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High Schoolers helping small business in Hunan, China through selling tea

Led by Grace He, an incoming senior in high school, SoCal Mei Tea takes advantage of their connections with Furong Village in Hunan to help a small tea farmer sell their tea abroad. In 2021, they've made $1,000 dollars in profit just by selling at IvyMax San Diego Centers and catching the attention of parents coming in and out of the building. All of their profits go back to the villagers feeding the elderly and helping the children find opportunities.

Illustrated by Madison Chun


By Faith Qiao, Catherine Qin, Daniel Gong, Katelyn Shen

 

Preface

We went through great pains. A lot of my stories comes from IvyMax, and this is no different. It began as an attempt to deep dive into IvyMax's P2P Microfinance program which, on paper, looks like one of those voluntouring opportunities that lost their effectiveness as going to Africa to build houses and take instagram pictures fell out of fashion. The program, which originally involved physically going to the destination (Hunan, Ningxia, or Nepal) eventually became a virtual activity where students sat in orientation for 8 hours a day and then interviewed potential loanees.


We first interviewed Joey, a past participant of the program. Unfortunently, he could only provide us general details, but he did point us to Grace He, who went on to establish a lasting partnership with a small business that participated in the P2P program back in Winter of 2019. The funny part is, Joey talked about a Mei Tea farm in NingXia, but it is completely separate from the story in this article. What's even funnier is that when we went to interview Mr. Peng via the July 2022 P2P program, it turned out there were two Mr. Peng's vying for the loan.


In the end, I think rather than being a massive success story, this is more of one about the tiny differences we can make for people living far away. Going to Africa for voluntouring might mean that you don't have the best of interests in mind, but building that house still means that a family will have a roof to shelter them from the rain.

— Faith Qiao

 

China has thirty-one provinces. Those thirty-one provinces pieced together makes a country shaped like a hen. Today's story is set at the belly of the hen in the small, rural Furong Village located in the Hunan province. Here, villagers make a humble living by farming vegetables and shelter in what can barely be described as a “small wooden shack.” The town, for the most part, “disconnected from the outside world.”

However, in this detached farming village in rural China, there exists a business partnership between a local tea farmer and a San Diego high schooler that ships this tea halfway around the world and generates thousands in revenue. San Diego senior Grace He is the president of the SoCal Mei Tea Club, a club that sells tea from Furong, Hu Nan to families in San Diego. In the span of three years, through the entire COVID-19 pandemic and multiple rough patches, a few high schoolers managed to turn the simple idea of selling tea into a small business that helps rural villagers all the way in China.


In early 2020, Grace, along with many other students, traveled to Furong Village in Hunan, China as part of the P2P Microfinance Program at IvyMax. In accordance with the “microfinance” descriptor, the goal of the program was to extend loans to small businesses in the villages.


Because of Furong’s location and the income of its villagers, many financial services typically available to Chinese citizens are often few and far between. Banks are unwilling to offer them business loans, as people living in high poverty often don’t have good credit scores and are viewed as high-risk borrowers. Microfinance serves as a solution to both issues—connecting borrowers with small loans from social innovators and government stimulus.


Before the COVID-19 pandemic, over 98% of microfinance loans were paid back. The one big negative of microfinance is the extremely high-interest rate. With interest rates averaging 37% which is more than 6 times bank loan averages of 5.5% interest. While microfinance is supposed to be riskier than bank loans, this huge interest rate can potentially result in many business owners being unable to pay it back putting already poor individuals into even greater debt.


There are of course serious risks with Microfinance initiatives. The United Nations Capital Development Fund report that "just 1% of MFIs around the world are financially stable, and China is no different." Even so, "a small loan of $100 to buy animals or seeds for planting can make a major difference for a poor family, and a series of loans within a community can transform it."


If you want to learn more about Microfinance, Knowledge at Wharton, the Wharton's school of business journal, has an excellent article on the history and efficacy of Microfinance in China. — Faith Qiao


Students looked to invest in businesses that they believed could grow and pay back the loan. Every year, businesses in Hunan would apply for an interview. Through this interview, students gather information on the financial conditions of their business as well as the owner's vision for the future. At the end of the program, all participating groups gather to decide on which business ends up with the loan. The descsions often boil down to the comparison of an “old chicken farmer hoping to buy more chickens with the loan” versus a “tea company hoping to invest in a grinding machine.” All the participants in the microfinance program have various business financial statuses. In the end, the students are giving a loan, not a donation, meaning the business they choose needs to be able to pay it back after a year.


