What La Kaffa is doing differently is that it’s working directly with established local dealers who can guarantee economies of scale. For example, La Kaffa has 300 stores in Indonesia thanks to its local partner ACE, the largest hardware and furniture retail group in the region.

How did La Kaffa partner with the movers and shakers of different international markets? The answer may surprise you with its simplicity. It listed itself on the stock exchange.

La Kaffa went public in 2015. "In our business, the cash flow is vigorous enough that you don’t need to go public," explains La Kaffa cofounder Wang Li-yu (王麗玉). "But becoming listed helped us assemble an international team."

Surangel Whipps Jr., president of Palau at the first Chatime store in Palau. (Source: La Kaffa International)

Beryl Lee of ASIT, who has extensive experience consulting for businesses across the Taiwan Strait, elaborates that when an established foreign business looks for partners to work with, it starts by talking to global credit investigation firms. If the first result that comes back is that the potential partner is not listed and has no publicly disclosed information, "it really puts a damper on things; you can’t expect to play with the big boys without first getting listed."

Of course, finding a local partner is only the first step. The second test is whether you can work well together, to each other’s mutual benefit

Buying shares and promoting franchisees to subsidiaries

"You must always put yourself in your distributors’ shoes," advises Henry Wang.

Which is to say: when the local dealer sets up shop, headquarters in Taiwan needs to send people over; if the dealer lacks marketing or finance experts, headquarters must loan them the talent; when the pandemic disrupts business, headquarters must be willing to forgo profits, lower premiums, and delay loan repayment; in extreme cases, headquarters may even trust the local dealers to formulate and execute their own strategies in their markets.

Wang Li-yu relates that their Australian partner once held a marketing campaign where customers could get a whole year of free drinks if they got a Chatime tattoo. It caused quite a stir on social media and brought in over 800,000 views.

Chatime store in Australia. (Source: La Kaffa International)

La Kaffa also became the shareholders of their own partners as a way of showing support.

In 2011, La Kaffa bought 55% of the shares of its Australian distributor Infinite Plus, effectively turning it into a subsidiary. Eight years later, La Kaffa invested US$4.22 million to buy stakes in its Canadian partner Kevito.

"Our franchisee in Australia became our partner in Sydney before it became our dealer for the whole country. After years of working together, we decided that they’re worthy of our trust and investment. We extended our contract from five to twenty years so that our distributor could concentrate on developing the business," says Wang.

Thanks to support from headquarters, growth in Australia is only second to Indonesia, which also makes it the second-largest market. Australia was also the first overseas partner to sell ready-to-drink beverages and instant mixes in supermarkets. It accounts for 10% of the subsidiary's revenue. La Kaffa has decided to replicate the Australian experience in Canada.

In 2023, La Kaffa will also let the Australian subsidiary take charge of the US market.

Taking the fight global while keeping the supply chain local

The once-in-a-century pandemic has taught La Kaffa that rapid expansion only works if the staff, service, and supply chain are all in place.

The world outside is changing. "The overseas markets used to mean internal battles between Taiwanese companies. Now, it’s a global slugfest," says Henry Wang. Local hand-shaken drinks brands are starting to appear, and Chinese brands have also entered the fray. The international market has become a buyer’s market. The price war is especially intense in Southeast Asia.

(Source: Pei-Yin Hsieh)

Because of this, La Kaffa has placed its focus on supply chain integration for the past three years. For instance, La Kaffa is eyeing creamer plants in Southeast Asia. The acquisition of such assets would mean that Southeast Asian dealers would no longer have to wait for shipments from Taiwan. This cuts down on customs fees and will make La Kaffa’s local partners more competitive.

In addition, La Kaffa has also bought tapioca ball maker Ten En (天恩) and invested in "drinkbot" startup Botrista. It is trying to revamp its cost structure. "If the store opens at nine, workers need to come in two hours earlier to boil the tapioca balls. Ten En’s new recipe can shave 45 hours off of cooking time in a month. This helps to lower labor costs," says Wang Li-yu.

With 1,400 stores around the world, you can find time for Chatime even in South America and Africa. As Taiwan’s most globalized hand-shaken drinks brand, La Kaffa’s expansion policy is all about keeping with the times and making flexible decisions at the perfect moment.

Have you read?

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• How Taiwanese Bubble Tea Conquered the Taste Buds of The Japanese

Translated by Jack Chou
Uploaded by Ian Huang