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Development Status Quo and Future Opportunities and Development of Seedlings in 2014

According to China Sannong Website A. the status quo of seedlings: substantial increases in production capacity and shrinking demand 

1. Increased production capacity. The influx of capital from other industries has changed the way the seedling industry worked. The planting area for seedling has increased substantially. In recent years, China’s planting area for flowers and seedlings has been increasing very fast. According to the latest figures released by the Ministry of Agriculture, by 2012, the planting area has reached 1.12 million hectares, of which the largest area is for ornamental seedlings, 640 thousand hectares, or 9.6 million mu.


From what we have surveyed on different cities and production areas, China’s planting area for ornamental seedlings might have exceeded 9.6 million mu. In Shandong, planting areas of seedling has have reached 2.39 million mu. From 2012 to now, planting areas of seedling have increased almost 1 million mu. Changyi is the rising star in the development of seedlings. Now its seedling planting area has reached 100 thousand mu. In Yanling County alone, the planting area has reached as much as 600 thousand mu.


2. Shrinking demand. Sales from plant nurseries to plant nurseries are still running high. But sales from plant nurseries to landscaping projects are running low. This is because after intensified investment in first couple of years, local governments are strapped for money. Some local governments even have incurred large amounts of debts. Local governments’ money crunch has led to unpaid bills. Therefore, many landscaping companies are reluctant to undertake new projects, which results in decrease in seedling demand.


In this year, across many places, both seedlings’ prices and sales volume have been running low. Especially seedlings like Photinia and other flowering shrubs and cypress seedlings are difficult to sell even though they are sold at prices lower that the costs to produce them.


Seedlings that were popular experienced price drops as well. In Jinhua of Zhejiang Province, the price of Osmanthus with diameter over 4 meters dropped from last year’s 4000 RMB to 3000 RMB. In Shengzhou of Zhejiang Province, red maple, Acer palmatum, cherry and other small tree seedlings experienced a 20% drop in price compared with the same period last year. Though big tree seedlings of 10 centimeters high, like Sapindus, Luan tree, magnolia, experienced a price drop by a third, their sales still stagnated.


Even though the prospects do not seem promising, plant nurseries are still expanding. Like in Shengzhou, 70 million annual cherry flowers, Begonia, green peach flower and red-leaf plum flower and other small seedlings had already been sold out in March, doubling the sales of last year.

B. Development Opportunity: favorable policies bring long-term benefits 

1. “Opportunities offered by urbanization”. The 18th Party Congress Report changed the original “Four Goals to Strive to Achieve Modernization” (i.e. to modernize industries, agriculture, national defense and science and technology) to “Four New Goals”, namely new industrialization, informatization, urbanization and the modernization of agriculture. This is the first time that urbanization is included in the important national strategies aimed at realization national modernization. This is the “Urbanization opportunities” that we mention on various occasions.


Urbanization rate in China in 2012 was 52.6%, and that of developed countries was over 70%. If we set our target at 70%, then we will need to increase urbanization rate by 20 percentage points, which will at least take 10 to 20 years’ time. If we use Japan as a reference, we can safely conclude that as long as urbanization continues, urban landscaping will continue to see fast increases in investment. Therefore, China’s landscaping industry will enjoy a boom period that will last at least 10 to 20 years.


2. Beautiful China. “Constructing Ecological Civilization” is part of China’s development strategy. Along with the four goals set up previously, namely economic construction, political construction, cultural construction, and social construction, this has now become the fifth goal. China is striving towards the goal, building a beautiful China.


Against this background, more efforts are made to improve air quality, recover soil fertility, and treat water pollution. On September 12th, China published its Action Plan for Air Pollution Treatment and Prevention. The targets set in the plan are after five years of efforts, nationwide air quality should be generally improved; number of days of heavy pollution substantially reduced; air quality in Beijing, Tianjin, part of Hebei, the Yangtze River Delta Region, and the Pearl River Delta Region will be noticeably bettered; in another five years or longer, heavy pollution weather should be removed gradually, and nationwide air quality to be improved substantially. The second policy of China’s Ten National Policies on Improving Air Quality clearly states “Continue landscaping and afforestation projects in and around the city; expand city’s area of land covered by green plants.” This creates a favorable environment for the landscaping industry.


Presently, China has 15 provinces (regions, cities) that have launched ecological province (city) construction. Among them, 13 provinces implemented guideline plans to build ecological province (city). Over a thousand counties, cities and regions have begun constructing ecological counties. Building model cities for environmental protection, beautiful environment countries, environmentally friendly companies, green neighborhoods and other projects are well underway.


“Beautiful China” is nationwide, rather than local; it is long-term, not a one-off short-term project. Therefore, we have good reasons to believe that China’s flower industry will have more specific favorable policies, stronger support from the government, and more generous financial support.


C. Development direction: breeding improved variety, more automation, more professional and moving online


If one wants to do well in the seedling business, they need to figure out the following three questions “what to plant, how to plant and whom to sell.” These three questions have to do with product positioning, actual planting, and sales respectively. Based on the current status of this industry, in the future, this industry will see four trends: breeding improved variety, more automation, more professional and moving online.


  1. Breeding improved variety

a. Choose improved variety that pass national or regional tests and are proven to be good improved variety by practices. These improved varieties will have better sickness resistance, more good-looking, and are popular on the market. The most important thing about producing seedlings is to choose what type of seedling you want to plant. This has a direct impact on profitability. This industry now focuses too much on a few types, like fast-growing and colored leaves, but neglect rural types such as pistachered fruit holly, sorbifolia, Chinaberry, maple, tallow, and Liquidambar, which do have great potential. Few people choose to grow and breed improved varieties for these types, so people are still using the old improved varieties for these types.


