the near. Ch. i Un. v. future. Gibson explains that Yunnan’s long annual droughts can affect agriculture production. engchi. and daily water consumption. Meanwhile, increased cultivation of coffee —a water intensive crop— is draining the remaining reserves of water. Changing from sun to shade-grown coffee would reduce the amount of water used for the cultivation and processing of coffee, which in turn would mean more water for public use and other crops, especially during droughts. But most importantly, it would prevent total reliance on and proliferation of dams. Aside from the construction of dams and other infrastructures, the massive cultivation of eucalyptus and rubber trees and the rampant production of coffee of the past years are clearing forests, deteriorating the soil, and leaving the region more prone to droughts, landslides and decreased biodiversity. Gibson recommends ecological farming and certification as the solution to maintain this booming coffee industry while preserving the environment of Pu’er.. 12.

(21) 2. Research model 2.1.. Research framework. Given that the current literature available on Yunnan coffee is scarce and superficial, the main question that this research attempts to address is the individual and collective role and motivations of all actors involved in the coffee business in Pu’er, and how their interactions have led to the current fast development. Moreover, this study will explore the impact that government, farmers and investors have on other actors, and the division of power. Based on previous literature, the present study will focus on issues of poverty alleviation, quality control, foreign investment and, most importantly, the role of the government in the. 政治大. development and promotion of this industry.. 立. ‧ 國. 學. The variables involved in the fast development of coffee in Pu’er are summarized in three: actors, strategies and motivations. The qualitative analysis of each variable, explained from the different perspectives of each of the actors involved, provides an understanding of the. ‧. functioning of the coffee production system in Pu’er. First, this research will examine the role. sit. y. Nat. of each party involved in the coffee industry, including their individual contributions and motivations. Next, the focus will move on to the global strategies developed by the. io. n. al. er. government and implemented in cooperation with companies and farmers. These are the main. i Un. v. strategies known to have generated the fast development of the last years and expected to. Ch. engchi. produce further growth in the future. Finally, the study will analyze what factors serve as motivation for officials, entrepreneurs and farmers to combine efforts for the development of coffee industry. Based on existing literature and the interviews conducted during the field research, those driving forces will be further categorized as “official” and real motivations.. 2.2.. Methodology. This study is based upon four main methods of research: literature review, quantitative data, interviews, and participatory observation, the last three obtained during the fieldwork in Yunnan. Since the production of coffee in Yunnan is a rather unknown and fairly recent phenomenon, hardly any literature has been written on the issue, especially in the social sciences. In the past five years there has been a gradual increase in the information available. 13.

(22) on Yunnan coffee, mostly in newspapers, coffee blogs, and short journal articles written by local scholars. This study will use some of these formal and informal sources as general reference. Considering the absence of quality information, the aim of this research was to gather all the knowledge necessary for a first in-depth analysis of the current situation and future development of coffee industry in Pu’er. Quantitative data is scarce and cannot alone reflect the current reality. While some numerical data will be analyzed, the bulk of this study is based on qualitative data gathered on site. In order to answer the research question, this study opted for a very comprehensive, in-depth, participatory involvement in the data collection, and aimed at understanding the issue from all angles. Consequently, the types and sources of the data, as well as the actors involved, were selected to be as heterogeneous as possible, within the target established in the research question.. 2.2.1. Fieldwork. 立. 政治大. ‧ 國. 學. Field research in Yunnan, including interviews, data collection and participatory observation, was conducted from March 11 to 31 in Kunming and Pu’er.. ‧. The research began in the province capital, Kunming, where the main offices for coffee. Nat. sit. y. companies and government branches are. The first destination was the office of the Coffee. io. er. Association of Yunnan (CAYN), located in the heart of the city: the Green Lake. The formal semi-structured interview with members of the CAYN proved very helpful to envision a. n. al. Ch. i Un. v. general picture of this industry for the first time, as well as to obtain references and contacts. engchi. to expand the research. In the following days, formal semi-structured interviews were conducted with members of Aini Garden and Manlao River Coffee in Kunming. In addition to the interviews, more information about coffee culture and knowledge of local coffee was obtained through several informal conversations in coffee shops near Wenhua Alley, Kunming “foreigners’ street”.. Following the first incursion in Yunnan coffee through the capital city, the next and main destination was Pu’er. The region is home to a wide variety of coffee farms and factories, companies and procurement centers, universities with coffee studies and, most importantly, the main government office for coffee development in the area. Government officials in the Pu’er Coffee Industry Development Office not only agreed to an extensive interview and tour around the premises, but also provided a wide range of official data that illustrates the growth. 14.

