Interview with Ing. Michel van Rijn (President RijnPlant Breeding BV and board member RijnPlant BV)
Which nations are the main selling markets of RijnPlant in recent years? Facing the economy crisis, how is the current state of each of them?
RijnPlant Breeding and RijnPlant Sales have different markets to supply to, As a Anthurium, Bougainvillea and Calathea young plant producer, RijnPlant Breeding sells its products to over 50 countries worldwide. After Holland as our largest market, PR China, Brazil and USA are major markets . Daughter-company RijnPlant Sales is responsible for the sales of 65% of the European Anthurium pot plant production. Target markets are not only limited to western European countries, also Poland and Russia are become more and more important markets.
Over the last years we see a large increase in our young plant sales in all export countries. We are proud on this result, which is achieved with years of hard work. Important factors to achieve this result are having transparent and direct communication with all our customers. Even when we need to work with agents because of the amount of sales in a certain country, we keep the direct communication. This makes it easy for customers to get the lastest information regarding cultivation and availability of new varieties directly from our De Lier based head office. Another key point is our strategy by offering specific varieties on a area-exclusive base. This system, which we already use for years in Europe, works also very well in Asia and USA We want our customers in a country to cooperate together instead of competing, we have seen that this works well by giving customers exclusive rights on a certain variety. Our customers who have exclusive rights on different varieties do not need to compete on price. Instead, they start to communicate with each other on the cultivation skill and market trend.
When looking to the sales of finished plants RijnPlant is also giving extra services to their customers. With our cooperate brand ‘RijnPlant Group’, we use the combined power of 13 major pot Anthurium companies in The Netherland to supply a whole range of Anthurium plants, from 9-cm pots till 27-cm pots to the European retail market. To put it in a figure: RijnPlant Group is responsible for 65% of the European Anthurium pot plant production. Their production is +- 15 million pots annually and making an turnover of around 50 million Euros. With working with such a cooperate brand our growers and our own production facilities, can handle larger orders, for example make by chains of garden centres and IKEA. Several times per year our sales staff have meetings with the purchasing department of the big retail companies to discuss the choices for the coming period and to make a good strategy for the long-term. Together with retail we can discuss with flower type or flower colour will be more popular in the coming years ór with flower types we will make popular by taking control of the market in a certain way. Since RijnPlant is participating in many links of the supply chain, we feel the pressure on the market at this moment. This situation is not positive for the whole economy and for horticulture , but it is proven in the past that when you invest during the tough times, you will be stronger after it. That is the way we will fight this ‘crisis’. Now is the time to improve production and introduce new varieties. On short -term everyone wants to get stronger sales by making extra promotion. We see it as important to make both promotion to our direct customers, the retail, by giving suggestions about added value we can give our plants. Examples are the use of coloured cover pots , ceramic pots, special sleeves etc. Next to that it is also important to influence the ‘customer of your customer’, the end-consumer. RijnPlant is one of the first companies who make promotion on television in The Netherlands. Every week our products are shown in the major Dutch gardening program. Promotion on television and easy to recognize retail concepts in garden centres makes it easy for the consumer to find our products. Our sleeves around the plants and the distinctive labels attached to the pots, make clear to every consumer that it is a top quality product!
RijnPlant is a young plant supplier and also an end-product producer, does it cause the competition between RijnPlant and your own customers?
RijnPlant is started as a grower of Anthuriums many years ago. Already quickly we get involved in breeding, since the available varieties couldn’t meet our high standard. During the years we are grown to a company that is very active in the sales of young plants. At this moment RijnPlant produces +- 20% of the total European Anthurium pot plant production itself (and RijnPlant Group produces about 65%)! To avoid that we become a competitor of our customers, but also to avoid our customers compete we each other we have adopted the exclusivity system. From the point of view of RijnPlant Breeding we see all customers as equal. This means that we deal with our two production facilities the same as with our customers. They get the same young plants and they both have to negotiate with the sales manager from the sales department about new varieties, and contract details etc. All the 13 companies grow different varieties in different pot sizes, with this system they can be of an added value for each other and for the RijnPlant Group. What seems to be competitive strategy works out as a cooperate strategy!
