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Flower power: Taiwan aims to become world's florist
01:21 UTC+8 December 28, 2010
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SINCE the 1990s, China's Taiwan has gained worldwide fame as a high-tech manufacturer churning out computers, micro chips and gadgets.
While that was happening, however, few noticed that this island province of just 23 million was climbing its way to the top of a entirely different sector - flowers.
By joining its rural past with cutting-edge technology, it has become one of the world's biggest flower exporters, and No. 1 orchid exporter.
And it's not only Taiwan that has reaped the benefits.
Taiwanese flower firms have also been giving a hand to the Chinese mainland's mass-produced flower business.
Now, with both sides of the Taiwan Strait growing closer economically by the day, the time seems ripe for combining Taiwan's know-how with the mainland's vast plantations to create something more impressive.
But that might have to wait - Taiwan is aiming to move up the value chain into R&D, breeding and patenting its flower varieties, to increase profit margins and keep a technological step ahead of looming competition.
In short, it wants to become for orchids and other flowers what Holland is for tulips.
The situation is indicative of the business barriers remaining between the two sides of the strait, as well as the sharply business environments. To understand more, it's worth taking a brief look at the roots of Taiwan's flower business.
Early shoots
The heartland of Taiwan's flower production is in the balmy, southwest plains and foothills south of the Tropic of Cancer, where the climate is ideal for horticulture. Here, Japanese colonizers established large-scale agriculture in the early 20th century, especially sugar and fruit plantations. When the Chinese Kuomintang took control of Taiwan from the retreating Japanese after World War II, public enterprises were put in charge of large-scale agricultural infrastructure left behind by the Japanese. Taisugar was one of the biggest such firms.
By the 1980s, however, Taiwan had moved into manufacturing for export and given up its economic dependence on agriculture. Wages and costs climbed rapidly too, and soon Taiwan was importing most of its sugar from cheaper locations. Looking around for new business, Taisugar hit upon an idea: Mass-produced flower production for export, with sights set on the Japanese market. A large private firm got in the game, too, and a new agribusiness was born.
In the early 1990s, Taiwan's flower firms also began to go west, lured by Chinese mainland rock-bottom land and labor costs. A handful of these firms set up shop near Kunming, in southwest China's Yunnan Province. As with a surprising range of Chinese industries, the Taiwanese helped launch mass-produced flower business in Chinese mainland. Flowers had always been plentiful in that part of the country. But the Taiwanese introduced techniques for mass production, improved infrastructure, and served as middlemen between Dutch, Japanese and American breeders and Chinese mainland growers.
"Taiwan's businesses played an important role," says Chang Su-san, director general of the department of international affairs at Taiwan's Council of Agriculture. "They had the capital, and they brought technology and flower varieties."
However, difficulties soon set in as the Taiwanese struggled with red tape in Chinese mainland, a poor record of protecting breeders' rights, unreliable business partners and problematic local officials. Some Taiwanese horticulture firms - as well as Dutch and other foreign firms - pulled out of Chinese mainland, disillusioned.
Taiwan's flower business has blossomed over this past decade with the emergence of two distinct, yet equally successful, business models. The first was Taiwan-based mass production for export, customized to the tastes and strict regulations of Japan, the US and EU markets. The second was Chinese mainland-based production by Taiwanese firms for Chinese mainland consumers.
Golden age
In Taiwan, flower firms increasingly focused on quality, rather than just quantity. Helped by export-friendly policies, private flower producers thrived by mass producing high-quality breeds, like "butterfly" orchids (phalaenopsis) and "boat" orchids (cymbidium).
The results have been eye-popping.
Flower and flower seed exports have nearly tripled in value in the last decade, from US$48 million in 1999 to US$111 million in 2009.
Orchids account for much of that boom - US$87 million of last year's exports were orchids, up from US$40 million in 2004.
Meanwhile, it is pointed out that while orchids account for just 20 percent of Taiwan's flower exports by quantity, they are 80 percent of export value.
In 2005, Taiwan became the world's top orchid exporter, replacing Thailand - an honor it still holds.
Japan was the original target market for flower exports. But in the past few years, exports to the US have also boomed. The US overtook Japan to become Taiwan's No. 1 export market for orchids in 2008.
Taiwan grabbed US market share by adhering to the US government's strict import standards. US agriculture officials now regularly inspect Taiwan's greenhouses to ensure they meet American regulations.
Taiwan may be raking in money from its flower exports, but the incumbents are also looking over its shoulder.
New firms have crowded into the market, and Chinese mainland is fast becoming a flower power in its own right. That's why Taiwan's firms want to move up the value chain, in search of better margins and ensure they stay a step ahead of the Chinese mainland.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. All rights reserved. Shanghai Daily condensed the article.)
