Roses - Made in China

[HenryTo]

Make no mistake - our trade deficit with China is going to get bigger - but this time, not at the expense of local workers but other overseas economies. Following is courtesy of the NY Times:
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September 25, 2006
Bouquet of Roses May Have Note: ‘Made in China’
By KEITH BRADSHER
KUNMING, China — Americans and Europeans are used to buying mass produced shoes, toys and microwave ovens from China. So why not roses?

That is the thinking behind an elaborate Chinese government effort to export cut flowers, aimed not just at developing a new business to take on the world but at redeveloping the social and economic landscape here in southwestern China.

By placing the flower industry, along with several others, far from the coastal provinces that have enjoyed most of the nation’s prosperity, Beijing officials hope to bring jobs to tens of millions of impoverished, isolated workers in a bid to narrow the income gap between rich city dwellers and unemployed farmers.

At the giant flower farms here in Yunnan Province, workers earning as little as $25 a month clip roses from huge greenhouses, take them to vast sheds to remove any thorns by hand, and wrap them in paper and plastic for shipment. Roses without thorns are lighter and can be packed more tightly, reducing the cost of air shipment.

With the first sustained exports to the United States starting later this week, some of those flowers will end up in Los Angeles, packed with red wine bottles in gift boxes; others will be sold at auction in the Netherlands, where historical pride over locally grown tulips and other flowers has not quelled demand for inexpensive Chinese roses. Almost overnight, growers in this poor, rural province have become big suppliers to markets from Singapore to Moscow.

“Our plan is to become the biggest flower producer and exporter in Asia in 10 to 15 years,” and possibly the world’s largest after the Netherlands, said Li Gang, the deputy chief of the Flower Association, a provincial government agency.

The government has dedicated a huge effort to making all this possible. Extending its top-notch infrastructure inland, it is building 12-lane roads, sturdy bridges and international airports in this strategically critical area. Elsewhere in China’s poor inland provinces, similar investments are helping industries making everything from shoes to electronics to cars.

The cut-flower industry is so important a national priority that President Hu Jintao came to Yunnan Province two years ago to call for growth in shipments. Prime Minister Wen Jiabao and his predecessor, Zhu Rongji, have taken a personal interest in improving the province’s greenhouses, and the government is offering interest-free loans for greenhouse construction.

China is mainly trying to export roses, which have a high value per pound and can most easily be transported long distances with limited damage. Carnations can withstand air shipment but have a low value per pound, and tulips have a high value but must be packed very loosely, which drives up air freight costs so that China cannot easily compete. Lilies can be shipped by air and have high value but must be handled with considerable care, so China is starting to export them to closer markets like Singapore.

China sells all grades of flowers, and growers here, like growers everywhere, are trying to boost production of top-grade flowers, those that grow tall, straight and without blemishes. But the top varieties of roses — those that command a premium around the world — are scarcely grown in China because of disputes over the evasion of royalty payments by Chinese growers.

The cost of air shipping works out to about 30 cents per long-stemmed rose, a little less without thorns and leaves. By comparison, farms in Yunnan sell their flowers at wholesale for 4 cents to 16 cents apiece, a price that soars to 28 cents each just before Valentine’s Day. Depending on the time of year, these roses cost as little as half the price of roses in other developing countries, excluding air freight.

Yunnan is not only a good place to grow flowers but also a place of particular interest to Chinese leaders because of its sensitive location. Tucked against Myanmar, formerly Burma, as well as Vietnam, Laos and Tibet, Yunnan is close to India. China fought a border war there in 1962, and the area is the main route for heroin trafficking from Myanmar to China; as in Colombia, the Chinese government is trying to encourage cut flower cultivation as an alternative to the drug trade. Yunnan also has important rail and road links that increasingly connect China to southeast Asia.

China is concerned that Islamic fundamentalism might extend into its western provinces from Central Asia if the area remains undeveloped, and the flower-growing villages south of Kunming tend to have many Muslims.

The central government is spending $200 billion a year, much of it to build roads, bridges, airports and phone systems that link the inland regions to the outside world, ensuring, among other things, that the flowers have a smooth and speedy trip. Refrigerated trucks are being offered free or at deep discounts to farm groups so that fewer flowers wilt in transit, Mr. Li said.

But in the flower industry as in so many others, China’s business practices have prompted other nations to object. Western governments, including that of the Netherlands, complain that many Chinese growers do not pay royalties when they raise internationally registered varieties of flowers. The dispute could prompt countries to restrict Chinese flower imports, and it has already interfered with the transfer to China of new rose breeds that grow with practically no thorns.

