The Asian flower industry has the potential to become the leading flower industry in commercial floriculture worldwide. Looking to the future, the Asian flower industry could rival, if not surpass, the size and scope of the European flower industry which presently dominates global commercial floriculture.
2. Evolution of the World Cut Flower Market Place
Forty years ago, demand for cut flower by consumers around the world was satisfied by local cut flower production. In Europe, per capita consumption was significant, and consumer culture required a large supply of cut flowers for gifts, occasions, and everyday use. As a result, cut flower production in Europe was sizable. Gradually as transportation systems developed throughout this region, it became possible to distribute cut flowers grown in southern areas of Europe to northern areas of Europe. Consequently, the European flower industry began to extend its boundaries for cut flower production and along with this expansion grew the influence of the European flower industry. This background history could be considered the beginning of commercial floriculture as we know it today.
When the world energy crisis occurred in 1973, the marketing plan for distributing cut flowers grown in different European countries to Holland for sale through the Dutch flower auction and back to markets throughout Europe became a significant production opportunity for southern European cut flower growers. Increasingly larger quantities of cut flowers were grown in southern Europe to meet the demand for cut flower sales through Holland. Flower growers in the southern regions had a price advantage over growers located in northern regions because cut flower production was more expensive for northern growers during the winter season due to increased energy costs required to obtain quality flowers in controlled temperature greenhouses.
Then, competition for southern European cut flower growers intensified when Israeli cut flower growers, who were located further south entered the market with product to be sold through the Dutch flower auction. Israeli growers had the production advantage of being further south where they could produce cut flowers in open fields or plastic tunnels year round, eliminating most of the overhead expenses for greenhouses and heating systems. But in order to develop a potentially lucrative export cut flower industry for themselves, the Israelis needed to address limiting factors to their success. The two main limiting factors were transportation costs to Europe and a water shortage if production were to expand.
Solutions to these limiting factors were found for Israeli growers. In the case of transportation costs which offset growers cost advantage in terms of energy compared to growers in southern Europe, the government provided transportation subsidies which have reduced the costs to the growers to ship their cut flower product to Europe, thereby maintaining a competitive cost advantage over European growers. As for the water shortage, research on irrigation systems that would conserve water usage was applied to production systems for cut flowers.
Through the 1970s, the activities of the European flower industry had begun to influence cut flower production and sales beyond the borders of Europe. Cut flower sales through the Dutch flower auctions had gained a share of the United States market. This was achieved by promotion activities in the USA supported by the Holland Flower Council which encouraged Americans to purchase more cut flowers for gifts, occasions and everyday use, similar to consumer habits in Europe. Most of the flowers sold to the USA through the Dutch flower auctions are shipped to the USA by air through New York.
Simultaneously, Miami, USA, was being developed as a key import distribution base for cut flowers being grown in Columbia, South America and shipped north. This caused considerable competition for local cut flower growers in the USA. Manufacturers and suppliers from the European flower industry were quick to find opportunity in this situation. Not only were South American cut flower growers purchasing varieties from Europe but flower growers from the USA were persuaded to invest in production systems and equipment from Europe in hopes of becoming more efficient producers like the Dutch growers who had once faced competition from southern European growers. As a result, the United States flower industry owes a significant share of its growth in terms of promotion and sales and improved production systems to the influence of the European flower industry.
It is worthwhile to mention that the Israeli flower industry has become a formidable competitor of the European flower industry. Israeli cut flower producers ship significant quantities of product into the USA market via both New York and Miami. This compensates Israeli producers for the reduction in cut flower sales to the European market which is increasingly being supplied by flower growers from regions in Africa, especially Kenya. Also, Israelis have been successful in selling their production equipment and varieties to flower growers in other countries.
Continuing to advance in the 1980s, the European flower industry began seeking further opportunity and expansion in Asia by 1985. Japans bubble economy was starting to inflate and discretionary income spending by the Japanese was rising. European flower imports made headway into the lucrative market in Japan. Within a few years, as economies in Korea, Taiwan, and Hongkong strengthened, the European flower industry moved into these markets with their cut flower exports as well.
Since the early 1990s, the European flower industry, as a worldwide leader in commercial floriculture, has been impacting the rest of Asia with cut flower imports from Holland and sales of flower varieties, production equipment, and technology for new production operations in Asia. Israeli cut flower producers, manufacturers, and suppliers have followed but, one step behind. The main difference between the European flower industry and the Israeli flower industry is that the European flower industry enters their new markets by launching aggressive marketing campaigns which call attention to the quality and image of Dutch flowers. These campaigns stimulate demand by new consumers for their cut flower products. So far, the Israelis have not particularly created an image for end consumers of Israeli flowers. This difference is one of the factors which contributes to why the European flower industry is the world wide leader in commercial floriculture.