(23) of coffee and tea industry, the measures and policies implemented by government agencies, and the prospect figures for the following years. This quantitative data is necessary to establish a reliable numerical reference to support the more subjective, observational data. The formal interviews were then followed by an informal lunch meeting in which topics like tea and coffee culture, ethnic minorities, and tourism were discussed with veteran government officials and younger office workers representing Yunnan and other regions in China. The intimate connection of the Pu’er Coffee Office and the rest of parties involved in this industry in Pu’er proved to be extremely helpful to obtain information and references of relevant contacts in the prefecture.. In the following days, several coffee companies were interviewed and factories were visited.. 政治大. This research includes semi-structured interviews with local companies like Beigui, Arabicasm and Aini; foreign purchasers like the giants Starbucks and Nestlé; and individuals. 立. like the owners of Yicun Coffee who, pushed by his passion for coffee, opened a small. ‧ 國. 學. processing store where you can sit and taste coffees from all over Yunnan. The hours of interviews, coffees drank and factories visited are the main source of information for this. ‧. research. Although in less number due to language barriers —many farmers only speak local dialect—, this study also includes impressions from conversations with some farmers met in. y. Nat. er. io. al. sit. procurement stations and private farms.. v. n. Since the growth of the industry is followed by an increasing demand of trained professionals,. Ch. i Un. this research also conducted in-depth interviews with professors of the coffee major in the. engchi. Yunnan Vocational College of Tropical Crops, and informal interviews with some of the students in this new specialty. Luckily, it was also possible to assist to actual classes in two of their newest and original classrooms: the coffee shop and the processing-cupping classrooms. To summarize, the research in Pu’er delivered great amounts of information from very different sources and diverse methods, ranging from formal interviews to informal conversations over a cup of coffee. While many interviewees were recommended by government officials, the majority of the people that contributed to this research were met through their connection to Kworlds Communication, an advertisement company that works in close collaboration with the government. Finally, taxi drivers and restaurant owners, hotel managers and KTV employees, they all seemed to have something to say about Pu’er coffee industry. 15.

(24) Back in Kunming, two more interviews were conducted to contrast and delve into questions that arose during the fieldwork in Pu’er. In order to further understand the potential environmental threats of intensive coffee production in the region, an interview was conducted with environmentalists of the non-profit organization Green Watershed. Then, a professor of the Tourism Management department in Yunnan University was contacted to provide some insight about the future of Pu’er as a destination for coffee tourism.. All formal interviews were duly taped in Chinese language and transcribed into English. Informal conversations, impressions, and other fieldnotes were recorded in writing in a field research diary.. Limitations of the study. 立. 政治大. The following research encountered several limitations that need to be addressed. First, this. ‧ 國. 學. study was primarily limited by time and resource constrains. The span of time available for the field study and the lack of resources, especially economic, restricted the time of this. ‧. research to eighteen days. Moreover, some interviews could not be conducted due to incompatibilities in schedule and location. Language barriers also limited the scope of the. y. Nat. sit. research, particularly when conducting interviews with farmers. Yunnan is a region with a. al. er. io. great variety of ethnic minority groups that speak different dialects and languages;. n. additionally, the local dialect of Pu’er can be difficult to understand for non-native Mandarin. Ch. i Un. v. Chinese speakers. The majority of farmers lack basic levels of formal education and thus their. engchi. knowledge of the standard Mandarin is scarce or nonexistent. As a consequence, some interviews with farmers could not be carried out or had to be conducted with the help of nonprofessional translators.. Nonetheless, the main limitation of this research originated from the interviews conducted with government officials and entrepreneurs. A general tendency observed in many interviews was that the responses of different interviewees to same questions were surprisingly similar, both in tone and choice of words. Other times, speakers used similar drawings and diagrams to illustrate what they expressed. In other words, frequently throughout the research, standard answers were provided for certain delicate topics. While there is no real evidence to confirm this affirmation, the overall impression is that these responses may have been extracted from pamphlets, books, speeches or general propaganda. 16.

