Chinese food and beverage (F&B) franchise brands are entering Korea more frequently. As the milk tea brand Chagee is pushing aggressive openings centered on major commercial districts in Seoul, China's largest coffee franchise, luckin coffee, has completed its domestic trademark registration and begun preparing to enter Korea. Industry observers say Chinese brands are focusing on Korea as a stage to verify brand competitiveness and test their potential for global expansion.
According to related industry sources on the 22nd, luckin coffee recently completed domestic registration of major trademarks such as "루이싱," "瑞幸," and "luckin coffee Express," along with the blue deer logo that symbolizes the brand. Since its 2017 founding, luckin coffee has grown by pushing aggressive store openings and a mobile order–centered operating model. It currently operates more than 30,000 stores. Recently, it has also accelerated overseas expansion, including acquiring the U.S. premium coffee brand "Blue Bottle."
Competition in China's beverage market is currently fierce. According to iiMedia Research, the size of China's new-style tea beverages (milk tea, fruit tea, cheese tea, etc.) market in 2024 was 350 billion yuan (about 79.5 trillion won), up 6.4% from a year earlier. However, as the market grows, the number of brands has also surged, creating growth limits in the domestic market alone, prompting a push to expand overseas.
This also aligns with the active entry of Chinese franchise brands into Korea. In April, Chagee opened its Gangnam flagship store along with locations in Yongsan I'Park Mall and Sinchon at the same time, and has since continued opening stores in key Seoul commercial districts, including Yeoksam, City Hall, and Konkuk University area. It is also set to open in the food hall of Shinsegae Department Store's Gangnam branch next month. Auntea Jenny, a Chinese fruit tea and milk tea brand that opened its first store near Konkuk University Station in Nov. last year, completed franchise registration with the Korea Fair Trade Commission in Feb. this year and has begun franchising. Another Chinese milk tea brand, HEY TEA, operates stores in major districts such as Gangnam, Hongdae, and Myeong-dong.
◇ Korea emerges as a testing ground for global expansion
One of the biggest reasons Chinese franchise brands are eyeing the Korean market is domestic consumers. Korea's coffee market is considered a quintessential red ocean where countless brands compete, including Starbucks, A TWOSOME PLACE, MEGA MGC COFFEE, and COMPOSE COFFEE. As such, it is difficult to prove everything from taste, quality, and price competitiveness to the brand experience.
A coffee franchise industry official said, "Domestic consumers quickly accept new brands, but if they are not satisfied, they often do not return," adding, "Recognition from Korean consumers is seen as a process that verifies brand competitiveness."
In particular, Korea is geographically close to China, which makes logistics relatively less burdensome, and it is considered a market where building the supply chain—key to the franchise business—is relatively easy. Lee Jong-woo, a professor in the Department of Distribution and Marketing at Namseoul University, said, "One of the reasons overseas expansion is difficult in the franchise business is the supply chain, but Korea is close to China, making logistics operations relatively less burdensome and well-suited to test consumer responses," adding, "It can be seen as a strategy to verify menus, services, and operating models in the Korean market, then expand to other countries."
The influence of the Korean market cannot be ignored. The reach of social media (SNS) is a prime example. Chinese brands are opening stores mainly in core commercial districts that attract young consumers and foreign tourists, such as Gangnam, Sinchon, Myeong-dong, Hongdae, and Konkuk University area. That is because reviews and content from domestic consumers and inbound foreign tourists spread quickly through SNS, boosting brand awareness.
Industry watchers also say earlier success stories have had an impact. The Chinese hot pot brand Haidilao is a prime example. Haidilao Korea's sales last year were 117.7 billion won, up 50.9% from a year earlier. During the same period, operating profit rose 84.6% to 20.2 billion won.
However, it is unclear whether the initial buzz will translate into long-term success. A franchise industry official said, "In the Korean market, settling in is harder than entering," adding, "Menu competitiveness that can drive repeat visits and brand differentiation must be in place."
Seo Yong-gu, a professor in the School of Business at Sookmyung Women's University, said, "Korea is a market with relatively high cultural affinity and purchasing power. In particular, brands that succeed in Korea may spread to other countries on the back of the K-content boom," adding, "Ultimately, for Chinese brands to survive in the Korean market, the key is whether they can move beyond temporary buzz and become brands embedded in consumers' daily lives."