Initially, commercial floriculture production in southeast Asia was developed because of increasing need for low cost flowers by the European cut flower market place. European flower traders identified commercial floriculture production in southeast Asian countries as a source of supply. Ironically, Dutch auctions often served to re-distribute this product to the Japanese market. By the mid to late 1980s, Dutch importers/exporters had begun selling floriculture product in Japan. With economies expanding, the little tigers, i.e. Taiwan, Korea and Hongkong were the next Asian targets with market needs for floriculture products from Europe and potentially from other Asian countries which could produce floriculture products less expensively.
The development of the commercial cut flower industry in Asia has been unlike that of Israel, African countries, south and central American countries. In the latter regions, cut flowers have been a product produced mainly for export with no thought of a potential domestic market. On the other hand, in Asia, whereas cut flowers were initially produced for export, the market potential has rapidly changed to include opportunities for supplying the local market as well. This unique development is on account of the rapid strengthening of economies in the region, high population densities, and the consumer perception which has been promoted heavily by the European flower industry that the use of fresh flowers in ones every day life represents an improved, quality lifestyle.
Today and in the future, the potential for commercial floriculture expansion in Asia, including production for domestic and export sales of cut flowers, is greater than ever before. The elements for success needed to transform the Asian flower industry into the worldwide leader of commercial floriculture have been implied by reviewing the evolution of the world cut flower market place.
3. Opportunities for Cut Flower Development in Asia - Markets
There is considerable opportunity in both export and domestic markets for cut flowers from southern Asia. In case of export markets, it seems reasonable to set short, middle, and long term goals with respect to entering these markets. Simultaneously, efforts to develop domestic markets within and among countries in southeast Asia should be undertaken.
3.1 Goals for Establishing Export Markets from Southeast Asia
a) Short - Term: Countries in Asia - Japan, Korea, Taiwan, Singapore
Already, cut flowers have been exported from southeast Asia to other countries in Asia, especially Japan, Korea, Taiwan, and Singapore. The advantages in marketing product to these countries is that they are relatively near, shipping requirements in terms of postharvest storage have been minimal, though this situation may not persist, and often contacts to find buyers have been made only through relative or previous business relationships.
In the case of Japan, it is well known that custom regulations and quality requirements are among the strictest in the world, though the price fetched for product is high. This incentive is attractive despite the difficulty to achieve success in marketing cut flowers to Japan.
In terms of distribution to these countries, it is important to examine what are the practical transportation routes to these countries from southeast Asia. It could be that developing a transportation hub in Bangkok or Singapore would be convenient for shipping cut flowers from southeast Asian countries, including cut flowers from Yunnan province in China, to countries in northeast Asia. Numerous commercial flights already are in place regarding this possible shipping pattern for cut flowers from the region. The transportation concept of a shipping hub would imply that initially all cut flower production intended for export to northeast Asian destinations would first be shipped to the hub, e.g. Bangkok, and then re-distributed to specific destinations in Japan, Korea, Taiwan, and Singapore. This routing for northeast Asia could be extended to Australia and New Zealand.
This centralized shipping hub would require expanding postharvest handling and storage facilities at the airport terminal and increasing freight forwarding activities for cut flowers in Bangkok. At the same time, shipping procedures and storage requirements for cut flowers to be transported from southeast Asian countries would be streamlined by the ability to focus on transportation requirements to Thailand rather than an array of destinations. In the short term, this could serve as a way to shorten the time to improve distribution of cut flower product from all southeast Asian countries to these lucrative northeast Asian markets.
b) Mid-Term: Countries in North America - Canada and USA; Central Europe
At first consideration, it may seem unlikely that cut flowers exported from southeast Asia could penetrate the markets in North America or central Europe as these markets are already well supplied with cut flowers from other regions such as south and central America and southern Europe, Israel, and Africa. However, in the case of North America, the entry points for cut flower imports are mainly New York and Miami, leaving open the opportunity for establishing an import entry point in Vancouver or San Francisco, especially for cut flowers shipped from a Chinese port, i.e. Kunming. Recently, with the return of Hongkong to China, there has been an exodus of Chinese from Hongkong to Canada establishing residence in North America. Already the San Francisco area in the USA is home to many ethnic Chinese.
