In June 2023, MIXUE GROUP made a high-profile debut in Japan, selecting the upscale Omotesando district in Tokyo, where Dior and Chanel stores are located just a wall away. At that time, the company boldly declared its ambition to open 1,000 stores in Japan by around 2028. Three years later, as of June 2026, only 4 stores remain in Japan. The target completion rate of 0.4% isn't even worthy of the term "underperformance"; it represents a substantive strategic failure.
More concerning is that Japan is not an isolated case. In 2025, MIXUE GROUP's overseas store count saw its first annual net decline, with a net closure of 428 stores for the year. Meanwhile, domestic stores still maintained a rapid growth rate of 33.12%. As the "Snow King" charges ahead in China and Southeast Asia, the Japanese market serves as a mirror, revealing the limitations of a budget-friendly overseas expansion model.
Why is the Japanese market so difficult to crack? A triple assault of costs, culture, and competition.
MIXUE GROUP's core competitiveness in China is essentially a "supply chain flywheel": unified procurement, production, and distribution of tea leaves, milk powder, fruit syrups, packaging materials, and equipment, all standardized and delivered to franchisees for the final cup. More stores lead to larger procurement volumes; larger volumes lower costs; lower costs enable cheaper prices; and cheaper prices attract more consumers and franchisees. This logic proved effective in Southeast Asia, with over 2,600 stores in Indonesia and over 1,300 in Vietnam. However, in Japan, this flywheel has stalled.
Cost side: An unworkable economic equation. Overall renovation costs in Japan are approximately five times higher than in China, with renovation expenses typically accounting for 70% to 80% of total investment. Many commercial properties also require a lease deposit equivalent to 10 to 15 months of rent, far exceeding domestic levels. Core commercial properties are often held by private owners, and new brands must undergo scrutiny of their business qualifications, financial status, and may even require third-party guarantees. Meanwhile, labor costs in Japan remain persistently high globally. When fixed costs rise exponentially, the "low margin, high volume" model that sustains MIXUE GROUP domestically loses its foundation.
More critically, without a sufficient store scale, the supply chain advantages cannot be realized. MIXUE GROUP's business model is essentially a "supply chain company disguised as a milk tea company." Core ingredients like milk tea powder and fruit syrups are mostly produced in China, shipped to overseas warehouses, and then distributed to franchise stores. This system requires a dense store network to spread logistics and warehousing costs. With only 4 stores, there is no basic supply chain efficiency, leading to persistently high per-store costs.
Consumer culture side: "Sweetness" collides with "unsweetened tea." Japan has a deep-rooted tea culture, with a particular preference for unsweetened tea, which accounts for over 80% of the country's tea retail sales. MIXUE GROUP's products are known for their high sweetness, and many Japanese consumers sharing their experiences on social media have noted that the brand's standard products are generally too sweet, with complex fruit teas that clash with local preferences for light, clear beverages. When the "sweetness of Mixue" meets Japanese consumers' "preference for light flavors," the foundation of product appeal is shaken.
More crucial is the difference in consumption scenarios. When consuming tea or coffee, Japanese consumers place greater emphasis on the in-store experience, valuing cleanliness, comfort, and humane service as social spaces. Data from GMO Research in Tokyo shows that "beverage quality," "staff service," and "store atmosphere and cleanliness" are key indicators of satisfaction for Japanese coffee shop customers. This is precisely not the strength of MIXUE GROUP's value-focused, small-store model.
Competitive landscape: Surrounded by convenience stores and vending machines. Japan boasts one of the world's densest networks of convenience stores and vending machines, with 100-yen ready-to-drink beverages available everywhere from stations to office buildings and residential areas. Local giants like Ito En, Suntory, and Kirin have dominated the unsweetened tea and budget coffee segments for decades. Fujikawa, an analyst at Euromonitor International, a UK-based research firm specializing in the Japanese foodservice industry, noted: "In Japan, consumers can buy cheap coffee from vending machines and convenience stores, making it difficult for Chinese brands to leverage their low-price advantage."
MIXUE GROUP's competitors are not just other milk tea shops—they are vending machines and convenience store shelves found in every corner of the country. When consumers can get a drink at a lower cost and greater convenience, "in-store consumption" itself loses its value advantage.
From a store layout perspective, MIXUE GROUP's stores in Japan are scattered in foreigner-concentrated areas, with little to no presence in core residential neighborhoods or mainstream commercial districts. The brand's customer base relies heavily on Chinese expatriates, international students, and short-term tourists, while Japanese local consumers generally show low repeat purchase rates. New store openings initially attracted queues and buzz with the novelty of Chinese-style tea drinks, but this short-term traffic quickly fades without converting into stable customer loyalty. This is a classic case of "popular but not profitable"—hype without retention, buzz without stickiness.
