Chinese Flower International Trade Status Analysis in 2007

PART 3

Xu Xiangyu, Chen Yi, Li Chunyan

(1.CFNA Flower Branch 100062; 2.Beijing Huake Runnong Consulting Ltd 100125)

(2) Fresh cut flowers

China's exports of fresh cut flowers in 2007 amounted to $30.56 million U.S. dollars, increasing the year-on-year export by 10.83 % compared to 2006. The China flower industry was affected by bottlenecks in the level of flower preservation technology, domestic logistics and other factors. Japan, Singapore, Hong Kong, Thailand, Malaysia, South Korea, Russia, Kazakhstan, Kyrgyzstan Stan and Macao markets and the volume of fresh cut flowers accounted for about 95.27% of total flower exports. Japan is one of the major international flower consumption countries and is still the major export market of China’s floral products, particularly fresh cut flowers. Fresh cut flowers exports to Japan in 2007 accounted for about 63.65% of China's total exports (figure 12). The overall situation of exports to Japan is more stable, however, the export growth rate was 53.8 % in 2006 and dropped to 19.66% that 2007. If China's fresh cut flower exports to Japan cannot be of stabile for improvement in product quality, production lead times and selection of new varieties China will face other emerging problems from other countries and regions exporting to Japan such as Colombia, Ecuador, Kenya and other countries causing fierce competition for China and the rate of increase in export market share to Japan is bound to decline.

The export growth rate of the top five countries and regions for fresh cut flowers showed a declining trend in general in 2007. Singapore, Thailand and Malaysia in had export growth rates of 106.7 %, 132.8% and 158.5 % in 2006 and in 2007 these growth rates declined to that of 38.4%, 51.5% and 69.2% in 2007. In particular there was a huge decline in the Hong Kong market with the export growth rate dropping from 92.3% to -45.2%, which allowed Singapore to replace Hong Kong as the second largest export market of Chinese fresh cut flowers.

The Chinese export market had a sudden appearance in South Korean in 2007 with a export growth rate increase from 25% in 2006 to 117% in 2007, which showed a good market prospect for future development.

There are different levels of market decline in China's three major emerging markets to Russia, Kazakhstan and Kyrgyzstan which had rapid growth in 2005. The export market to Kazakhstan particularly declined from a growth rate of 541% in 2006 declining to -75% in 2007. It is easy to see from these examples that China's export of fresh cut flowers was not a stable market yet.

Particularly with the increase of flower exports from Turkey and Iran to the above mentioned countries, Chinese enterprises have faced a sudden increase in competitive pressures. How to consolidate and expand markets in these areas is the major problem that Chinese exports of fresh cut flowers enterprises are facing. Developing the Middle East market has achieved some progress. The fresh cut flowers exports amount to United Arab Emirates and Saudi Arabia are for the first time in the top 15 countries and regions for Chinese export destination and the growth rate potential is large. This region may become another emerging export target market of China's fresh cut flowers in the next five years.

Figure 12 Countries and Regions of China's Fresh Cut Flower Exports in 2007

Figure 13 Fresh Cut Flower Exports to Major Destination Countries and Regions with Changing Trends in 2007

Carnations became the largest fresh cut flower crop for export among all of the export fresh cut flower crop exports in 2007. The export of Carnations was $12.548 million U.S. dollars and accounted for about 41% of China's total fresh cut flower exports. Chrysanthemum and China rose fresh-cut flower export amount was $6,480,000 US dollars and $4,250,000 US dollars, approximately 21% and 14%, respectively (Figure 14). We will analysis the main exports of Chinese fresh-cut flower crops one by one below.