(25) Since many sets of interviews shared numerous similarities, the reliability of the information provided by the interviewees for those questions was questioned and closely examined.. These phenomena have been taken into account for the analysis of the information. Due to the lack of literature on Yunnan coffee, this research relies on other sources to contrast the veracity of the information gathered during interviews. The data has been analyzed taking into account general literature on the development of coffee industries around the globe, the researcher’s knowledge of the people and the culture and, most importantly, the observations made during the field research. In many cases, observation of the interaction between farmers and businessmen, government officials and companies was key to determine the degree of trustworthiness of the affirmations made by those same actors during the interviews.. 3. Results. ‧ 國. 學. 3.1.. 立. 政治大. Introduction. ‧. Pu’er city is the coffee capital of China. The fast development of coffee industry has awarded this honor to the region, and since then it has become the prevailing slogan used by the. y. Nat. sit. government and other coffee promoters. In fact, the official logo designed for the promotion. al. er. io. and branding of Pu’er coffee is often accompanied by the slogan “Pu’er — Capital of Coffee. n. in China”. This logo can be seen throughout the region and in the town of Simao. Not only it. Ch. i Un. v. is displayed at the entrance of factories, in the packaging of local coffee products and during. engchi. competitions, but it is also present in banners around the city, local television commercials, and even in coffee mugs. Local government officials welcome their guests with fresh coffee poured in a white cup with the logos “Pu’er Coffee” and “Coffee Association of Pu’er” on each side. This cup symbolizes the support of the government to the promotion of this industry. It was the local authorities that commissioned the design of an official logo to help support the branding campaign. This logo is a clear representation of the strong commitment of the local government to promote the role of Pu’er as China’s coffee capital (G02, March 18, 2014).. Kworlds Communication was commissioned by the local government to design the logo and to collaborate with them in many other coffee promotion campaigns. The company focuses on several areas, ranging from media and advertisement, design and coffee promotion. This 17.

(26) company works in close cooperation with the government of Pu’er for the creation of promotional videos, the design of logos and other marketing strategies, print and digital media advertising, and the organization and documentation of coffee competitions, among others. Located in the outskirts of Simao city, Kworlds headquarters —they also have offices in Beijing and Tianjin—serves as an office and also as a coffee promotion center. In their warehouse they have on display samples of the main coffee brands in Pu’er and a great variety of equipment to roast, brew and serve coffee. Formerly professional photographers and graphic designers, the members of the company are now coffee connoisseurs. In the company’s warehouse, they provide a basic introduction to the world of Pu’er coffee and brewing techniques. Whether they are working for the local authorities as promoters or just enjoying a cup of coffee with some friends, a visit to Kworlds’ coffee promotion center is. 政治大. always a guarantee of a full immersion in the world of Pu’er coffee.. 立. When the coffee boom was more and more visible, the members of Kworlds returned to Pu’er. ‧ 國. 學. and established a business that encompassed their professional careers in media design and their passion for this drink. Since then, they have become coffee experts and a link to. ‧. government officials, companies, farmers, promoters and many individuals in the coffee business in Pu’er. They are a reflection of the dynamism of this industry and the. y. Nat. sit. interconnections created among all participants in coffee production. Like them, more and. al. er. io. more people are becoming coffee entrepreneurs, investing in firms, processing factories and. v. n. other businesses. They are receiving the help of the government, universities and companies,. Ch. i Un. which simultaneously assist each other in the improvement and promotion of growing, processing and trading.. 3.2.. engchi. Actors. Pu’er is now the coffee center of China. Increasingly more and more locals, outsiders, and foreigners are landing in this region to invest in this crop and become part of a trendy industry. But the success of this development can not be explained without the intimate connections among all parties involved in the coffee business. The main actors involved in the development of the coffee industry in Pu’er are the local government and coffee companies, both domestic and foreign. The role of farmers, albeit less determining, is also considered in this study.. 18.