What is RijnPlant's opinion about more and more Dutch floricultural firms invest, cooperate, and produce locally in China? Do you have the same plan for the future? Why (reasons of the decision)?
Over the past years we have seen that larger horticultural firms have experienced large expansion outside Europe. On one side these firms moved their production to Asia to produce for the European market, this especially happens with flower bulb business and seed producing industry and tissue culture labs . On the other side also sales for these companies are increased in Asia, what also have great influence on the choice of production area. For RijnPlant the last thing caused the decision to start up an own company in Shanghai, PR China. Over the last 10 years our sales in China are growing by the year and in order to offer our customers the best plant quality and the best cultivation support with a sharp price our move to Shanghai is very logical. People from outside think that only cheap labor is the driving force why daughter companies are founded in China, but it isn’t. For such a high quality product like Anthurium with a cultivation time, based on starting material, of at least 8 months, you want to give your customers good plant material and good support. In the actual case when using air freight, plants are on their way for some days in ‘less controlled’ . Next to this, our own facility will also be used as a showroom for our excising and our new varieties. Coming April, just after Horti Expo 2009 our production will start and three months later, the first Anthuriums will be send to our customers which our spread over whole China. In our opinion the move of European companies to Asia and to China in special is positive. It is a great step to present ‘Dutch quality’ products for a affordable price to markets for which our plants were (too) expensive. It is a win-win situation: better quality for grower, better price for grower, more varieties on market for end -consumers, good presentation for Dutch horticultural sector.
Can you introduce more details about the RijnPlant China to our readers? For example,
I. Will you produce pot plant end-products at Shanghai?
II. Will it involve the breeding section in Shanghai?
III. How about the technical conduct on production? Will you send staff member from Holland to Shanghai? or train local Chinese staff member by serial training program?
Already for several years RijnPlant has intensive contacts with parties to realize a company in China. Our Shanghai-based company will solely focus on the production of young plants by growing tissue-cultured plants to a larger size. It is true that we combine in Holland the supplies of young plants and in-house production of finished plants, but as said in China we will only produce for our customers. In the past, when we imported our plants into China, it was too expensive to ship larger young plants to our customers. Now we start in Shanghai, we offer the extra service of supplying young plants of bigger sizes. Next to 10-12cm high plants in 2,5cm plugs, we also offer 20-25cm high plants in larger plugs to the grower.
The breeding skills; our mother plants, the way we make crossings and the way we select novelties, are top secret. Breeding new varieties is a process that takes many years and costs a lot of efforts. We will not start breeding at our Shanghai facility, but in fact we will do intensive testing in Shanghai to ensure we offer the best novelties to our customers in Asia. It will also make it easier for growers to see which varieties RijnPlant can offer to the Chinese market.
Not only good material is important to make the best end product, also you need good people to give the plants a good treatment. For our Chinese company we have chosen to send the general manager from Holland and to select some key persons from China. The Chinese employees who will have higher functions have received higher education in Holland in order to ensure their skills and knowledge.
How much percentage of the production cost can be reduced when the facility start to produce Anthurium young plants in China? What are the main factors of reducing cost? Will the reduction also be shown on the price of young plants?
Quality is the issue that counts most. All arguments to start a company in China are given by the fact that we want to give the Chinese/Asian growers the best plant quality possible. Because of production in China we can give the young plants the same conditions like we use in Holland for growing up, but we eliminate the step of international transportation. We have learned that this transport, although executed carefully, can harm the plants especially plants of larger size. Quality has first priority, but this is also a chance to save costs for our customers. Since we have domestic production, the costs for international freight costs and import costs are eliminated which can save the grower more than 10% on his total plant costs.
What are the most popular varieties in Asia and China in recent years, and how about the amount of each variety? Can you give a brief introduction about RijnPlant's partnership in China?
