Entrepreneur

After Gong Cha "Betrayal", S'pore Franchisee Rodney Tang Brews His Own Bubble Tea Brand LiHO

With 80 outlets in Singapore and over 70,000 fans on Facebook, it’s a brand that doesn’t need any introduction.

Gong Cha, one of the top purveyors of bubble tea in Singapore, has officially undergone a massive change.

Gone is the brand we’ve grown to memorise the menu of, and in its place is LiHO – Hokkien for “how are you?”.

Rodney Tang, General Manager of RTG Holdings and the man who brought the Gong Cha franchise to Singapore in 2009 has already converted more than 30 outlets to the new brand.

All outlets would be replaced by 5 June.

And it’s not just a change in name that we can expect – Tang reveals that other than a new logo and packaging, suppliers for its tea and other raw ingredients, and also the method of making its drinks have also changed.

A LiHO outlet at Bedok Mall / Image Credit: GRVTY Media
A LiHO outlet at Bedok Mall / Image Credit: GRVTY Media

This rollout would reportedly cost the group about $1 million.

Said Tang to The Straits Times, “Tea is tea – there is only so much I can do to make it different. But we are introducing drinks such as cheese tea and smoothies.”

But there’s more to the story than just a rebranding.

After all, with an annual revenue of $30 million, it really does seem like business suicide getting rid of a brand that Singaporeans have grown to love.

“I Felt Betrayed”

First established in 2006 in Taiwan, Gong Cha was brought over to Singapore as a franchise by Tang and his group in 2009.

Tang and his group have, all this while, been franchisees of popular eateries from overseas, some of which include Korean restaurants Nene Chicken, Bornga and Paik’s Coffee.

However, with the shift to ‘made-in-Singapore’ LiHO, they’ve changed their roles from franchisees to brand owners – a plan that Tang admits wasn’t even his intention in the first place.

He revealed to The Straits Times that at the end of last year, the Taiwanese parent company, Royal Tea Taiwan Co, had proposed an extension, and while he was more than willing to do so, he was “busy” and “kept putting off reading and agreeing to it”.

“Anyway, we had been working together for years and I trusted them.”

But it was only when he visited his Taiwanese business partners that he found out that the entire company had been sold to Gong Cha Korea.

“So my friends were no longer in charge of the company and did not even inform me formally. I felt betrayed.”

Gong Cha Korea, launched in July 2014 by Kim Soo-Min, president of Unison Capital, a Japanese private equity firm, was actually first brought to Korea in April 2012 by franchisee Kim Yeo-Jin, its former CEO.

The drink quickly caught on with young Koreans, and the number of stores swelled from 1 near Hongik University to 126 within 20 months.

It was only in 2014 that Unison Capital bought over 70% of the Korean arm, then launching it as Gong Cha Korea.

In April last year, Gong Cha Korea expressed their interest in acquiring the global headquarters, Royal Tea Taiwan Co, and in October, wanted to boost its ownership of the headquarters from 35 to 70% by January 2017 – all part of its plans to enhance the brand’s global presence.

Image Credit: Pulse

This prompted Tang to look through the new terms of franchising, which he found were “more restrictive, with clauses that would have affected his ability to manage RTG’s other brands effectively”.

Even after negotiation of more favourable terms, Tang admitted that “the idea of owning and building a new home-grown brand had already taken root in his mind and became too compelling for him to ignore”, which prompted him to do away with franchising altogether.

In fact, he even has plans for LiHO to go global as well, eventually putting the new brand up against Gong Cha.

“I think we have come up with a brand that can expand into Hong Kong, Korea, mainland China and maybe even the United States and Canada,” he told The Straits Times.

Chatime, Anyone?

Reading about his situation, we can’t help but think about the Chatime situation that happened to our neighbours up north.

Also a purveyor of bubble tea, Chatime was brought over to Malaysia by Bryan Loo, CEO of Loob Holding in 2010. In their situation, however, their agreement was abruptly terminated by Chatime’s franchiser La Kaffa.

The day after the news, La Kaffa announced in a press conference on 6 Jan that it would be taking over Malaysian Chatime operations and development “due to disagreements over direction”.

“Whatever dispute could have easily been sorted out through the franchise agreement in the manner of arbitration in Singapore,” Loo told Channel NewsAsia. “It should not have come to the extent […of] unilaterally terminating our franchise rights for Malaysia. This is something beyond our imagination.”

Not one to give up, Loo then announced the rebranding of all their outlets on 25 Jan, and officially rebranded it to Tea Is Our Life (now Tealive) on 2 Feb.

“Raised in Malaysia by Malaysians” / Image Credit: Bryan Loo

“We feel that we (Tealive) will be the next Malaysian brand that is going to put a footprint on the world,” revealed Loo on Malaysian radio show The Morning Grille.

LiHO – A Homegrown Singaporean Brand

Image Credit: @shazbyshaz / Vulcan Post

“And at least for the first time in many years, I am excited about having something to achieve. I am confident that we have a chance to succeed in this space.” – Rodney Tang

For now, reactions to the news have been mixed – some expressing their disappointment that their favourite teas are now gone, and others showing their support for the rebranding.

It’s still too early to tell if LiHO would manage to retain the market share that Gong Cha had in Singapore, but we are definitely behind this homegrown brand’s efforts to proudly carry our flag in the burgeoning global bubble tea market.

In the meanwhile, check out our sister publication, Discover SG’s review of LiHO’s new offerings here!

Featured Image Credit: GRVTY Media

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