(27) 3.2.1. Government Different governments exert different degrees of control over the development of the industry. In post-Mao China, the previous central planning system has given way to a more competitive market economy that relies on local initiatives and management. China has evolved into a decentralized system that allows local officials to “play an entrepreneurial role” in the development of the local economy (Oi, 1995, p. 1147). In the coffee market, the involvement of the local government is necessary for the protection of this industry. Whether their role focuses on quality control, improving export capabilities, providing financial and technological assistance, or conducting research, the government of Pu’er is responsible for taking the lead in the development of coffee and the revitalization of this industry.. 政治大. Indeed, the upsurge of large-scale production of coffee in Pu’er in the 1980s was the direct. 立. result of local government intervention. Government authorities and members of Nestlé in. ‧ 國. 學. Pu’er stress the key role of the local government in the 1980s in transforming coffee growing into the prosper industry that it is today. An official in the Coffee Office explains how it was. ‧. solely the government’s initiative to contact Nestlé. After negotiations with local authorities, the multinational decided to teach them how to grow coffee (G02, March 18, 2014). In Nestlé. sit. y. Nat. they even venture to argue that without the government’s intervention and their involvement. al. n. Policies. io. Pu’er (B06).. er. “the industry would probably not be so big, or there would be no coffee industry at all” in. Ch. engchi. i Un. v. Since then, the government has adopted a more secondary role than that of the 1980s, albeit pivotal to the expansion of coffee industry. Through the formulation of policies and guidelines, the governments of Yunnan and Pu’er aim to set a framework to promote coffee cultivation, attract investment, and encourage farmers and entrepreneurs. At the national level, in 2007 China enacted the “Special Agricultural Product Region Layout Plan” (tese nongchanpin quyu buju guihua) to support the development of coffee as a specialty product, followed by the 2011 document “Suggestions on the Promotion of the Development of China’s Tropical Products Industry” (guanyu cujin woguo redai zuowu chanye fazhan de yijian), in which coffee was considered one of the main tropical crops in the country. Regionally, the government of Yunnan formulated other coffee-related measures such as “Suggestions on the Acceleration of the Development of Coffee Industry” (guanyu jiakuai. 19.

(28) kafei chanye fazhan de yijian) and “Planning and Policy Suggestions on the Development of Yunnan Province Coffee Industry” (Yunnan shen kafei chanye fazhan guihua ji zhengce yijian) (Pu’er Coffee Office, 2013, p.13). These policies encouraged Pu’er government to issue the “Decision on Accelerating the Development of Coffee Industry in Pu’er City” (guanyu Pu’er shi jiakuai kafei chanye fazhan de jueding) (Zhu, 2012, p.4). This document has become the guiding text for the coffee industry in Pu’er, since it describes the goals, principle, ideology, priorities and tasks for the development of coffee in the next five years, and establishes a minimum government investment of 20 million renminbi per year. Nowadays, the government of Pu’er is determined to continue formulating new measures while ensuring the correct implementation of the policies currently enforced. According to a coffee scholar in Pu’er, it is the government’s duty to issue measures and enact policies because “when the. 政治大. government sees that there is a particular industry that is influential in the market, they have to develop some policies to make it more stable” (S01).. 立. ‧ 國. 學. Attraction of investment. To motivate international companies to buy coffee or establish a joint venture in Pu’er, and to. ‧. encourage locals to open coffee companies, the government has developed preferential measures like the ones included in the “Decision on Accelerating the Development of Coffee. Nat. sit. y. Industry in Pu’er City”. For instance, depending on the scale and directionality of the. al. er. io. investment, the government of Pu’er can offer tax redemption or reduction, economic support. v. n. and other incentives (G01, June 24, 2014; & G02, June 25, 2014). The government promotes. Ch. i Un. the signature of memorandum on understandings with multinationals as testimony of their. engchi. support and compromise to these companies. As a direct result of government encouragement, coffee companies and factories mushroomed in the past years. Located in the outskirts of Simao, the Munaihe Industrial Park was created to manage these new companies, encourage more businesses to establish in Pu’er, and create a coffee trade center. The main coffee companies in Pu’er moved their headquarters to Munaihe: Starbucks, Aini, Arabicasm and Kefei, among others, enjoy the comfort of an industrial park created to ease transportation for farmers, and to facilitate the work of potential investors and buyers.. Administrative organization In order to control, coordinate and correctly implement these measures and strategies, the government of Pu’er has created a bureaucratic web of coffee offices around the province, and has appointed local authorities, many of which were in charge of tea promotion not long 20.

