To stem com­pe­ti­tion, Tai­wan’s deep-rooted orchid in­dus­try must be in­no­va­tive and stay op­ti­mistic

The China Post - - BUSINESS -

On the sec­ond leg of our trip, we vis­ited Yu Pin Bi­o­log­i­cal Tech­nol­ogy Co. Ltd. in the town of Minx­iong in Chi­ayi County in a bid to bet­ter un­der­stand the di­vi­sion of la­bor in Tai­wan’s agri­cul­tural sec­tor as well as its abil­ity to go global. Among Tai­wan’s orchid grow­ers, Yu Pin Bi­o­log­i­cal Tech­nol­ogy Chair­man Chang Neng-I was the first to set up green­houses in the United States, thus con­trol­ling both ends of the smil­ing curve — R&D and the mar­ket.

In the past, Tai­wan ex­ported orchid seedlings to the United States, where lo­cal grow­ers con­tin­ued to cul­ti­vate the plants in green­house nurs­eries, forc­ing them to bloom at the de­sired time. Only then were they sold in the do­mes­tic mar­ket. Chang, how­ever, ex­ports pot­ted ma­ture orchid plants that he brings to bloom at his own green­houses in the United States be­fore selling them to his cus­tomers.

“We make great ef­forts to sell Tai­wan or­chids to ev­ery cor­ner of the world,” he says, proudly. “The is­land of Re­union in the In­dian Ocean has a pop­u­la­tion of just 800,000 peo­ple, but Tai­wan is able to ship ten con­tain­ers with about 200,000 or­chids to Re­union per year. Where there are busi­ness op­por­tu­ni­ties there are Tai­wanese. Pha­laenop­sis or­chids are a highly glob­al­ized busi­ness.”

In or­der to ward off com­pe­ti­tion, Chang con­tin­ues to come up with new ideas. His latest brain­child is a six-cen­time­ter high flow­er­pot with a small orchid just 13.5 cen­time­ters in length. When pack­aged in a box, the pot­ted orchid meets U.S. courier ser­vice com­pa­nies’ size re­stric­tions for the low­est do­mes­tic de­liv­ery fee. This means that these minia­ture or­chids can be de­liv­ered di­rectly to the do­mes­tic mar­ket upon ar­rival in the United States via lo­cal ex­press de­liv­ery ser­vices. Chang points out that pha­laenop­sis or­chids are not yet avail­able in sev­eral Amer­i­can cities. He hopes to use phar­ma­cies across the United States as a sales chan­nel, selling pot­ted mini or­chids for the price of a ham­burger.

The con­tin­ued growth of Tai­wan’s orchid in­dus­try hinges on ex­plor­ing mar­kets over­seas. Chang cur­rently plans to build green­houses in the Mid­dle Eastern emi­rate of Dubai. He is also get­ting ready to en­ter the In­dian mar­ket.

Why does he want to sell or­chids in a desert coun­try? “In Dubai, the whole­sale price for an orchid stands at NT$1,000,” ex- plains Chang. With such lu­cra­tive prices, Dubai could be­come a new busi­ness par­adise for Tai­wanese or­chids, should it be pos­si­ble to in­vest in green­houses there.

Tai­wanese or­chids will prob­a­bly not just bloom in the desert but also en­chant con­sumers in long-iso­lated Iran with their beau­ti­ful blooms and vi­brant col­ors once trade sanc­tions are lifted in ex­change for a freeze of Iran’s nu­clear pro­gram. While the world still de­bates how the re­sump­tion of Ira­nian crude oil ex­ports will af­fect the in­ter­na­tional oil price, the Sogo Team has al­ready ze­roed in on Iran as a new con­sumer mar­ket. At the same time, Chang also sees great mar­ket po­ten­tial in Mexico, Columbia and Brazil.

He does not worry about com­pe­ti­tion from the Nether­lands at all. “The world is so big, there are so many peo­ple... there are op­por­tu­ni­ties ev­ery­where, and there is no such thing as who de­stroys whom,” Chang says.

Some­times, com­peti­tors can even be­come busi­ness part­ners.

I-Hsin Biotech­nol­ogy Corp.,

Chi­ayi

The third leg of our tour takes us to another orchid breeder in Dalin in Chi­ayi County. The strat­egy of I-Hsin Biotech­nol­ogy Corp. high­lights the coopet­i­tive re­la­tion­ship with Dutch orchid grow­ers.

In re­cent years, I-Hsin has mainly ex­ported Tai­wanese orchid seedlings, young plantlets and seedlings in flasks to Euro­pean coun­tries such as Den­mark, Ger­many, Italy and the Nether­lands.

