The flower industry in China emerged in the era of reform and opening up, and has continued to grow and develop along with the trend. For more than 30 years, the flower industry in China has grown from scratch, from small to large, and has continued to develop rapidly.
From 2015 to 2019, the turnover of China's flower retail market with more than 100 million RMB soared from 1.9 billion to 3.4 billion, an increase of 79%, and the growth momentum was sharp. Chinese consumers are developing their flower consumption habits.
At this stage, Chinese flower consumption contexts are relatively concentrated
The flower consumption contexts are mainly divided into ceremonial consumption, such as for birthdays and other anniversaries, visits to patients, weddings, funerals and other occasions; festive consumption, such as Valentine’s Day, Spring Festival, Women’s Day, 5.20, Labor Day, and other special occasions.
The flower planting area in China is large, covering wide regions, and the market position is high.
China's flower planting area accounts for one-third of the world's total flower production area. Regionalized industries have formed southern tropical and subtropical flower production areas focusing on Yunnan, Sichuan, Jiangsu, Zhejiang, and Hainan; southern tropical foliage plant production areas focusing on Guangdong and Fujian; ornamental nursery stock producing areas focusing on Zhejiang, Sichuan, Henan, and Hebei; northern flower producing areas dominated by Beijing, Shandong, and Hebei; and northeast flower producing areas centered on Liaoning.
Yunnan has developed into one of the world's three emerging flower-producing areas and the world's second-largest fresh-cut flower trading center. Fresh cut flowers account for about 70% of the domestic market. From the perspective of transaction scale and volume, Kunming Flower Auction Center has become Asia’s first and the world’s second-largest fresh cut flower auction market. After nearly 20 years of development, it has established a supply chain quality control system, transaction rules, price index, service system, and brand promotion system.
E-commerce transaction models are growing rapidly
At present, there are four main trading methods in the Chinese flower market: counterparty transactions, auction transactions, e-commerce platforms, and futures transactions. The ratios are respectively 40:30:25:5, in which the market share of counterparty transactions is accelerating decline, the growth rate of auction transactions has slowed or even reversed, futures transactions have not yet taken shape, and e-commerce has grown rapidly. In 2020, China's flower e-commerce market has reached 72.06 billion RMB, three times that of 2017. With the widespread use of the Internet, the transaction model of e-commerce platforms has gradually been accepted by the public, and the development of e-commerce platforms has continued to mature and improve.
Compared with the traditional transaction model, the advantages of the e-commerce model are reflected in two aspects: First, flower companies can achieve unified management through the establishment of an online chain platform, and better develop e-commerce, which is convenient for companies to seek customer sources and improve client-ends. The second is that online marketing can often reduce the overall price of flowers. Through the online network, companies can save the promotion and circulation expenses that have to be spent under traditional marketing methods, thereby making it possible to reduce commodity costs and prices.
Policy support helps industry development
The flower industry is not only a beautiful public welfare enterprise but also an emerging green industry. The development of the flower industry plays an important role in greening and beautifying the environment, building beautiful households, adjusting the industrial structure, doubling urban and rural per capita income, expanding social employment, and improving people's quality of life. In order to further promote the development of the flower industry, the state formulated a national flower industry development plan (2011-2020), determined the development strategy, industrial layout and construction priorities of the national flower industry, and put forward the main policies and guarantee measures for the implementation of the "Plan". The two main producing areas of Yunnan and Shandong have issued development plans for the flower industry as early as 2018 and 2016.
Despite good development opportunities and growing market demand, the flower industry in China still has the following major problems:
The main market players of large-scale planting are insufficient. Planting subjects are mainly individual flower growers, with out-of-date facilities, poor risk resistance, and low planting efficiency.
The quality of flowers needs to be improved. One is the low level of specialization of individual farmers and the lack of post-harvest processing concepts, technologies and facilities, which directly affect the quality of flowers; the other is that cold chain logistics and transportation have not been widely used. Flowers are fresh agricultural products and require cold chain transportation. Traditional room-temperature transportation not only has no temperature control system, but the loss of flowers caused by large boxes and rough transportation exceeds 30%.
Consumers pay for the lengthy industrial chain. Flowers go through an average of 5 links from flower farmers to consumers, over 72 hours, with an average price increase of 15-20% for each link, and the more links, the longer the time and the higher the loss.
What is the future development trend of the thriving flower industry?
In the future, new growth in the flower market is highly expected to focus on the household flower consumption market. The consumption demand for flowers in China is increasing at a rate of 20% every year. With the continuous improvement of people's living standards, the living of flowers has become a trend. For many consumers, flowers are no longer an occasional purchase, but a consumer product that can please oneself at any time. Flowers have become an important consumer product that decorates the public environment, improves the home atmosphere, and improves the quality of people's spiritual life.
There will be more and more planting behaviors from companies as the main investment. With the increase in the price of production factors and the increasingly fierce competition in the industry, the competitiveness of small and medium-sized farmers or growers has declined, and the advantages of the scale of corporate farms have begun to emerge. Therefore, there will be more and more planting behaviors from companies as the main investment.
Direct farm shipments will account for an increasing proportion of market transactions. At present, the scale of fresh-cut flower auctions is getting bigger and bigger, increasing at a rate of double digits every year. Direct sales from the base are welcomed by the market. Many companies and e-commerce companies have adopted the concept of flower fields to vases, but the real direct sales are mainly in some large-scale production bases. With the development of e-commerce and the increase of new media channels, the connection between growers and consumers will become easier and closer. The supply chain presents a "dumbbell shape" of "light in the middle and heavy at both ends", and direct farm shipments will account for an increasing proportion of market transactions.
The process of agricultural branding accelerated. In the past, people only bought flowers with good-looking colors and fresh flowers. Now consumers are becoming more aware of flowers and becoming more picky and cautious. The quality of flowers from big-scale company-type farms is guaranteed, and the varieties are novel. Consumers will value this kind of brand to buy flowers, which will promote the accelerated development of the branding process of the flower industry.
Market competition has intensified. In the future, China's flower market will become more mature and the flower market will have a larger radiation range, which means that market competition will intensify. The competitive pattern will expand from single-variety competition to quality competition, brand competition, technology competition, management competition, cost competition and other kinds, from a national competition to global competition.
Although market competition has intensified and China’s flower market also has problems with planting, quality, and industrial chain, the flower industry must continue to grow in demand for flowers, new flower consumption scenarios, new trends in exquisite life, and new consumption of diversified products. It will grow with the trend, and there will be considerable room for industrial development in the future.