(29) ago. This coffee organizational framework was completed in June of 2012, when the Pu’er City Coffee Industry Development Office was established and appointed as the headquarters of coffee promotion and management for the prefecture. Additionally, each county in Pu’er city has a coffee development office. This organization in Pu’er is unique in all China (Hu, 2013), and it is argued to be one of the factors of success in comparison with other coffee producing regions in Yunnan. For members of Nestlé, this bureaucratic system marks the difference, and the progress it has achieved is very visible: “[Compared to other regions,] Pu’er is well advanced in every aspect: quality, production, productivity, marketing, organizational structure, coffee offices, and so on. It is very well organized and developed” (B06). One of the members of Nestlé who arrived in Pu’er in 2005 has been witness to the structural changes that are taking place in the region. He explains that now companies like. 政治大. Nestlé work in close cooperation with the Coffee Association of Yunnan and the Coffee Development Office of Pu’er. They hold regular meetings with both institutions and discuss. 立. issues “very open and transparently” (B06). The Coffee Association of Yunnan is an. ‧ 國. 學. organization that helps inform and promote local coffee, and coordinates with local governments the correct development of the industry. It is a non-profit social organization,. ‧. created by coffee businessmen and enthusiasts, and has full endorsement from the government. The Coffee Association of Yunnan was ratified by the Ministry of Civil Affairs. y. Nat. sit. of the People's Republic of China in 2009 (G02, June 25, 2014). Moreover, the vice-mayor of. al. er. io. Pu’er, Peng Yuanguo, has been appointed as the head of coffee development in the region.. n. Peng is fully committed to the management of the main issues regarding coffee in Pu’er city;. Ch. i Un. v. he also serves as a link between growers, companies and government officials. Some people. engchi. in Pu’er even refer to him as the “vice-mayor of coffee”. While these agencies have largely contributed to the correct management of coffee industry in the prefecture, Zhu suggests that shortage of funds and lack of training of the personnel working on these offices are the weak points of this system. The author recommends the creation of separate departments to deal with the different aspects of coffee, such as economic organization, planning and designing, and technical training (Zhu, 2012, pp. 5-6).. Promotion The government of Pu’er is also very active in the promotion of local coffee through advertisement, coffee competitions and branding. Local officials commissioned Kworlds to create the logo and slogan, and continue to count on their assistance and on other local companies for the organization of contests and promotional events to raise awareness and 21.

