While auction prices for tea leaves in Uji, Japan—the heartland of matcha—have skyrocketed by 170% within a single year, the “World Matcha Super Factory” in Tongren, Guizhou, China, is running at full capacity, shipping batch after batch of matcha to the Japanese domestic market.

As global matcha enthusiasts lament the soaring prices of high-end Japanese matcha, workers at a production line in Guizhou are loading fresh matcha powder into refrigerated trucks bound for Japan. This is no longer just a story of raw material supply; it is a silent revolution in the global matcha industry.

According to the latest industry research data:

• China: 2025 matcha production reached approximately 12,000 tons, far exceeding previous industry estimates of 5,000 tons.
• Japan: 2024 annual matcha production was 5,091.97 tons. Notably, a significant portion of Japan’s “production” relies on imported raw materials, as domestic tea production faces the dual dilemma of declining yield and skyrocketing prices.

01. The Global Landscape: A Structural Change

The global matcha industry is undergoing a structural transformation. Traditionally, Japan has been synonymous with matcha, dominating the high-quality sector. However, the latest data reveals that China’s matcha output is now several times that of Japan, making it the world’s largest matcha producer.

International demand is growing far beyond expectations. From January to October 2025, Japan’s matcha export volume reached 6,889 tons, three times the pre-pandemic level. This rapid growth has led to tight global supplies, with media outlets even describing the situation as a “Global Matcha Drought.”

02. The Crisis in Japan

The Japanese matcha industry faces unprecedented challenges.

• Climate Change: Record-breaking heat in the summer of 2023 caused a reduction in Tencha (the raw material for matcha). The Japan Meteorological Agency reports that the national average temperature in July has broken historical records for three consecutive years.
• Soaring Prices: In May 2025, the auction price for Tencha in Kyoto reached 8,235 JPY/kg (approx. 408 RMB), a year-on-year increase of 170%. Famous brands like Marukyu Koyamaen and Nakamura Tokichi have successively raised prices, with some products seeing hikes as high as 382.4%.
• Export Pressure: As of August 1, 2025, the U.S. imposed a 25% tariff on all Japanese products, increasing the burden on Japanese matcha exports.

Crucially, while Japan exported over 5,000 tons of matcha in 2024 (with over 2,200 tons going to the U.S.), the limited domestic production implies that a significant portion of “Japanese” exports actually utilizes imported raw materials—primarily from China.

03. The Rise of China

China’s rise is not accidental; it is driven by a massive cost advantage. The production cost of Chinese matcha is only 1/3 to 1/2 of that in Japan. This gives Chinese matcha immense competitiveness in the global market, especially in the industrial ingredient sector.

Production Breakdown (2025 Estimates):

• Total Output: ~12,000 tons
• Zhejiang: ~5,500 tons
• Guizhou (Tongren): ~3,500 tons
• Jiangsu (Changzhou): ~3,000 tons

This scale is far higher than previous estimates. Tongren, Guizhou, branding itself as the “Matcha Capital of China,” has established a massive production system and plans to further increase Tencha yields by 2026.

04. Supply Chain Competition

China is moving beyond being a simple raw material supplier.

• Full Industry Chain: Tongren has developed 58 matcha series products, now available on supermarket shelves in 43 countries and regions.
• The “Guicha Alliance”: Leading enterprises have formed an alliance model (“Enterprise + Cooperative + Base + Farmers”) to unify standards across planting, processing, and packaging, ensuring a stable supply chain.
• Global Reach: Chinese matcha is now sold in over 50 countries, including Japan, the U.S., and France. The fact that groups like Guicha are exporting back to Japan signals that Chinese quality has gained recognition from the traditional matcha consumer base.

05. Market Trends & The 2026 Inflection Point

The matcha consumption market is diversifying.

• Product Innovation: In 2024, 50 top tea drink brands launched 73 new matcha products. Applications have expanded from tea ceremonies to baking, ice cream, snacks, and even cosmetics.
• Global Creativity: In Berlin, a cafe named “Matchasome” developed a banana-flavored matcha latte, with the owner noting, “Matcha is now a strong rival to coffee.”

The Price Prediction: With the significant increase in Chinese production, the market expects a price inflection point in 2026. The surge in supply will help alleviate the global shortage and provide consumers with more affordable options.

06. Future Challenges

Despite rapid growth, challenges remain.

• The High-End Barrier: The high-end market, especially “Ceremonial Grade,” is still dominated by Japan. China needs to improve both quality and cultural depth to break this ceiling.
• Brand Perception: International markets still have a path dependence on “Japanese Matcha.” Some overseas products even disguise Chinese matcha with “Uji” labels, harming the category’s credibility.

Experts suggest that China needs to tell two stories well: “Return to Origins” (referencing Tang/Song history) and “Innovation.”

Summary

While Kyoto’s auction prices hit record highs, Guizhou’s “Super Factory” (with a 4,000-ton design capacity) is running full steam ahead. With China’s 2025 output hitting 12,000 tons and three major production regions established, the global supply landscape has fundamentally shifted.

As Japan struggles with climate-induced shortages and tariff barriers, China—armed with a significant cost advantage—is quietly rewriting the rules of the global matcha industry.