Due to the high density of Chinese in these two western entry points to North America, it is highly conceivable that Chinese flower importing companies could proliferate if the opportunity were available. This was certainly the case with Miami which already housed a large population from south and central America when flower imports from Columbia, Ecuador, and Costa Rica began to enter the USA market on the east coast. Until now, domestic producers of cut flowers in California on the west coast of the USA have been holding up against imports from south and central America but, would surely retreat if low cost, high quality imports from southeast Asia via China were available. The reason for setting this export goal as mid-term is that airline shipping routes from China to these cities are not as well established at this time compared to routes from Bangkok to northeast Asian destinations.
It might be proposed to establish Kunming in China, which is currently being developed as the center for cut flower production in China, as the transportation hub for distributing flowers from southeast Asia to North America.
Another mid-term export goal would be to market flowers from southeast Asia to central Europe. This could be achieved, transportation wise also through Bangkok, which already has airline clearances for many central European cities, including Amsterdam.
Another factor in identifying mid-term export market goals is that both north American and central European markets are already well supplied with an abundance of quality, low cost flowers from other regions. These export markets are also both further away in distance so that shipping costs are not particularly an advantage. Marketing factors which will affect the attainment of these mid-term goals will likely be related to price and customer service. The capability for the Asian flower industry to initially offer these export market customers low prices, a full production mix, convenient and reliable shipping service will increase the chances of gaining market share in a market place which already has supply.
c) Long-Term: Countries in Eastern Europe
Lastly, there will be opportunities for marketing cut flowers from southeast Asia to Eastern Europe, particularly northeastern Europe. This would be another likely destination for flowers being shipped out of Kunming. At the moment, economies in northeastern Europe need to improve before significant quantities of cut flowers would be in demand, but by that time (5-10 years) it is likely that transportation routes will have expanded greatly from China to its neighbouring territory, northeastern Europe. As in the past, no doubt winter production of cut flowers in a southern area will surpass cut flower production in the north.
3.2 Goals for Establishing Domestic Markets within Southeast Asia
Similar to establishing export markets for cut flowers from southeast Asia, focusing on improving transportation is a key factor to establishing distribution into domestic markets within and among southeast Asian countries. It is proposed that distribution between these countries may be improved if a transportation hub system were enacted. Also, in the case of developing domestic markets, it is likely that efforts to add or improve wholesale markets in major cities would facilitate greater distribution of cut flowers within these countries.
4. Opportunities for Cut Flower Development in Asia - Production
Opportunities for cut flower development in Asia with respect to production are not location dependent, meaning that any area of southeast Asia should be able to capture significant cut flower production opportunity if pursued. In present and future commercial floriculture markets, production opportunities exist if the goal to reliably produce high quality product in consistent quantities can be attained.
To reliably produce high quality cut flowers in consistent quantities requires optimum production management. Production management strategies for implementation and training of personnel will be different for different types of production operations. Varying types of production operations might be commercial cut flower companies, large or small; government directed agricultural farming communities; or rural development programmes managed by public or private funds. For each of these types of production operations, dissemination of pertinent information needed to manage production may require different strategies. Therefore, a key factor to realizing production opportunities is education. Ideally, educational resources should be developed and supported by public and private sectors.
An example of educational resources which could be critical to the success of implementing optimum production management for cut flower enterprise in Asia would be a training center/demonstration showcase of production technology adapted to local growing conditions for specific cut flower crops. This educational institution or organization could facilitate dissemination of information to management at cut flower operations or provide training of technical personnel involved in cut flower operations.
Enlisting the support of floriculture professionals from outside and within Asia to coordinate activities in research and education for the purpose of furthering floriculture development in Asia would have significant impact on the pace and scope of cut flower development in Asia. Formally organized, it would be possible to solicit funds through international agencies to support an institution set up for this purpose, i.e. International Center for Floriculture in Asia.
Departments related to production and marketing management for cut flower crops would be defined in order to reliably produce high quality cut flowers in consistent quantities regardless of the location in southeast Asia. Such departments could be:
If sufficient attention and support were given to attaining the goal of reliably producing high quality cut flower product in consistent quantities among Asian countries, then it would be reasonable to expect that the Asian flower industry would soon overtake any other regions flower industry, including the European flower industry, in production. Moreover, given the rapidly increasing rate of spending among Asian consumers for cut flowers, it is also reasonable to expect that the Asian flower industry will soon surpass consumption rates for cut flowers compared to that of other regions.
