Kunming Tea Factory has a long history that has been very influential on the development of Puerh tea in general. Throughout its many decades of operation, The Kunming tea factory was traditionally best known for its tuocha and brick teas. It was also the first tea producer to build a factory exclusively for the production of ripe tea (shou cha 熟茶). Most scholars consider Kunming Tea Factory's role in the development and distribution of ripe Puerh tea as one of the reasons why its popularity spread, which of course changed the way in which all Puerh tea manufacturing would develop over time.

Kunming Tea Factory in its traditional form closed in 1996, however in 2006 the factory was purchased and re-opened under new management and continues to operate today. The factory itself is around 20,000 square meters including dorms for some of its employees. It produces more than one thousand tons of tea annually, which are exported and sold domestically.

In 1939, the factory was established as the Fu Xing Tea Factory and started to gather and produce tea that was farmed all throughout Yunnan. Its main product at this time was tuocha. In 1950, the factory was taken over by the state and at the end of the decade, around 1960; the name was changed to Kunming Tea Factory. The factory began producing raw bricks and black tea mostly for the domestic market. Kunming Tea Factory was unique because six private entrepreneurs were allowed to invest and join forces with the government, making it the first and only company of the period based on cooperation between the government and private sector. From 1958 to 1960 the "Great Advancement" of trade was occurring and the over-production of Puerh had upset the limited ecosystem of the trees and harvest dropped to half of its expected output. Kunming and Xiaguan factories were forced to transport "dead angle tea"(死角茶), that had been stored elsewhere for a long time, to their factories in order meet the demands of the market.

Before the mid 1950's the production of Puerh tea throughout the entire province was too small to incur much government regulation. Local merchandisers could buy mao cha directly from the farmers, and the government itself rarely interfered or bought any of for its own uses. From 1954 on, the government demanded that local merchandisers must go to approved agricultural areas to buy, transport or wholesale teas. As production increased and more factories opened, the demand for mao cha increased. The laws gave the provincial government greater leverage to control the flow and management of raw tea. Later, this would place Kunming Tea Factory in a fulcrum position to begin expanding.

In the 1970's the management of the factory was given to the Yunnan provincial government. They began purchasing new machinery, expanding product lines and creating new blends. With the first production of ripe tea, Kunming Tea Factory began to export tea and would play a central role in the development of ripe tea in the whole province.

In 1973, Kunming Tea Factory successfully completed an experimental production of large-leaf Puerh (大叶普洱). Together with the inception of ripe Puerh production, these new developments would lead to an exponential increase of exportation for the factory. By the mid 1980's the factory was exporting more than 1000 tons of tea to Hong Kong and Macau every year. Their exportation accounts for around 80% of the tea sold to that province. In 1985, the factory expanded and purchased around 55,000 square meters in Paoma (跑马山). This second factory and warehouse would be devoted completely to the production of ripe tea. It was the largest of its kind at that time. In 1986, Kunming Tea Factory would cooperate with the provincial government to restart the Provincial Product Inspection Bureau to asses the quality of tea production throughout the province.

Kunming Tea Factory has played a very important role in the history of Puerh tea. Its contributions to the development of ripe Puerh helped to increase the popularity of the region's tea, both domestically and abroad, which would change the way Puerh production occurred forever. The factory's early experimentation with large-leaf Puerh (大叶普洱） was an innovation that was way ahead of its time, predicting a trend that would gather much more momentum at the end of the millennium. The old ripe tea warehouse and factory, with its walls stained brown from decades of fermentation and composition (wo dui 渥堆） remind one of a sepia photograph from the earliest days of Puerh production. One could almost see the large trucks carrying brick teas off towards Hong Kong, and a bit later, the bustling dim sum restaurants with Puerh tea gaiwans they would one day become a part of.