Floribusiness FloraHolland and the conquest of the Chinese market

    FloraHolland and the conquest of the Chinese market

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    Royal FloraHolland are promoting their members’ flowers on the Chinese market through their World Flower Exchange programme. Their ambitious target is to reach a Chinese import market share of 120 million stems. Programme director Guido de Wit: ”China has a lot of potential, especially in flower sales through the internet.”

    Programme director Guido de Wit and business developer Emily Peterson were manning a large booth at the IPM in Shanghai two week ago. They were exhibiting at the trade fair as part of World Flower Exchange (WFE), FloraHolland’s programme aimed at increasing their members’ market share on the Chinese market.

    De Wit and Peterson presented a range of flowers that aren’t available on the Chinese market or are of higher quality than the ones sold by Chinese growers. ”We could just send people a catalogue, but it’s always better to show your products at a trade fair. We also told visitors the story behind our flowers. Why can we provide better quality? What’s the reason for the price difference? How can we offer such a long vase life?” explains De Wit. There was hardly any attention for something like vase life in China a few years ago, but nowadays, this is becoming more and more important, according to De Wit.

    Great potential

    FloraHolland’s specific target group in China consists of florists, and consumers from the upper middle class. This class is growing rapidly at the moment.

    The cooperative distributes the flowers within China through e-commerce partners. De Wit explains that more and more florists in China are purchasing their flowers online. And this is true for consumers, especially young people, too. ”There’s great potential in online sales here. Week after week, month after month, you can see another huge increase. Especially among young people, who have just bought a house and want to decorate it. They’re different from their parents, they’re looking for a certain lifestyle. And florists are purchasing more and more online too.”

    FloraHolland sell their members’ flowers through around ten existing digital platforms. De Wit refers to them as ‘flower e-commerce platforms’. ”These platforms are huge. Some of them have around 28,000 registered florists. A platform is like a combination of a web shop and a social media site”, adds Peterson. ”In China, all social media are integrated in platforms.”

    ”The flower sales platforms that we use for WFE consist of two different types. Firstly, there are the platforms for florists. Secondly, there are subscription platforms, where consumers take out a flower subscription. The latter type in particular, is hugely popular at the moment”, according to De Wit. ”It’s a sign that more and more Chinese people are starting to buy flowers for personal use, which is a great trend”.

    Above-average incomes

    Royal FloraHolland is active in China in three big cities: Shanghai, Beijing and Guangzhou. These cities all have a population of several millions, plus a huge surrounding area. De Wit calculated that via these three cities, they can reach 100 to 200 million people in their target group.

    Royal FloraHolland has distribution centres in all three cities. That’s where the flowers are cooled down again, immediately after they’ve arrived by plane. In addition, the cooperative has an office in Shanghai.

    One of the difficulties of selling flowers in China, is the distribution, says De Wit. The existing distribution channels aren’t very good because flowers are usually transported unrefrigerated. So, Royal FloraHolland has selected a few Chinese partners who use chilled transport and they’re now shipping the flowers from FloraHolland’s centres to the warehouses where customers collect them.

    De Wit and Peterson stress that the Chinese market is very different from the European market. De Wit: ”On one hand, the market is developing rapidly. On the other hand, it has its own, unique characteristics, which we have to take into account. For example, Chinese customers want to get exactly what they see in the picture on the platform. They won’t accept a bouquet that’s slightly different from the picture. That has flowers with a slightly different colour, or a stem that’s five centimetres shorter, or one stem less. And they have a preference for riper flowers. Specifications are very important, you can’t ignore them. We’ve got to prepare ourselves for that kind of market.”

    Large volumes

    According to Peterson, the Chinese want types of flowers that aren’t cultivated in China, or that aren’t available in China with the same level of quality. ”And they want each variety in large volumes.” They need such large volumes because the platforms are visited by such huge numbers of consumers and florists. If they like a product, they immediately order enormous quantities.