Compared with Europe, Asia is a different market. A different market asks for a special strategy and distinctive varieties. Since we started in 1999 to export our products to China, we were not totally aware of this. The climate in China is not the same through the whole country, so some varies did perform very well in Guangzhou are where at a Beijing-based customer this varieties was not performing 100%. Anno 2008, we offer special for the Chinese market a range of extra strong varieties. All these varieties are trialed first at our research facility in Holland. In the next step these varieties are commercially grown at one or more production facilities in Holland to see the real characteristics of the varieties. When we are quite sure about the good performance of a variety in Holland , we will send it as a trial to Asian growers. As you can see, we take quite a time to really challenge new varieties before we send them to our customers. Like in Europe, we offer our varieties on a exclusive base in asia. All our top varieties are supplied to max. two companies in China. With this strategy we make the grower a monopolist, so make promotion nationwide himself and attract the retail to buy from him..
Though the PBR has started running in China, the illegal propagation still can be found in China. Will it affect the operation of regional exclusive right? And how is the effect of regional exclusive right strategy in China so far (reactions from the market)?
To be honest: our system of regional exclusive rights make it easier to fight illegal propagation. The last years we have tried together with other breeders to convince key parties in China that PBR is necessary in order to increase investment in China. Like for all patent-related issues, a company is working for many years on a certain project, is investing tens of thousands Euro’s in order to actually get a distinctive and unique new product. When we cannot earn back this investment, we can also not continue to introduce new varieties to the market. Our customers in China are very keen to get exclusive rights in special varieties in their portfolio. It gives them the chance to be unique in the market. The first contracts about the exclusivity agreements ended last year and all growers have asked to give us a new contract for 2-3 years. As we see now this systems works very well!
Many people think that there is a gap between end consumers and producers/breeders in Chinese floricultural field. The end-consumers do not have enough knowledge on caring the pot plant they bought. Also, it still lacks the atmosphere of “consuming floriculture products and using them in daily life” in the Chinese market. Thus, many Chinese horticulture enterprises wish to have a governmental institute which specially works on introducing and promoting floricultural consumptions. Is there any similar institute in Holland? Or what is RijnPlant’s opinion/experience on this issue?
In Holland we have the ‘Bloemembureau Holland’ (Flower Council Holland) who makes promotion for the Dutch horticultural industry worldwide. On the other side we also see that major horticultural companies are actively involved in promotion campaigns for their products. It is good to have a central institute which has a coordinating function to make promotion to the florists, retail and customers. Next to that I think that it would be interesting to copy the European phenomenon to organize ‘consumer exhibitions’ in China. Flower should be seen as part of the daily life. People are many times thinking how to design their interior with nice furniture and wall papers etc., but flower should also been seen as a part of the house interior! As RijnPlant we see this not as our primary task, but we are very willing to help our customers by making promotion campaigns and giving consultancy to them.
What is RijnPlant's opinion about the future trend of floricultural consumption in China? Is the China market attracted to RijnPlant?
Over the years RijnPlant is active on Chinese market, we see an increasing demand from consumers to specific RijnPlant varieties. What happens with cars and with clothing, also happens with Anthuriums now! When people buying a car, they never ask for ‘a red car ’, but they ask for a BMW or a Mercedes. In the market we experience the increasing demand for ‘Red King’, ‘Red Victory’, ‘Fantasy Love’ etc. just to name a few of the more than 200 RijnPlant varieties. For RijnPlant it is also important that our products have such strong names, and with specific promotion we also want to further build on these names. We need to make it easy for consumers; when they need a strong Anthurium, they ask for one of the varieties named above. The regular trend China regarding Anthurium focus on large flowering red varieties. Therefore RijnPlant has bred those kind of varieties that does well in Chinese climate and are loved by the consumers. Like in Holland we also see in China a new trend, and we hope this trend is a ongoing trend for the future to also try other colors. In Holland consumers started to buy ‘different’ colors already 10 years ago, but now we also see the change in China. ‘New’ colors for Chinese market are pink (Adios Kiss, Pink Love), white (White King, Pr. Alexia White) and orange (Orange King, Amazing Queen). Because of the conservative market it is still a big task to make growers understand these news trends so they can anticipate on it. Sometimes growers have to take a small risk by trialing new varieties and new colors, but they shouldn’t forget that.
How much does RijnPlant know about China market? Do you have some investigation about China market? If so, what is the conclusion?
