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China: Premium organic roses

General information
Project location: Yunnan procince, China
Consortium: Van den Berg Roses CV, Kunming San Xin Greenhouse Engineering Ltd, CHC Agriculture Development Ltd
Project Budget: Euro 1.5 million
External financing: 50% grant funding by PSOM
Project period: January 2007 - December 2008

The rapidly growing floriculture consumer market in China offers new opportunities for a quality rose grower. This consumer market is growing in terms of potential demand (sales volumes are increasing), while the increased purchasing power permits more and more consumers to critically shop for more expensive but better quality cut flowers. As a general trend, it is expected that demand for quality roses will further increase – not only in China but also countries such as Japan, Hong Kong and Singapore undergo similar economic development. The project partners are eager to serve the above mentioned markets with quality roses, entailing an integrated (cold) chain approach involving production to marketing.

Currently, rose growing in China is predominantly based on illegally (i.e. without license and royalty payment) propagated plants; at the moment, less than 1% of the Chinese roses are grown legally. This situation, in combination with inferior quality and non-continuous supply, is impeding the export of Chinese roses. The inferior rose quality is mainly due to the lack of understanding of proper growing techniques and the lack of cold chain management, post harvesting and packing standards in China.

Van den Berg Roses intends to establish a pilot production facility in Yunnan for the year-round growing of a variety of top-quality rose cultivars – in quality unprecedented and in variety currently not served on the Chinese market. Although the company has ample experience in rose cultivation, both in The Netherlands as well as in Kenya, growing conditions as well as the business environment are different in Yunnan. In order to minimize the technical and commercial risks, Van den Berg Roses will team up with proposed recipient Kunming San Xin Greenhouse Engineering Ltd. and local project partner CHC Agriculture Development. The partners’ strategy will focus on delivering top quality of produce and on serving high-end markets. The complementary expertise of the partners enable them to take a chain approach as the individual consortium members have expertise from rose production to marketing and this will give them a competitive edge.

The partners will invest in a 4.5 ha state-of-the-art greenhouse facility for year-round growing of new rose cultivars for the local Chinese and export market. To the maximum extend possible, the partners will apply organic crop protection methods using Insect Pest Management. The project will include investments in cold chain management and sales and marketing. Hardware will include the greenhouse and related heating and climate control equipment, a cold storage, post-harvesting equipment, a sales & marketing and administrative office, and agricultural input. Technical assistance will include training of staff in organic crop protection, social and environmental accountability, quality management, and sales and marketing.

The project will result in:

  • the establishment of a Joint Venture between the project partners
  • the construction of a modern greenhouse, office and post-harvesting facilities, including the planting of the first batch of 360,000 young rose plants
  • recruitment of 60 employees
  • training of 60 staff employees in climate control, organic crop management, post-harvesting, and sales and marketing
  • a marketing strategy targeting the local and export market, resulting in first sales;
  • production according to MPS-A (environment), MPS-ETI (Ethical Trade Initiative: social standards), and MPS-GAP (retail standard)
  • training of 60 staff and workers in, and acquiring certificate of ISO 9001-2000 (quality management in production and sales)
  • a pre-audit by IMO (Institute for Marketecology) for organic certification
  • a bankable business plan for securing finance for follow-on investments.

Follow-up investments will include expansion of the production area to 20 ha (realized by 2014), of which 5.5 ha will be established within two years after completion of the project. Additional direct employment during this spin-off period is estimated to be 50 staff and workers.