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China’s Novel Investment – Making Money by Investing in Pu-erh Tea
*This article was made available by Puerh Cha
While most Pu-erh tea lovers would never dream of selling their prized collections the escalating price of Pu-erh tea has attracted many investors and opportunists. In China's supercharged economy, where no investment opportunity goes unnoticed the idea of investing in tea is not just a novel idea but an increasingly popular trend followed by many affluent young professionals. For the better part of a decade the price of Pu-erh tea has risen each year, averaging a rough estimate of 10% annually.
For premium production consisting of wild tea leaves or leaves from old tea trees gathered from famous regions such as Yiwu this markup is progressively higher with prices jumping between 30-80% in 2006 alone. The aged tea sector has produced the biggest gains of all. Prices for certain vintages have sky rocketed, some easily multiplying by as much as 10X times within the span of a few years. A noticeable example is the price of the famous 1950s Red Label (Hong yin). One piece of this famous teacake weighing approximately 357grams was once valued at US00 in 2003 but has now risen to almost US00 in 2006 at retail outlets in Hong Kong.
In summary the market growth for Pu-erh tea has been for the past decade outstanding. A repeat of this outstanding growth for the next decade will likely see collectors and investors sitting on a goldmine. As the main market for Pu-erh tea is China, the sustainability and growth of the Pu-erh tea market will largely coincide with the future development and growth of the Chinese economy.
While the increasing demand and popularity points to a bright future, a note of caution, not all Pu-erh tea will appreciate in value. Much of the Pu-erh teas flooding the markets today are fakes and low quality teas. It is unfortunate but the precedence for increasing Pu-erh production has greatly compromised the quality of tea in recent years. While the production of Pu-erh tea continues to increase annually, the quality has substantially dropped with outputs from both 2005 and 2006 being most disappointing. The knock on effect has been a sharp increase in the price of older vintages. The pursuit of Pu-erh tea is best done with caution. Ignorance can be costly to a naïve investor.
Note: Pricing information and opinions on market trends are based on informal discussions with tea merchants at various trading locations. The prices should be taken as a rough estimate only and the accuracy may vary accordingly. All investments are a risk.
*To read more on Pu-erh investment trends click on the link Pu-erh Tea News or go to http://www.puerhcha.com/Links/Links_Puerh_Tea_News.htm
About the Author: Varat Phong. is the founder of Puerh Cha and is a passionate collector of Pu-erh teas. Varat’s passion and love for Pu-erh tea frequently takes him to China, Hong Kong and Taiwan in his continuous search for rare and unique Pu-erh teas. For more information, articles and illustrations on Pu-erh tea please visit the Puerh Cha website at http://www.puerhcha.com
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