‘Wholesalers are playing a vital role in China’s floral industry’

Chen Yingxu (陈迎旭) is the founder and owner of Jin Ke Hong Xiang (金科宏祥 ) (import company) and Ying Xiao Jia Ye (迎霄佳业) (wholesale company). His organisation is one of the earliest importers and it has the busiest reputation in northern China. The company’s head office is in Beijing, with outlets throughout China – Shanghai, Chengdu (inland China) and Guangzhou (near Hong Kong).

The Covid-19 pandemic sent shockwaves throughout the global economy and the effect on China’s flower industry was no different. By November 2020, Yingxu’s share of imported flowers within his business had dropped to 60 per cent.

Outside Chen Yingxu’s head office in Beijing

The business’s primary product lines are fresh cut flowers and preserved flowers, with houseplants added to the company’s portfolio in 2019. Up to 2021, his Beijing branch has had a yearly revenue of 50 million RMB, while the new shops in other cities generate turnovers of approximately 20 million RMB a year.

Yingxu was interviewed by Lauren Yu for FloraCulture International, December 2021. Yingxu had just arrived back home after a hard day’s work in Beijing’s Sheng Hua Hong Xiang Flower Market (北京盛华宏林花花世界), which is outside of the 5th Ring Road of the capital. His wholesale business, Ying Xiao Jia Ye, has moved twice recently from its original location in Beijing’s Lai Tai Flower Market (莱太花卉交易中), situated on the third ring road to its current location. Yingxu tells FCI that each new site marks an improvement of facilities despite the inconvenience of moving.

FCI: How did you start in the flower import business?

Yingxu Chen: “I started as an employee. In 2000, I graduated from technical college and went to work in a factory in Beijing. I didn’t enjoy it and quit after two years. I was looking for temporary work and found my purpose, by accident, in a flower market.

I enjoyed the work so much that after three years, I opened my own business importing flowers. At first, importing just twice a year for Valentine’s Day and the Chinese New Year. I wanted to target the high-end of the market with quality anthuriums and Oncidium. However, the varieties on the market disappointed me, so I started to look for new products to sell.

Workers pushing wholesale stock.

My Dutch supplier, from rose-breeding company De Ruiter, visited me. He asked me why I wasn’t importing flowers all year-round?

My initial response was that imported flowers are only for special occasions and would not sell. Plus, the majority of florists had no experience with incorporating foreign flowers into their arrangements. Then, my Dutch contact offered to financially support my business by lending me €50,000 as a startup promotion.

I refused, as I wanted to pay the costs from my pocket. I was only 27 at that time and inexperienced. That business decision turned out to incur substantial financial losses. Seeing us struggle, our Dutch supplier came back and offered the same financial support towards our import business so we could keep operating.

In the first 18 months, we kept making a loss. Our Dutch supplier promised that if we couldn’t turn it around and profit in six months, they would write off our payment for all past shipments. Their trust gave us great confidence, and we continue to be partners.

Without the kickstart from De Ruiter to start the year-round import, I think the Chinese flower industry would continue to be a few years behind and would not be as flourishing as it is now.”

What has changed for flower import since the coronavirus pandemic?

“Import inspections are heavily regulated. Disinfection on the outer package is compulsory for all shipments.
Each shipment needs to be tested for the Covid-19 virus. Overall the efficiency with screening is high because the Chinese government has good policies to support fresh produce import. For a morning inspection, shipments will be released on the same day and arrive in our store within five hours. However, if the packaging tests positive, the whole shipment has to be destroyed.

Flowers storing in the cool room.

We understand and respect such regulation because preventing the spread of this virus is the priority. We work together with our suppliers to be extra cautious.

So far, we have had a good record, and none of our shipments has had a positive corona testing result.”

What do you think will happen to flower imports in the next five to ten years?

“Belly capacity on passenger flights and freighter flights have significantly reduced, and the transportation price is too high, which makes importing not as profitable.

At the pandemic’s start, we paid 13 euro per kilo, which is ridiculously high and forced us to raise our prices. Our customers tell us that they cannot work with such costs. Since then, we have sourced 40 per cent of our flowers locally. China is starting to produce a good number of varieties at improved quality and competitive prices. This change is making imported products less attractive.