Figure 14 Major Categories of China's Fresh Cut Flower Exports in 2007

（I）Carnation

At present, the first target market for China's fresh-cut flower Carnations exports is Japan, with annual exports of $9.764 million U.S. dollars, accounting for 77.8% of all carnation exports and shows the strong dependence on the Japanese market (Figure 15). The monthly export trend of fresh-cut flower Carnations to the Japanese market is basically the same except for April and May a departure from the trend. According to Japan’s customs trade statistics, China's export amount to Japan was 1.397 billion yen in 2007 (2007 exchange rate of one U.S. dollar = 100 to 125 yen), which accounted for about 24.96 % of Japan's import value. Bilateral trade statistics due to changes of exchange rates and trade statistics caliber and other reasons, there are nearly 2 million U.S. dollars difference. China’s main rival in the Japan market is Colombia, whose export amount on fresh-cut flowers Carnation to Japan reached 3.789 billion yen in 2007, which accounted for about 67.67% of Japan's import value for Carnations. In addition to the market share gap there is also a big gap in the unit price between Columbia and Chinese fresh-cut flowers carnations to Japan. The Chinese unit price is around 566 yen / kg and Colombian unit price was about 1,160 yen / kg. Chinese enterprises have a long way to go to reverse the Chinese fresh-cut flower Carnations image of low-price and inferior quality in Japanese market. The nature band features of China's exports of fresh cut flower Carnations to Japan is very notable in 2007, January, February, June, July, October, November being the annual trough period of export; March, September and December being the peak period, especially in March where exports reach the highest level (Figure 16). The comparison of Japanese imports of fresh cut flower Carnation monthly trend shows (Figure 17) in 2007 the movements have the same general trend with the exception of May. It is not difficult to come to the conclusion from the analysis of the raw data in figure 17 that according to the Japanese market demand Colombian flower exporters have the ability to adjust their production cycle, reasonableness of the production cycle and the production capacity better than Chinese enterprises. If Chinese export enterprises can improve these areas, it will gradually narrow the gap in Japan Carnations fresh cut flower market between China and Colombia.

Thailand, Hong Kong, Korea and Singapore markets which ranked from No. 2 to 5 inChina's fresh cut flowers Carnation exports show greater differences in the cyclical market demand. The peak demand in Thailand is in May (Mother's Day) and New Year’s Day in December. The peak demand in the Hong Kong market is in February during the Chinese Lunar New Year and after February there is a rapid decline in market demand. After May the market demand is in a relatively low level and remains relatively stable. In Korean market demand is in April and May, and in June the import demand enters into a stagnation period. Then it begins to gradually rebound in October showing the second annual peak demand. The Singapore import market for basic flower requirements maintained a relatively stable state throughout the year (figure 18).

Figure 15 Countries and Regions of China's Fresh Cut Flower Carnation Exports in 2007

Figure16 Chinese Carnation Fresh-Cut Flower Export Monthly Trend in 2007 (overall and Japan)

Figure 17 Japanese Carnation Fresh-Cut Flower Import Monthly Trend in 2007

Figure 18 Chinese Carnation Fresh-Cut Flower Export Monthly Trend in 2007 (other major countries

and area)

Provincial distribution of China's exports of fresh cut flower Carnation in 2007 showed Yunnan and Zhejiang provinces were the top two provinces. The export volume respectively reached $6.69 million U.S. dollars and $5.15 million U.S. dollars, accounting for about 53 % and 41% of China’s total exports and the other provincial cities with less than 6% of total exports. The busy season for the export of fresh cut flower Carnations in Yunnan Province was in March, May, September and December in 2007, while that of Zhejiang Province was in March to May and September and December (figure 19). Comparing the trend curve in figure 19 and in Figure 17 and 18 it shows the following characteristics:

1. Monthly exports of fresh cut flower Carnations in Yunnan province and the trend of Japan's monthly imports trend is basically the same. This reflects that Yunnan has the grasp of the international market demand for cyclical changes for the export of Yunnan carnations and has been greatly improved this situation compared to the past.

2, The export volume of ZhejiangProvince in April surpassed that in Yunnan, while in the international market peak demand there is a sharp decline in exports in May. The emergence of such a situation exists on two possibilities: First, Zhejiang fresh cut flower Carnation exports to Japan failed to control the production cycle and had certain problems in 2007, leading to changes in the delivery cycle; Second, due to a sharp increase demand in Korean market in April ,Zhejiang enterprises had to increase exports to South Korea. No matter the reason, the strong demand in the international market in May, the sharp drop in export amount of ZhejiangProvince flower Carnation made local manufacturers loose a large international market share.

3, The export volume of Zhejiang Province in March exceeded the highest single-month export amount in Yunnan Province, showing that fresh cut flowers Carnation export from Zhejiang Province has a great productive potential. If it makes some improvement in the production cycle regulation the export amount will have a very big promotion space.

Figure 19 ChineseMainProvince Carnation Fresh-Cut Flower Export Monthly Trend in 2007

Chinese version © Copyright 2008 to Xu Xiangyu, Chen Yi, Li Chunyan

(1.CFNA Flower Branch 100062; 2. Beijing Huake Runnong Consulting Ltd 100125)

English Translation © Copyright 2008 to Berl Thomas and Associates, Inc. USA