All the flowers being grown commercially in Yunnan are internationally traded species that have been brought in from elsewhere. Growers in Yunnan have produced a few new varieties and registered them with Chinese authorities. But they have made few efforts to register them abroad, where they would be subject to questions about whether the new varieties are derived from ones that are already registered, in which case royalties would be owed.

Additionally, the government’s moves here may violate international trade rules, which bar the use of government subsidies to help cover the operating costs of exporters.

Then there is the issue of China’s immense productivity. Growers in many countries worry that China may ship so many flowers, especially low-quality ones, that wholesale prices could plunge.

“One of the big dangers in China is overproduction, so this is something that definitely needs to be controlled,” said Luc Driessen, the managing director for China at Van Den Bos, a Dutch flower bulb company.

Doeke Faber, chairman of the Association of Flower Auctions in the Netherlands and president of the International Association of Horticultural Producers, said that China was in a position to pose an even bigger competitive threat. “Certainly they are the sleeping giant,” he said. “They have excellent climate and very cheap labor.”

China’s push into the cut flower industry — which includes plans to quadruple exports to $200 million by 2010, or more than a billion stems — is mostly of concern to established producers like Colombia, Ecuador, Kenya, Malaysia and Thailand, flower traders and growers said.

The United States exports few flowers because of high labor costs, but California produces 15 percent of the flowers sold in the American market. These tend to be varieties like sunflowers that are not easily shipped long distances, however, so American flower production is not likely to be hurt much by China’s rise, said Ben Pauley, the vice president of mass markets at FTD.

The Chinese growers do face some large obstacles, including a continuing shortage of refrigerated storage areas and trucks to keep flowers from wilting and the expense of flying the flowers to distant markets. Even if world oil prices continue to fall, air freight costs will always be substantial.

As much as 90 percent of the retail price of a rose is added after the flowers arrive in the United States or Europe. Many of China’s roses are sold in supermarkets, where the markup is smaller.

China’s influence on the global flower industry may also emerge in a tactile way: the lack of thorns.

At a flower farm in Si Jie, 70 miles south of Kunming, Shi Yin, 22, takes her clippers into a greenhouse, walks down the long rows of flower beds and selects the roses that will wind up in the gift boxes in Los Angeles.

The flowers that meet her approval are taken to a dimly lit shed, where rows of women strip the thorns and leaves by hand. The task tends to be done by machine elsewhere, if it is done at all.

Qian Lan, a slim 19-year-old in brown work gloves and a soiled cream-colored apron, stood in the shed on a recent afternoon and grabbed at yard-long white and pink roses, one at a time. She clamped a pliers-like device around each stem, about a foot from the bottom, gripped tightly and pulled down, doing surprisingly little damage to the stem itself. Machines with what look like whirling plastic pipe cleaners can do the same job as Miss Qian, but injure the stem more, leaving cuts that can reduce vase life.

Yet doing it by hand is an ergonomic nightmare with a strong risk of repetitive stress injuries. “My hand goes numb if I do it for a long time,” said Miss Qian, a recent high school graduate who earns $25 a month.

Asked whether a man had ever given her roses, Miss Qian shyly murmured “yes.”

Then she blushed deeply, and turned back to her work.

[rffrydr]

Columbia goes head to head with china in textiles--and looses. And is reborn.....green. Is green inherently protectionist?

http://www.latimes.com/business/la-fi-colombia-china-20110219,0,5676306.story

[rffrydr]

A flower by another name, not so sweet:

http://www.bloomberg.com/news/2010-11-09/cameron-risks-spat-with-chinese-by-wearing-poppy-during-visit-to-beijing.html

[rffrydr]

Doom-and-Gloomer not so gloomy:

http://www.bloomberg.com/video/61918448/

PS Bloomberg has got to loose these money-honeys.
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Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Yes, this was a big story in Europe, doing to Belgium in one year what CA did to French wine in 20.

That it is a locus of intellectual propterty disputes underlies the curious times we live. Western citrus industry is all based on ancient Chinese (read Asian) hybrids- -the "mandarin" is still a central crop (and the "Bing" Cherry from Chinese in CA in modern era) yet no "fees" paid.

Software and DVDs do not get sold back to us. Agriculture may be the front where these issues are resolved/disputed long before "software."