Another thing people should pay attention to is that improved variety has a shelf life too. Good seeds might change as time passes. Change in people’s demand might mean some improved varieties are no longer popular on the market. In the Seedling Catalogue for Beijing’s Regular Afforestation, 10 varieties that previous were included are not listed this time, including Beijing poplar, Canadian poplar and black poplar. Newly added varieties include sawtooth oak, rowan, Mongolian linden, maple.


2. Major trends in landscaping will be variety, diversity, community and ecological, functional trees will be valued. a. seizing opportunities offered by people’s curiosity, breed varieties with unique-looking trunks, branches, flowers, leaves and shape. b. rural type plants with better drought, pollution and sick resistance, are water saving, and have fewer diseases and pesticides. c. strong resistance to drought, cold, heat, salinity, have protective effects, and can be planted in harsh environments. d. trees with good resistance, grow slowly and require low maintenance. e. can satisfy demands that arise from building the new type of countries and also can bring ecological benefits.


As China intensifies its efforts in improving the environment, the functional tree market will further expand. In Beijing for example, some companies have begun breeding varieties that can absorb PM 2.5, which is going to be good selling point in the future.


It’s the same overseas. Dr. Charles Hall professor of horticulture at Texas A & M University says that presently most cities in Europe and the States choose flowers based on the following principles: first they need to be functional. Flowers need to have useful, for example cleaning the air, lowering noises, and reducing urban light pollution. Anna Bauer, president of American Paul Group, believes that across the globe, the way consumers look at flowers have changed. People now not only pursuit flowers aesthetic beauty, but also look for their usefulness. People no longer judge flowers only by the simple standard of aesthetic beauty, but also by if they can make air cleaner, backyards easier to clean, or if their leaves can be used in salads.


  1. More automation

More automation can effective decrease costs and improves efficiency. In seedling nurseries, installing an irrigation system can guarantee irrigation at any time, and can irrigate according to plants’ needs based on weather and the growth of plants. It is more effective compared with traditional irrigation. In some areas, there are more frequent dry weathers, and irrigation facilities can draw water from underground and effective avert drought disasters. In Japan, labor is expensive. So in seedling nurseries hire only a couple of workers and use mainly machines to improve efficiency. Larger nurseries have blenders, potting machines, lifers, cranes and etc. Smaller ones have pesticide sprayers, ladders, pruning tools, plastic rods to bind seedlings, and etc. Watering is mostly spraying irrigation or dripping irrigation.


2. Without automation, there will be no standardization. More and more nurseries are proposing or carrying standard production. But that is only a rough standardization. The reason is simple. Man-made variances are present throughout production, from uneven fertilization, various sizes of tree holes, and different pruning styles by different people and so forth. All these can influence the growth of trees. If one wants to further standardize production, they need to use many different machines and facilities to reduce manmade variance.


With our country’s current level of processing capabilities, producing machines specifically for nurseries is not very difficult. Nurseries and processing and manufacturing companies can cooperate to manufacture useful machines with a competitive price and performance ratio. The industry has not paid enough attention to this regard. Whoever makes breakthroughs in this regard, will be able to control costs.


  1. More professional

This industry will be more scientifically run and will be run in a sophisticated way. Presently in China, it’s rather easy to enter this industry. Quality of seedlings is not consistent because the landscaping market does not have strict quality standards. Seedlings of different levels of quality can be sold out. In recent years, funding has flowed in. Nurseries have expanded. But many people still do not have good managerial methods or principles. Compared with previous rounds of nurseries, spacing in the rows and spacing between rows has been improved, some specialty nurseries have been built. But in terms product positioning, varieties, plant adaptability, standardization, input-output cycle, market size, operational and managerial capabilities, expand sales channel, and other areas, no improvements have been seen. In summary, this industry is not professional enough, lacking expertise in general. Its management is not sophisticated either. Though many nurseries are large, with an area of thousands or tens of thousands of mu, their technical strength and sales force are weak. These can only be called nurseries, and can hardly be called enterprises. Meanwhile, there are not professional drugs, fertilizers, herbicides and etc. available for seedlings.


Comparing with developed countries can best explain the problem. Japan is very attentive to basics. They care most about soil in nurseries. In Japan, soil for planting seedling is a bit like China’s soil for planting vegetables, with a high content of organic matters. They use slow-release fertilizers specifically designed for seedlings. Vannucci Piante, an Italian company uses sterile seeds, stone layers to prevent diseases and germs from spreading, and scientifically sound water and fertilizers management. As a result, they see few diseases or pests in their plants. But our country has to rely on pesticides to grow seedlings.


  1. Going online

The importance of the internet is reflected in different links of the industry. Disconnection between sales and production and lack of coordination between designing and implementing in landscaping are problems persisting in this industry for many years. The problem is different links do not have a “bridge” for communication between each other. The landscaping and flower and seedling industries in China are not scientifically and technologically advanced. Due to systems and many other reasons, the already limited scientific research capabilities cannot be effectively used to benefit production, which is a shame. Many large nurseries cannot improve sales because they lack good platforms for communication between sales and production. Flower agents, though able to bring more orders, operate locally, and do not have a nationwide internet to connect one with another. Going online has another layer of meaning, namely the consumer market already can proficiently use the internet. But due to unsatisfactory progress in product standardization and logistics, e-commerce in the flower industry is developing very slowly.


Provide by Hortiflorexpo IPM Shanghai (Intex Shanghai)

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