Sur­pris­ingly, the Nether­lands counts among I-Hsin’s three ma­jor ex­port mar­kets. Not only has the Nether­lands failed to com­pletely elim­i­nate com­pe­ti­tion from Tai­wan’s orchid grow­ers, the coun­try has even be­come one of the ma­jor mar­kets for some Tai­wanese orchid breed­ers.

I-Hsin Biotech­nol­ogy Pres­i­dent Jian Wei-tso ob­serves that Tai­wan boasts many orchid va­ri­eties, while the Nether­lands has mar­ket ac­cess. Europe is the world’s largest mar­ket for or­chids, with an­nual de­mand reach­ing 150 mil­lion plants.

Dutch orchid mar­keters are able to sell orchid va­ri­eties that do not sell well in Tai­wan in great quan­ti­ties in Europe. There­fore, I-Hsin Biotech­nol­ogy came up with an in­ge­nious strat­egy. “We dis­cussed whether it would be pos­si­ble to sell the orchid va­ri­eties that were not picked by our cus­tomers to the Dutch orchid grow­ers. Then Tai­wan would take the roy­alty fees,” Jian ex­plains.

In­side I-Hsin’s tis­sue cul­ture lab, ev­ery cul­ti­var has a prod­uct num­ber. Over the years, more than 12,000 breed­ing ex­per­i­ments yielded more than 2,300 pha­laenop­sis va­ri­eties with prod­uct num­bers, which means they were suc­cess­fully bred and com­mer­cial­ized for mass pro­duc­tion.

Given that it can take a decade to breed a nov­elty orchid and bring it to mar­ket, I-Hsin’s more than 2,000 suc­cess­ful va­ri­eties rep­re­sent many years of painstak­ing, hard work.

Four Crises

Although orchid ex­ports keep grow­ing, chal­lenges and crises loom on all fronts. Af­ter Ja­pan’s multi­na­tional imag­ing and op­ti­cal com­pany Canon opened a pro­duc­tion plant in the Chi­ayi Da­pumei In­tel­li­gent In­dus­trial Park three years ago, a grow­ing num­ber of man­u­fac­tur­ing jobs be­came avail­able in this tra­di­tional orchid grow­ing re­gion. As a re­sult, orchid grow­ers in Minx­iong and Dalin find it in­creas­ingly dif­fi­cult to find farm work­ers. La­bor short­ages have be­come the ma­jor ob­sta­cle that stands in the way of fur­ther orchid in­dus­try growth.

Sec­ond, while the cul­ti­vated area of the Tai­wan Orchid Plan­ta­tion in Houbi, which hosts the an­nual orchid show, con­tin­ues to ex­pand, the wa­ter sup­ply can­not keep up with de­mand.

For the past three years, the 175-hectare biotech park has faced se­vere wa­ter short­ages, throw­ing into doubt the long-term de­vel­op­ment of Tai­wan’s largest orchid pro­duc­tion base.

Third, Chen Chia-chung, pro­fes­sor at the Depart­ment of Agri­cul­tural Ma­chin­ery En­gi­neer­ing of Na­tional Chung Hs­ing Univer­sity in Taichung, found dur­ing a re­cent fact- find­ing mis­sion to Europe that Tai­wan’s orchid grow­ers lag be­hind in their R&D of Euro­pean main­stream va­ri­eties by three to five years. He warns that by the time Tai­wanese breed­ers are even­tu­ally able to launch mass pro­duc­tion of these or­chids, mar­ket trends might al­ready have taken a dif­fer­ent di­rec­tion.

Chen be­lieves this is a se­ri­ous prob­lem. The Nether­lands con­trols the world’s largest mar­ket for pot­ted plants and pha­laenop­sis or­chids. Tai­wan can only rely on its large va­ri­ety of or­chids but is not able to con­trol or lead mar­ket trends.

Fourth, Tai­wan is play­ing catch up with the Nether­lands, while other com­peti­tors are on its heels. China has al­ready ob­tained per­mis­sion from the United States to ex­port pha­laenop­sis in grow­ing media such as sphag­num moss. This means that Chi­nese or­chids are com­pet­ing with Tai­wanese or­chids un­der the same ex­port con­di­tions.

Although Chang and Jian both be­lieve that Chi­nese orchid grow­ers have higher costs than their Tai­wanese coun­ter­parts have and can­not com­pete with Tai­wan when it comes to breed­ing new va­ri­eties, they still fear that China will un­leash cut­throat price com­pe­ti­tion in the United States.

“In the past, the Dutch posed a threat; now there still is a threat,” Feng ad­mits. In or­der to cope with re­cur­ring chal­lenges and re­lent­less com­pe­ti­tion, Tai­wan’s orchid breed­ers will need a good dose of un­shak­able op­ti­mism. Trans­lated from the Chi­nese by Su­sanne Ganz Ad­di­tional read­ing se­lec­tions can be found at http://english.cw.com. tw

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