Among Grace’s interviewees was a tea farmer and salesman named Mr. Peng. His business was Mei Tea (莓茶), a type of tea with a sweet aftertaste and a whitish appearance that is mainly produced in Hunan. As the tea’s popularity around the world is increasing, it has recently gained popularity among the Hunan farmers and is the main source of income for many. They ended up choosing to lend the loan to Mr. Peng.


But more important than that, the 2020 winter group of students was there to explore. We asked Grace about why she eventually took over the Mei Tea partnership, and she told us about a “girl around six years old.” She said she felt an inextricable connection with her.


“I just thought it was kinda like seeing my younger self. She was literally also just so carefree at the time like she would put others first but still be so incredibly happy and joyful. I just felt like that sort of youthful naivety was something that I had lost, and that I found again in her” — Grace He

A few days in the village show her the “genuine disparity” throughout the place. “The probability of me achieving all of my dreams was just so much higher than hers just because of my socioeconomic status, and I just didn’t think that was fair.” They made a promise to see each other again.

Grace’s groupmates began brainstorming ideas for a new club they wanted to establish that will help the Mei Tea farmers back in Ningxia. By 2020, the SoCal Mei Tea club was established as an IvyMax affiliated organization with Daniel Zhao as the president. But, the club never got to accomplish any of its intended goals. In less than a year, the president had graduated and club productivity dumbed down to nothing.


Grace had organized and led the first “season” of tea selling. Her team of five connected with families returning from Hunan to bring boxes of Mei Tea to San Diego. After a few events in summer, she eventually became club president.


“I kinda knew the most and had the best idea of what to do with the tea, so due to the fact that no one else was really active I just initially started managing marketing and selling all the tea,” Grace said.


It was a happy coincidence that the little girl Grace met a few years ago was also the granddaughter of the tea farmer the club was buying the Mei Tea from.


“That’s been my motivating to this day because I just don’t think it’s fair for someone to have to give up something because they have to devote their lives to helping their family, of course, that’s a good thing, but I think they should have the opportunity to chase their dreams just like I can.”


“They sell it to us at a lower price than what they would sell to like their customers and our job in the US is to set a price higher than what we bought it for, try to make a profit off of it, and all that profit goes back to the villagers,” — Grace He


They take advantage of IvyMax’s San Diego center activities and host sales events at their front door in concurrence with large IvyMax meetings. They’re a small club existing to support a small business in a small town. And naturally, they don’t sell on the taste or brand of Mei Tea, but instead, they sell their youth and enthusiasm to an audience of parents.

At the events, they make small talk with parents to create a connection and further encourage the parents to support their club and purchase their teas. And it works like a charm. Just last year, the club managed to receive a profit of around $1,000 from selling tea, which was all given back to Mr. Peng back in Furong. Because of the interconnectivity of the village, money that goes in ends up being funds that support the backbone of the entire town.


Mr. Peng’s Mei Tea business originally participated in the P2P Microfinance program back in Winter of 2019 just at the onset of Covid. In the coming years, his business has expanded outside of Furong village and into other small towns in the province of Hunan. About three weeks ago, the summer Microfinance P2P program restarted, and his business was once again a loan candidate. This time, he hopes that by participating, he could find the funds to expedite the packaging process.


When asked about his next steps, he said that he wanted to get a factory and start “mass producing” and expand his business onto platforms like 支付宝 and 京东. But because the program loans up to $2,500, it is likely he can only begin the packaging initiative.


On Grace’s end, their core team of seven members and three executives are continuing to look out for opportunities to sell their tea. At the same time, they are also actively monitoring the shipping process. They’ve also tapped into online sales, which have not done as well as the in-person selling. Grace attributes it to Covid, but as their selling point is primarily their passion, the lack of interpersonal interaction in online sales may be the culprit. Currently, their team is planning to expand into Northern California as around 60% of the current club members are in NorCal.







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