While that was happening, however, few noticed that this island province of just 23 million was climbing its way to the top of a entirely different sector - flowers.
By joining its rural past with cutting-edge technology, it has become one of the world's biggest flower exporters, and No. 1 orchid exporter.
And it's not only Taiwan that has reaped the benefits.
Taiwanese flower firms have also been giving a hand to the Chinese mainland's mass-produced flower business.
Now, with both sides of the Taiwan Strait growing closer economically by the day, the time seems ripe for combining Taiwan's know-how with the mainland's vast plantations to create something more impressive.
But that might have to wait - Taiwan is aiming to move up the value chain into R&D, breeding and patenting its flower varieties, to increase profit margins and keep a technological step ahead of looming competition.
In short, it wants to become for orchids and other flowers what Holland is for tulips.
The situation is indicative of the business barriers remaining between the two sides of the strait, as well as the sharply business environments. To understand more, it's worth taking a brief look at the roots of Taiwan's flower business.
Early shoots
The heartland of Taiwan's flower production is in the balmy, southwest plains and foothills south of the Tropic of Cancer, where the climate is ideal for horticulture. Here, Japanese colonizers established large-scale agriculture in the early 20th century, especially sugar and fruit plantations. When the Chinese Kuomintang took control of Taiwan from the retreating Japanese after World War II, public enterprises were put in charge of large-scale agricultural infrastructure left behind by the Japanese. Taisugar was one of the biggest such firms.
By the 1980s, however, Taiwan had moved into manufacturing for export and given up its economic dependence on agriculture. Wages and costs climbed rapidly too, and soon Taiwan was importing most of its sugar from cheaper locations. Looking around for new business, Taisugar hit upon an idea: Mass-produced flower production for export, with sights set on the Japanese market. A large private firm got in the game, too, and a new agribusiness was born.
In the early 1990s, Taiwan's flower firms also began to go west, lured by Chinese mainland rock-bottom land and labor costs. A handful of these firms set up shop near Kunming, in southwest China's Yunnan Province. As with a surprising range of Chinese industries, the Taiwanese helped launch mass-produced flower business in Chinese mainland. Flowers had always been plentiful in that part of the country. But the Taiwanese introduced techniques for mass production, improved infrastructure, and served as middlemen between Dutch, Japanese and American breeders and Chinese mainland growers.
"Taiwan's businesses played an important role," says Chang Su-san, director general of the department of international affairs at Taiwan's Council of Agriculture. "They had the capital, and they brought technology and flower varieties."
However, difficulties soon set in as the Taiwanese struggled with red tape in Chinese mainland, a poor record of protecting breeders' rights, unreliable business partners and problematic local officials. Some Taiwanese horticulture firms - as well as Dutch and other foreign firms - pulled out of Chinese mainland, disillusioned.
Taiwan's flower business has blossomed over this past decade with the emergence of two distinct, yet equally successful, business models. The first was Taiwan-based mass production for export, customized to the tastes and strict regulations of Japan, the US and EU markets. The second was Chinese mainland-based production by Taiwanese firms for Chinese mainland consumers.
Golden age
In Taiwan, flower firms increasingly focused on quality, rather than just quantity. Helped by export-friendly policies, private flower producers thrived by mass producing high-quality breeds, like "butterfly" orchids (phalaenopsis) and "boat" orchids (cymbidium).
The results have been eye-popping.
Flower and flower seed exports have nearly tripled in value in the last decade, from US$48 million in 1999 to US$111 million in 2009.
Orchids account for much of that boom - US$87 million of last year's exports were orchids, up from US$40 million in 2004.
Meanwhile, it is pointed out that while orchids account for just 20 percent of Taiwan's flower exports by quantity, they are 80 percent of export value.
In 2005, Taiwan became the world's top orchid exporter, replacing Thailand - an honor it still holds.
Japan was the original target market for flower exports. But in the past few years, exports to the US have also boomed. The US overtook Japan to become Taiwan's No. 1 export market for orchids in 2008.
Taiwan grabbed US market share by adhering to the US government's strict import standards. US agriculture officials now regularly inspect Taiwan's greenhouses to ensure they meet American regulations.
Taiwan may be raking in money from its flower exports, but the incumbents are also looking over its shoulder.
New firms have crowded into the market, and Chinese mainland is fast becoming a flower power in its own right. That's why Taiwan's firms want to move up the value chain, in search of better margins and ensure they stay a step ahead of the Chinese mainland.
(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. All rights reserved. Shanghai Daily condensed the article.)
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