Cut Flowers: A Multi-Million Dollar Industry Blooms in Rural China

By Clements-Hunt, Alison | International Trade Forum, January 1, 2004 | Go to article overview

Cut Flowers: A Multi-Million Dollar Industry Blooms in Rural China


Clements-Hunt, Alison, International Trade Forum


More than 20,000 Chinese farming families have been lifted out of rural poverty in a remarkable economic success story that has seen Yunnan province in southwest China become one of the leading cut-flower centres in Asia.

The area has emerged as a major player in the booming worldwide trade in highquality cut flowers and has shown how export-led growth can be a powerful antidote to rural poverty. For decades, communities in Chinas Yunnan province languished as an economic backwater, dependent on farmers growing subsistence crops.

This has now changed thanks to the rapid growth of the cut-flower sector. In little over a decade, Yunnan's cut-flower industry has grown from a mere 16 hectares to more than 10,000 hectares of production and has yielded a thriving export trade.

In fact, the growth of the industry in Yunnan has been so successful that it is now a business partner of the worlds largest cut-flower auction, the Verenigde Eloemenveilingen Aalsmeer (VBA) - Aalsmeer flower auction - in the Netherlands. The VBA has a strong long-term interest in ensuring that Yunnan meets international standards.

ITC has played a pivotal role in supporting the growth of Yunnan's new export industry and, through international linkages, has enabled local Chinese companies and producing households to sell ever-increasing volumes of cut-flower products abroad. In doing so ITC has helped the local population diversify away from the production of low-value crops to high valueadded cut flowers that are ready for export. Furthermore, this is being done in full respect of the environment. The evolving industry is laying the foundation for long-term economic vitality for the communities involved.

MULTI-MILLION DOLLAR EXPORT SUCCESS

In little more than a decade, 21,400 household growers and 390 enterprises have taken their place at the heart of a flower industry that is gaining international recognition, notably for the quality of its products. The Yunnan cut-flower business is currently worth US$ 415 million and accounts for 50% of the Chinese domestic market.

A series of critical developments during the 1990s saw the village-level industry grow rapidly, and subsequently gain entry to international markets. Key steps included:

* In 1994 the farmers in Yunnan created a cooperative and their annual production of 210 million cut-flower stems outstripped that of Shanghai.

* By 1995 success brought provincial government attention and the critical decision that the public authorities would support the industry's growth. A biological resources development plan was established to further diversify production away from stagnating tobacco and low-margin vegetable crops.

* Between 1994 and 1996 the tobacco industry, formerly the province's dominant sector, invested more than US$ I million in the evolving cut-flower industry, a move that encouraged other investors to back the new industry. This investment facilitated the crucial introduction of international expertise.

* Industry and market analysis by cut-flower experts highlighted important challenges for Yunnan's rapidly growing cut-flower sector. These included: insufficient understanding of the markets, both domestic and international: logistical issues; and technical challenges related to the introduction of new varieties. The resulting report saw the creation of the Yunnan Flower Association (YFA) in 1997. Within one month this new professional body had linked with ITC top address these challenges.

KNOWLEDGE, NETWORKAND ACCESS TO EXPERTISE

ITC's knowledge, network and access to expertise provided the international bridge to speed the transition of Yunnan cut flowers from a primarily domestic product to a significant foreign currency-generating export. ITC supported several important developments to secure the mid- to long-term growth of this embryonic industry:

* ITC catalysed discussions and built links between the Yunnan flower auction in Kunming and VBA, the Dutch flower auction. …

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