(30) publicize the “Pu’er coffee” brand. The government of Pu’er has also released several books, guidelines and regulations for the correct cultivation, quality control and technology research for coffee. Additionally, in order to promote coffee among Chinese citizens, they released books about the fundamentals of coffee and coffee culture in the prestigious bookstore chain Xinhua (Pu’er Coffee Office, 2013b, p.4). Noticeably, the local government of Pu’er city serves as a guiding leader and coordinator between coffee growers, producers, companies, traders, university researchers, and every person involved in the development of coffee industry in the prefecture. They are aware of all coffee-related activities taking place in Pu’er and all the actors involved. They gather, produce and issue all the data available for this practice. They provide support and training to. 政治大. farmers, economic incentives to companies, cooperate with universities to improve the human resources, and encourage all actors to raise quality standards to increase demand.. 立. ‧ 國. 學. 3.2.2. Companies. ‧. Domestic and international companies play an increasingly important role in the development of coffee industry in Pu’er. It has not been until recently, however, that these companies have. y. Nat. sit. grown, diversified and taken part of the leadership. The proliferation of coffee-related. al. er. io. companies is a fairly recent phenomenon, particularly significant in the past three years. This. n. is consistent with the boom in coffee production and sales in that same period. In 2012, there. Ch. i Un. v. were around 70 registered companies in Pu’er (Zhu, 2012, p. 4); in the year 2013, the number. engchi. of registered companies was 118, meaning an increase of 48 enterprises in little over one year (Pu’er Coffee Office, 2013, p.9). According to one of the managers in Arabicasm Coffee, this sudden increment is mainly due to the mushrooming of primary processing factories (B08). Given that still most of the coffee produced in Yunnan is exported as green beans, the number of secondary processing factories and packaging companies remains low. Nonetheless, some argue that in the past years there has been an increasing interest in establishing domestic companies that produce coffee from growing to processing, packaging and marketing. There is an increasing entrepreneurial interest in coffee. Members of Beigui Coffee observe that “there are more people in the coffee business, either because of the increasing economic benefits and higher prices, or because of the government focus on the industry” (B05). Currently, coffee companies in Pu’er, especially domestic companies, are concentrated on climbing up the technology and quality ladder. This change of focus will surely lead to the 22.

(31) emergence of several secondary processing factories and companies that grow, produce, and sell their own products. In Pu’er city there are international and domestic coffee enterprises. 70 percent of those companies export their beans or finished products to other countries, especially to Europe. For other companies, their business focus has shifted in the last few years from export to domestic-oriented. Nowadays, companies that only purchase beans, like Arabicasm, Starbucks or Nestlé, are giving way to a new wave of coffee firms that deal with all stages of production, like Aini, Beigui, or Manlao River. The latter usually own or rent a big piece of land and hire farmers to grow their coffee in it. Some companies like Manlao River even allow their farmers to sell part of that coffee to other purchasers. The majority of firms. 政治大. provide a steady salary to their farmers and some extra benefits according to production, sales and other factors (B03; & B10, March 24, 2014). The former are companies that do not grow. 立. coffee but instead own procurement centers where individual farmers, households or village. ‧ 國. 學. groups go to sell their beans according to weight and quality. The rejection rate varies depending on the type of company, their standards, and the natural conditions during the. ‧. growing season. For instance, Nestlé has a rather high rejection rate, particularly among newcomers. Being a company with high quality standards, Nestlé does not purchase coffee. Nat. sit. y. from farmers that do not meet their criteria (B06). This year’s frost and general low quality of. er. al. n. Starbucks (B07).. io. the beans has resulted in up to a 70 percent rejection rate in the procurement center of. Ch. engchi. i Un. v. Apart from economic incentives and booming sales, another reason why companies are flourishing and gaining confidence is government support. This is, nonetheless, a more recent phenomenon. Companies established in the last three to five years have received much more economic, technical and training support than those established in the mid-late 1990s. Beigui Coffee, formally established in 1998, did not receive any kind of government support because “it was early before the coffee boom” (B05). Similarly, Arabicasm did not receive economic help or technical support from the government when the company was established in 1997. On the contrary, companies established in the mid-2000s, like Manlao River or Aini Coffee, received some support from the government, either technical or economic, but yet not as significant as the help provided nowadays.. 23.

