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A Gaiwan is used to brew fine tea in "Gongfu" style. The cup is partially filled with loose leaf tea, filled with water, and then the lid is used to strain the brew by holding the cup rim with your thumb and middle finger, while the index holds the lid slightly askew (the lid of this set is made slightly oval to create a small gap). This can usually be repeated many times with the same tea leaves depending on the quantity and quality of leaf used. If your not familiar try a Google or YouTube search which will bring up a lot of results.
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