Over the next five to ten years, I expect flower imports to drop even further. In the past, many new varieties remained inaccessible for Chinese growers due to PBR issues. However, the situation has changed as many breeders have set up branches in China to launch new varieties.

Nevertheless, a business case for imported flowers will remain because high-end consumers demand flowers with unique sizes, shapes and colours.

Reliability is another consideration because locally grown flowers are of less quality in the summer. Even if imported flowers have travelled a long distance, the quality is still better than locally sourced flowers during this season.”

What is the frequency of shipment and the price of imported versus locally grown flowers?

“We receive a minimum of ten shipments per week, three of which are inbound from the Netherlands while flowers also arrive from Japan, Colombia, Ecuador, Australia, New Zealand, Kenya and Ethiopia. Imported flowers prices cost three to five times more than local flowers.

Our core business remains cut flowers, but since 2019 we have added limited volumes of pot plants such as Helleborus, Madagascar jasmine, lily of the valley, miniature roses, calla lily and more to our portfolio.

In addition, we receive one container load of preserved flowers each month.”

Tell us about your customer base and trends in Chinese flower purchases?

“Our major customers are florists, other wholesalers, hotels, high-class occasions, wedding design companies and online flower delivery services.

The facade of the wholesale shop in Beijing.

We do see a trend of people buying expensive imported flowers for themselves. There are an increasing number of households that can afford to buy high-quality fresh flowers.
There are several of our customers who will pay a few hundred euros on flowers each week to decorate their homes.”

Is floral consumption in inland cities as big as in leading cities such as Beijing and Shanghai?

“This matter is what I discuss frequently with De Ruiter, it is the fact that wholesalers play a crucial role in taking the flower industry in China to the next level.
If wholesalers are too reluctant to try out new varieties, customers will simply never see them. However, there is demand. At a certain point in time, import prices will become more competitively priced than local products.

Holidays are a peak time for imports. Some products are limited by seasonal availability, and we need to import large quantities during the Chinese New Year.
Our holiday sales are four to five times higher than a normal day’s revenue. These sales account for less than 10 per cent of the yearly turnover.

Before we started year-round importing, the holiday sales would account for much more than 10 per cent, nowadays, with the increase of everyday use, this revenue is increasing a lot.”

Do your customers ask for sustainably grown flowers?

“The Netherlands is working on IPM to reduce the reliance on artificial pesticides.

Delivery of flowers on trolleys.

We promote all these sustainable acts with our customers. Since 2016, people have been asking me to provide phytosanitary certificates and sustainability certificates. Gradually, the industry here will become more regulated. But more time is required to catch up with the European standards.

Personally, I notice that when I prick my fingers on locally grown roses, I suffer longer from the pain than I do with imported roses. We take safety seriously, so it is better to be more cautious. It is better to avoid taking a toll on our health, as such imports are more expensive but we get what we pay for.

Safety should be the priority, and then stable quality comes second. However, we need reasonable pricing to be the driving force behind the flower industry in China.”

How do you choose your local suppliers?

“We try as much as we can to work with large-scaled local farms. They charge more, but they do proper post-harvest treatments and do have higher quality standards.”

How do Chinese consumers perceive dried flowers?

“Dried flowers are not as popular here as in other countries. The Chinese love bold colours. As such, the pastel, soft hues of dried flowers are not yet popular. Their tone is conceived as dull. But we are beginning to have customers asking for them.”

How fierce is the competition from supermarkets and online flower delivery services?

“The business environment is better, and demand has been increasing in the past two years. I did have concerns about the competition, but now I do not see the new business models as threats. The e-commerce platforms are helping to promote flowers and there is increasing attention online from a few million followers in the past to more than 0.5 billion people. The market is expanding, and it is big enough for everyone to compete. I am focusing on perfecting serving my market segment. Seeing the weekly subscription and supermarkets competing for low prices, I think they will need to increase their prices to be profitable in the long run. I do not feel a disadvantage if the investment money does not back them up. More consumers are caring about flower quality because, in recent years, they see the value flowers have on wellbeing, and they’re not just luxurious purchases. So the desire for flowers has improved.”