For RijnPlant getting to know new markets is very important. Many horticultural companies have a R&D department for plant research, but personally I think they also do more R&D on the markets they supply to. RijnPlant started some years ago with doing very in-depth researches on markets we supply our young plants and/or flowering plants to. And already the first results made us so very excited, to get unique and very important information, that we continued that. One of our latest market research was a market analysis made of the market in China. With this research we cooperated with London Business University and HAS Den Bosch. Because Anthuriums are produced in the greenhouse, you should avoid to do all research from your desk. Like with sales and after-sales, direct communication with growers is important. Together with our staff and our agents in China, we have done many interviews among the majority of the Chinese Anthurium growers.
According to this market research, red color varieties dominate the current market as mentioned above. Most growers anticipate the selling price of Anthurium pot plants will decrease (57 %) or keep stably (36%) and the demand will increase (71%) or keep stably (29%) in five years. The trend of Anthurium pot plant size is mainly medium-size (14-22 cm) (41%). However, it is a notable result that the demand of small-size (9- 14 cm) Anthurium pot plant will be increased expectedly (37%).
On the other hand, we also have a deeper understanding about the Chinese Anthurium growers’ worry: they are very concerned about the selling prices of their Anthurium product, which is estimated decreasing in the future. Growing the same varieties with competitors and a lower quality of their own products are also major difficulties growers are facing.
Can you give a brief introduction of the development and history of RijnPlant? What is the characteristic of RijnPlant?
The initial foundation of RijnPlant was in the year 1944 when Mr. Leo van Rijn sr. started to grow vegetables under co-called cold frames. In 1968 two of the sons of Leo sr. grew total of 30.000 m2 of vegetables nearby the city of Delft. In 1975, when Leo jr. joined the company they started to grow a first 4.500 m2 of pot plants. During the following years the company has showed a fast growth to reach the current 30 ha. full with pot plants. One of the characteristics of RijnPlant being a family-owned business is the close distance between management and work floor. All of the six board members (three from the second generation and three from the third generation) have worked in all RijnPlant departments before getting management positions. They know what is going on at the work floor and keep personal touch with employees and their work.
There are plenty native plant species in China. An important issue for Chinese is developing the nature resource by breeding programs. Can you share the experience of breeding Anthurium? (how did you start it? What are the breeding goals?) Did RijnPlant consider that developing other Chinese native species of plants? Or is there any plan about cooperating with local research institutes?
RijnPlant sees and understand the value of native plant species in China. China, with its various climate regions is a centre of origin for a lot of plant families. As a breeding it is important not to forget you are working with living material. The centre of origin of Anthurium can be founded in the Latin American Andes region. We can find there a large source of germplasm, which have potential interesting characteristics that can be bred into commercial varieties. Over the last 20 years we have mastered the skills of being an Anthurium breeder very well and we have a large collection of botanical Anthurium species. Breeding takes a lot of time and efforts, at this moment we are working on new varieties that can come on the market with large quantities in +- 8 years. That 8-10 years to introduce novelties is the necessary time span for Anthurium breeding. Growers can recognize RijnPlant varieties because of their strong flower colors, quick growth, the production of many flowers and the ability to perform well in different climates.
As far as he knows, RijnPlant focuses on Anthurium and Bougainvillea. Is there any plan to start with other items in the future?
Like all companies we are always looking what other crops are interesting to do business in. In the past we had a large farm in Brazil to grow Dracaena propagation material which we exported to Holland where we sold it to the market. Over last 20 years we have become the world-wide expert in the field of Anthurium breeding and young plant production. Our cultivation process is highly automated to do the planting, replanting and sorting. From the beginning on we are committed to help our customers as good as possible and we define this good help as two factors: 1) good plant quality and 2) good services. Other crops we focus on now are Bougainvillea and Calathea . The first one is mainly sold to Europe, USA and Japan. Calathea is a crop with a very high potential for RijnPlant, our sales in Europe were very strong the last year. That strong, that we couldn’t supply our novelties to export markets. In the comings years we will be able to introduce new, own bred and patented varieties, to the Asian market. For all our business we see that it was a hard job to become the best in the market, but to stay the best in the market is even more difficult. Therefore we have chosen to keep our main focus on Anthuriums and Calathea , but who knows we will surprise the Chinese market in one of the coming years for new crops.