5. Leadership in Commercial Floriculture Worldwide
It is exciting to discuss how and why the Asian flower industry has the potential to not only take the lead in volume and consumption of floriculture products but, to become the leader of commercial floriculture worldwide. This may suggest the most important marketing and production opportunities for cut flower development in Asia.
Once again, in review of activities of the European flower industry, it can be said that the European flower industry has led the way in floriculture production, research, floriculture education and training programmes, development of floriculture postharvest handling and storage technology; floral marketing strategies; grades and standards for floral product; and transportation systems for distribution of flowers. Countries within the European region and outside of the region depend on product innovation from Europe to yield new flower varieties. Innovative floriculture production systems have been promoted and exported to other regions of the world. Even floral design concepts have been defined by the European flower industry.
The European flower industry exports more than just flowers. The European flower industry exports flowers, equipment and technology to produce flowers, marketing programmes to increase consumer purchases, and with those marketing programmes, cultural traditions and attitudes about flowers which includes floral design, uses of floral products, i.e. decoration, gifts, holidays, and appreciation for flowers.
Celebration of western holidays and the purchases of flowers for these holidays have become a main theme of floral marketing for consumers in Asia. Two examples of this are cut roses for Valentines Day and cut carnations for Mothers Day. This type comprehensive involvement with floriculture from disseminating the use of production equipment and technology to influencing consumer purchases of flowers by promoting western holidays associated with floral purchases has established the European flower industry as the leader of commercial floriculture worldwide.
Let it be asked, could the establishment of an Asian flower industry spread its influence among countries in Asia and the West? Why not? How would this be done?
There are many opportunities for marketing cut flowers from Asia. In addition to developing a new transportation concept for improving global distribution of cut flowers produced in Asia, there are opportunities in developing marketing strategies which would boost global consumption of flowers produced in Asia. First of all, unifying the image of flowers produced in Asia to create an identity of Asian floriculture would be one step. Then, this could be implemented by introducing an Asian calendar of floral holidays which indicated particular flowers and how they are used in association with these holidays. Even if certain flowers are not presently used in association with a particular holiday or celebration in Asia, there is no reason that floral associations from each country could not invent the concept.
For example, in China, on a certain day in the autumn, the moon and all things associated to be round like the moon are appreciated. Millions of round cakes, labeled moon cakes are sold to consumers. Why could not this holiday become a commercial opportunity for the Asian flower industry and pom pom mums become the flower of choice for this day as a gift item along with moon cakes. If the Japanese celebrate Christmas now with all its commercialism, why could they not celebrate Moon Day in the autumn? The same can be said for Americans and Europeans. In Vietnam, flower consumption is auspicious on the 1st and 15th of the month in compliance with Vietnamese traditions. This seems like another convenient way for the Asian flower industry to boost cut flower consumption all over the world twice a month if there were an Asian calendar of floral holidays reminding consumers that it was that time of the month to buy flowers.
Imbedded in this type of floral promotion strategy is the opportunity for the Asian flower industry to develop new varieties of flowers which would characterize these holidays. For example, in case of Moon Day not just any type of pom pom mum would qualify, but a particular colour, size, shape, etc. could be developed.
Given the cultural differences among Asian countries, the challenge would be to incorporate as many different cultural traditions representing the different Asian cultures as part of the coordinated Asian flower industry effort. This approach would allow each country to capitalize exclusively on a particular holiday, boosting production and sales for that country according to the holiday celebrated.
Once the mission of developing an Asian flower industry was accepted, it would be certain that marketing ingenuity from within Asian flower associations would take over and demand for cut flower products from Asia would soar.
Opportunities in production of cut flowers in Asia would go beyond just the need to increase the rate of production. New production systems for efficiency or environmental protection could be developed which would be adapted to conditions of flower production in Asia. Research priorities at flower research institutions throughout Asia could be directed towards developing innovative solutions which supported global sustainability. Then, in a technology turnaround, it would be countries in the west which would be sending exchange staff to Asia to study new flower production systems. Novel engineering or design applications in equipment and supplies which would be used by producers of flowers for the Asian flower industry could be patented and exported to flower producers in other countries outside of Asia. Endless opportunities. Endless opportunities.
The establishment of an Asian flower industry could direct the unlimited opportunities for development of cut flower production in Asia and development of worldwide flower markets for cut flowers from Asia.
In conclusion, it is necessary to emphasize that cooperation and commitment, in terms of education, research, funding, and communication from countries in Asia, is requisite in order for the Asian flower industry to succeed in replacing the European flower industry as the leader of commercial floriculture worldwide.