Learning from Japan's struggles: The structural dilemma of Mixue's overseas expansion—the failure of a low-price model in developed markets.
The setback in Japan cannot be simply attributed to "localization difficulties." It reveals a deeper structural contradiction in MIXUE GROUP's overseas strategy: a business model centered on ultra-low prices and scale expansion is fundamentally ill-suited to mature developed markets.
Overall overseas store contraction, challenging the overseas expansion narrative. In 2025, MIXUE GROUP's overseas stores totaled 4,467, a decrease of 428 from the previous year, a drop of 8.7%. This is not an isolated case in Japan—only 16 stores have been opened in South Korea over nearly four years, and 3 stores have been closed in Hong Kong. Even in core overseas markets like Vietnam and Indonesia, the company has begun proactively optimizing store networks. In markets outside Southeast Asia, expansion resistance has significantly increased due to policy environments and cultural differences.
Looking at the timeline, the slowdown in overseas expansion was foreshadowed. By the end of 2023, overseas stores had reached 4,331, nearly doubling from the end of 2022. However, in 2024, the net increase in overseas stores was only 564, an increase of just over 10%. This suggests that MIXUE GROUP's overseas growth had already entered a slow lane in 2024. The 4 stores in Japan are merely the most glaring sign of this structural slowdown.
Capital markets are starting to vote with their feet. During its IPO, MIXUE GROUP saw a 5,258 times oversubscription on the Hong Kong Stock Exchange alone, freezing approximately HK$1.84 trillion, setting a record for the Hong Kong market. The stock price once soared to HK$618 per share. However, as the overseas expansion story faded, the stock hit a record low of HK$201.2 per share on July 10, 2025, falling below the IPO price of HK$202.5. Capital markets' patience with a "high-growth narrative" is wearing thin, and the net contraction of overseas stores precisely undermines the foundation of this narrative.
Is the "Mixue Model" universally applicable? MIXUE GROUP's success in China is built on specific conditions: a vast underpenetrated market, low rent and labor costs, a mature and dense supply chain network, and scale effects supported by a large population. Some of these conditions apply in parts of Southeast Asia, but nearly all fail in developed markets like Japan.
What the Japanese market needs is not "cheaper," but "better matched"—products more aligned with local tastes, store environments that emphasize experience, and more refined local operations. The premium coffee brand "Blue Bottle Coffee" abandoned its standardized store format in Japan, opting for designs that integrate local landscape features and regional culture, gradually establishing a foothold in the local premium coffee market. In contrast, MIXUE GROUP transplanted its domestic success formula "as is" to Japan, resulting in obstacles at every turn.
Overseas expansion enters the "second half": From scale to quality. In March 2025, MIXUE GROUP officially opened franchising in Japan, with an estimated investment budget of 1.5 million RMB. However, as of June 2026, the opening of the franchise model has not led to significant store growth. This indicates that the problem is not the "model" but the "market"—even with lower entry barriers, the Japanese market's acceptance of the Mixue model remains limited.
MIXUE GROUP's success in Southeast Asia is based on local preferences for sweet tastes and a low level of standardization in street-side beverage formats. However, Japan is a highly mature consumer market with extremely rich options for consumers and high demands for quality and experience. In such a market, "low price" is never a universal key—it may even be associated with negative perceptions of "cheapness."
The core capabilities for Chinese tea and coffee brands going overseas should include product R&D capabilities, product standardization and localization R&D, international and local supply chain coordination, and compliance with local regulatory and food safety standards. Branding is the key path to achieving premium pricing and high added value. The lesson from the Japanese market is clear: in developed markets, it is essential to abandon a single reliance on low prices and shift to a development model that combines brand value building with deep local operations.
MIXUE GROUP hitting a "brick wall" in Japan essentially reveals a structural weakness of a scale-driven supply chain company when it encounters a mature market where scale effects cannot solve the problem. The number of 4 stores itself is not important—what it reflects is: when the "Snow King" steps out of the comfort zone of the underpenetrated market, facing a market with completely different consumption habits, cost structures, and competitive landscapes, the old success formula is failing. For all Chinese consumer brands currently or planning to go overseas, this may be the most thought-provoking lesson.
This article was created with the assistance of AI tools to collect and organize market data and industry information, combined with supplementary analysis and writing.
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