Every year there is much talk about the price of Longjing, 2014 being no exception. Most of the talk is hype, reporting the extraordinary prices that some Chinese businessman or government official has spent for Longjing. However, these “reports” never have any relationship to the real price of Longjing.  This year the Chinese media reported a one-third reduction of price for Longjing, and the American tea media, namely The World Tea News, has repeated this story. But the story is completely false. If you are expecting to see a price reduction in Longjing, don’t. It didn’t fall this year. It never has happened, nor will it ever. Let me explain why, and why the Chinese media would even manufacture such a story.

照片 1Longjing is certainly the most famous tea in China; it was a favorite of Qing Emperor Qian Long (the eighteen tea bushes he owned still exist as a tourist attraction) and Mao Zedong, who served the tea to Nixon during Nixon’s visit to China in 1972.  Fabled as legendary, Longjing (translated as “Dragon Well”) is a green tea.  The tea has been known in the West since at least the 18th Century. It comes from the mountains overlooking West Lake in Hangzhou. A place so beautiful that the Chinese believe it is proof on earth that Heaven exists.

The details of its making are very defined and illustrate ten distinct hand movements that are executed over the three stages of frying by the tea maker. In order to judge the finished product, tea makers focus on four characteristics: smell; color; appearance of the leaf; and taste. To add to Longjing’s specific characteristics, its production area is also limited and clearly defined. Suffice to say, the price for this tea has been high throughout its long history.  This would explain why it is probably the most counterfeited tea; even the worst fakes still command high prices in America and Canada by sheer virtue of the name.

It should come as no surprise that the purpose of the Chinese media is largely to serve as an instrument of propaganda for the Chinese government. The purpose of the Chinese press reporting the fall of 30% in the price of Longjing is to show that a corruption reform measure instituted by Xi Jinping, China’s new leader, is working. In the past, the officials spent an enormous amount of money on extravagant dinners, expensive gifts, expensive cars, and other luxury items that supported the appearance of a rich lifestyle, setting them apart from common people. Xi Jinping  banned that practice last year. Tea fell into this ban as a luxurious gift. Officials paid high prices for bragging rights for tea they reportedly paid a lot for. They were buying at inflated retail prices – not wholesale – using government expense accounts; prices only people spending other people’s money would pay.

The price of Longjing became worthy as an example of the government’s austerity照片 2 measure because of Longjing’s fame as a luxury product. To point out a drop in price underscores the success in Xi Jinping’s reform. The idea was that Longjing was so sought after by government officials and was so vast that it would destroy the Longjing market.  There was, in fact, a major drop in price in one market in China. However, the dropping price in question is that of Beijing retail operations, where spending is conspicuous and so inflated, it is an anomaly in the national market. In contrast, the price in Hangzhou for Longjing tea has not decreased, never has, and it never will, despite what the media here and in China have reported. Inflation has been a constant in China as the economy grows, and as the consumer market grows, so does the demand for Longjing tea. Longjing is sought after enough that its price is not dependent on a single buyer, or even a single demographic, like the armies of government officials.

It is easy to get confused when you take into account that the reporters did their price research in Beijing and inferred that there had been a price drop in Hangzhou. They did their research at  Ma Lian Dao, what some  people call the Beijing Wholesale Market. This is like calling Costco a wholesale market. While it is true that you can buy some tea a little bit cheaper than the price charged at a Beijing tea shop or tea house, Ma Lian Dao’s prices are a poor representation of actual wholesale prices paid to producers. It should be noted that a few years ago, a survey taken of the customers who buy tea there suggested that 80% of the customers were being cheated.  The reporters inferred that there had been a price drop in Hangzhou.

To be continued Friday, May 30.  In part 2, I will talk about actual tea prices, both retail and wholesale, and why the price of the best Longjing, or any authentic Longjing, will never go down.

Austin Hodge is the founder of sevencups.com.