    De Wit also points out how immature the Chinese market is, and that this can cause some pretty erratic dynamics. ”Demand will continue to be very unpredictable for a while. We’ll have to keep a close eye on that, because we’d like to be able to respond to the demand. We’ll have to learn to understand this country.” De Wit then mentions some of the traditional festivals and symbolism, which require very specific flowers. ”We need to get to grips with the new developments on the one hand and the cultural background on the other hand.”

    Increasing volumes

    A million flowers of Royal FloraHolland’s members have been sold in China by now. The exploratory trial phase is over. The cooperative has reached the next step in the WFE programme; the Proof of Concept phase, which means that they’re no longer limiting their sales to special holidays, but they’ll start offering their flowers all year round.

    ”We’re focusing on increasing the volumes and the frequency, we’ve moved on to a weekly supply now. What are the challenges we’re facing at this stage?” De Wit asks himself. In 2018, the cooperative’s focus will be on further growth; there might be a few Dutch trading companies that will start using WFE’s Chinese infrastructure by then.  Royal FloraHolland’s partners and customers are definitely interested, according to De Wit.

    The cooperative’s ambition is to open the Chinese market up for its members and partners. That means that within a few years, a substantial part of the Chinese flower import market should consist of flowers from auction members. De Wit mentions a target percentage of 20-30% of all Chinese flower imports. At the moment, exporters are shipping flowers from the Netherlands to China for a total value of around 50 million euro per year.

    Cost-plus scenario

    The programme director indicates that the cooperative is interested in other Asian countries too. De Wit mentions Taiwan, Japan, Hong Kong and South Korea. ”But the focus is on China. Maximising our profits isn’t our goal. We are trying to sell as much volume as possible to the Chinese and Asian markets. We want a cost-plus scenario, in which we can return the added value to our members”, says De Wit, who has noticed that competition is increasing in China. Ecuador, Colombia and the African countries are also showing an interest. ”If we want to beat them, we’ll have to be better than them. That’s why it’s so important to base ourselves in China now and to develop our market share.”

    De Wit and Peterson say that the trade fair in Shanghai attracted lots of visitors. The place was jam-packed with florists and consumers. And those happen to be the exact two target groups that Royal FloraHolland is looking for. In addition to Shanghai, Royal FloraHolland exhibits at three other trade shows each year, with the aim to promote their members’ trade in China. And they also use ‘Chinese style’ marketing activities, concludes Peterson. The cooperative has its own WeChat account and Royal FloraHolland uses social media to reach parties that attract florists. There are marketing activities through florists organisations, too. ”And if we organise a trade fair, we make a video, allowing 10,000 – 15,000 Chinese people to watch from abroad. That kind of thing is really appreciated.”

    Flowers from all countries

    The flowers that Royal FloraHolland has been trading in China lately, are from members in various countries. According to programme director Guido de Wit, they’ve been selling mostly roses, tulips, bouquet fillers and seasonal flowers. The tulips came from the Netherlands, roses from Kenya, bouquet fillers from different countries including Ethiopia and the summer flowers came from Israel.

    Not everyone will be able to sell to China through the platform, because not all of the cooperative members’ flowers are suitable for export to China. Guido de Wit: ”We look carefully at the demand and at which flowers meet that demand.” Another important condition for suppliers is that they have to be able to provide varieties that aren’t available on the Chinese market, or that aren’t available on the Chinese market with the same level of quality. Finally, suppliers have to be able to deliver large volumes.

    FloraHolland’s CEO, Lucas Vos, recently stated that the opening up of the Chinese flower market for their members is going well. One of the challenges that he mentioned was getting the right roses from the African production areas. Ethiopia and Kenya had very cold weather at the beginning of this year, which had a negative impact on production. And the colours aren’t exactly what Chinese customers are looking for. Vos said that traders were initially not too sure about FloraHolland’s interference and focus on China, but that at the moment, most of them support the pilot.

     

    Arie-Frans Middelburg
    Arie-Frans Middelburg werkt sinds 2002 als redacteur bij het Vakblad voor de Bloemisterij. Hij schrijft onder meer over veilingen, logistiek en ontwikkelingen in de sierteelt in het buitenland.

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