(32) The scenario is more comfortable for international firms. The government has attracted multinationals to the region with promises of lower costs and higher profitability than in other countries. But, above all, multinationals have been attracted with exclusive benefits like tax reduction. The current environment is even more positive for new settlements in the region. The 2013 report of the government of Pu’er identifies support and assistance to companies as one of the main tasks for the future development of coffee industry. Of particular relevance is the promotion of secondary processing factories to increase product value and create leading companies, all through technical assistance and training. Additionally, the government advocates for the cooperation of all firms and universities to improve in human resources (Pu’er Coffee Office, 2013, pp. 15-17).. Multinationals. 政治大. Currently in Pu’er, the main international firms are Nestlé and Starbucks. Foreign investors. 立. like the American Maxwell House, the Korean Maxim, and the Japanese UCC Ueshima have. ‧ 國. 學. a strong presence in the region, but their contribution to the development of this industry is significant in a very small scale. They only make one big purchase of coffee beans every year.. ‧. They are not “directly involved in production processes but offer some support with planting techniques in order to meet quality standards” (Blackmore & Keeley, 2012, p. 96). On the. Nat. sit. y. contrary, firms like Nestlé and Starbucks play a decisive role in the coffee business in Pu’er.. al. er. io. Nestlé is the engine that started this industry and that continues to upgrade production in. n. Pu’er; the introduction of Starbucks to the region symbolizes change, the modernization of. Ch. i Un. v. coffee industry, and represents the growing coffee culture among Chinese citizens.. engchi. Nestlé entered Yunnan 25 years ago, and they have trained farmers and worked with the local authorities ever since to improve and promote local coffee. They are the most successful multinational in the region. They do not own land, but instead engage in contract farming with growers that, due to the training and support provided by Nestlé and the high prices offered in return, remain loyal suppliers to the company. The Swiss have buying stations for the direct supply of coffee, and an experimental and demonstration farm that helps farmers and producers improve their skills. In 2013, Nestlé signed a memorandum of understanding with the government of Pu’er to invest in a Nescafé Coffee Centre in the region that will include a coffee farming institute and a consumer experience centre. Nestlé’s monopoly in Pu’er has substantially decreased in the past years (S01). Nonetheless, they remain the main coffee purchaser and the most influential multinational in the region (B06). Nowadays there 24.

(33) are more local and international companies competing against Nestlé. However, employees in Nestlé maintain that it is a healthy and necessary competition that does not worry them because “there is enough coffee for everybody” (B06). Contrasting the veteran Nestlé is Starbucks, a company that formally established in Pu’er only two years ago after purchasing coffee beans for a few years. In 2010, the Seattle-based coffee giant, in collaboration with the government of Pu’er city and the Yunnan Academy of Agricultural Sciences, signed two memoranda of understanding to invest in high-quality coffee in Yunnan. The agreement included the opening of the first Asia-based Starbucks Farmer Support Center, the management of a base farm to grow coffee, the creation of a demo farm for training on better farming practices, and education on Starbucks’s certification. 政治大. scheme C.A.F.E. Practices. In 2012, Starbucks and Aini Group announced the establishment of Starbucks Aini Coffee (Yunnan) Co. Ltd. This joint venture company was designed to. 立. increase Starbucks coffee-sourcing presence in China and use Pu’er coffee for the company’s. ‧ 國. 學. global blends. According to members of both companies, the nature of this partnership is rather symbolic, since it was mostly perceived as a way to introduce Starbucks in the local. ‧. production system. They insist that the two are completely independent companies (B02; B07; & B10, March 24, 2014). When Starbucks purchased 51 percent of Aini, the resulting joint. y. Nat. sit. venture was formed as a company independent from Aini Coffee. Starbucks borrows. al. er. io. facilities, equipment and personnel in exchange for training courses, technology development. v. n. and the use of the Starbucks Support Center, which completely belongs to Starbucks. At. Ch. i Un. times, Starbucks buys coffee beans grown by Aini farmers, though they normally have a. engchi. steady supply of farmers that drive to the procurement centre to sell their beans directly to them.. Domestic enterprises Domestically, there are two main types of coffee companies in Pu’er: trading companies, and companies that grow, process and sell coffee under their own brand. Three of the companies interviewed, Manlao River, Aini and Beigui, now produce their own coffee. Not so long ago, however, they belonged to the category of companies that, like Arabicasm, only purchase large amounts of green beans and export the coffee to other producers.. Aini is undoubtedly the main domestic company in Yunnan and the flagship of local coffee firms in Pu’er. Their area of cultivation is the same as the farms of Beigui and Manlao River 25.

咖啡，來自茶的故鄉： 為何外來農產品在普洱茶的發源地蓬勃發展 - 政大學術集成

咖啡，來自茶的故鄉：為何外來農產品在普洱茶的發源地蓬勃發展 - 政大學術集成