Current status of Phalaenopsis export from Taiwan- Its competition on the market of the U.S. Speaker：Ms. Stella Yuan CEO, Agriculture Business Division Taiwan Sugar Corporation March 3, 2011

22 Preface Taiwan exports 2.5 billion NTD (about 80 million USD) of Phalaenopsis to the world in 2010. United States and Japan are two major markets for Taiwan Phalaenopsis, they hold 50% and 35% of Taiwan Phalaenopsis exports, respectively. In America, the orchid market grows yearly. The wholesale value of orchids exceeded that of poinsettia in 2009. There will be a great increase in North American market in next three years. 2

Plants imported from Taiwan Ratio of imported from Taiwan/sales Phalaenopsis market shares (Year 2009) Units:million plants Nations Plants Sales Plants imported from Taiwan Ratio of imported from Taiwan/sales Japan 20 7 35% America 10 50% Europe 100 12 12% China 1 10% Others 5.6 56% Total 160 35.6 22%

America orchid sales changes in 2005-2009 Units： 10,000 pots  States 2005 2006 2007 2008 2009 California 778.0 640 650.9 733.4 877.9 Florida 620.2 475.8 525 650 558.9 Hawaii 268.8 290.5 279.3 224.9 175.0 New Jersey 7.2 10.5 9.1 22.8 16.9 New York 27.3 11.6 11.2 12.6 26.1 Illinions 21.7 21.3 19.9 115.7 Ohio 125 Total 1800.2 1477.4 1542.1 1706 1947.3 Data Sources：USDA,

Big company has the capability of mass and planned production In America market, it requires extra amount of orchids during important holidays, while at regular time it also needs steady supply. The products need to be diversified, more colors, different sizes and types or with different kind of pots and packing. Marketing policy will be focusing on mass market, i.e. grocery stores, superstores, garden centers and other chain stores.

Mass markets require colorful products and steady supply 666 Mass markets require colorful products and steady supply 6

The change of competition and production in American Phalaenopsis industry Traditional orchid production The introduction of Netherlands automation greenhouse production International cooperation at different stage of production The Netherlands orchid company invest production facility in America. New orchid growers – Other non-orchid growers in America change to orchid growers.

Growers in America forcing flowers with the plants imported from Taiwan 也是在佛羅里達的COSTA FARMS，是較傳統的溫室，但是生意穩定且有固定通路每星期五會大量出貨。 8

Phalaenopsis automation cultivation in North America Nursery 於佛羅里達的De LEON’S有引進荷蘭自動化溫室但可能有降溫有問題，需遮蔭系統。生長情況仍算不錯。 9

Matsui nursery estimates 101010101010 催花房共有10間,每間約0.2公頃,蝴蝶蘭佔了3間,其他則為其他蘭類,文心蘭用培養土根系佳花也多,文心蘭自泰國進口瓶苗 溫室植株生長及開花情況，出貨應用輸送帶傳輸。 Matsui nursery estimates There will be 70 millions Phalaenopsis plants demands in American market in 10 years. 10

Matsui nursery improves cultivation method for future competition. 111111111111 Matsui nursery improves cultivation method for future competition. 開始應用樹皮種了，且應用支架將葉態修正，以利栽培管理 11

Future trends in American Phalaenopsis market The impact of Culture model change - Traditional Taiwan-America corporation model v.s. Netherlands automation culture More bedding plants and greens growers change to grow phalaenopsis. Floricultura invests production facility in America. China, Korea, Thailand, and etc. may get into the American market in the near future. 【What is the advantage for Taiwan Phalaenopsis industry in the future ? It is a topic worth of thinking for everybody.】

The Netherlands is the biggest competitor of Taiwan Phalaenopsis industry Taiwan exports 32 millions USD phalaenopsis to America in 2009, and 39 millions in 2010. There is a 25.3% increase in 2009, yet only 21.7% increase in 2010. The increase rate slightly going down. 以金額比較，台灣總苗輸入金額占全部金額之比例自5成增加至近7成。而荷蘭的種苗由15%一直遞減至2010年才恢復10%以上。 在2010年兩國的增減率21.7%與146.3%，已出現一種警訊。雖然荷蘭輸入蘭苗金額，但是銷售幅度成長大，要警覺準備大舉進入北美蝴蝶蘭市場。 13 花卉外銷好創意

The Netherlands exports 4 The Netherlands exports 4.5 millions USD of Phalaenopsis to America in 2009 and 9 millions USD in 2010. There is a 17.8% increase in 2009 and 146.3% huge increase in 2010.

Floricultura’s strategy in North America The nursery in Salinas, CA will produce 5 millions plants in 2011. 2-3 millions are in 4”-pot with double spikes. It cooperates with Matsui nursery, and will start with providing half million double- spikes plants. 15

Improvements need to be done in Taiwan Phalaenopsis industry Research： There are gaps in varieties between research and market. (Varieties need to fit in local environments; varieties can tolerate transportation stress.) Production： Virus-infected plants are still present in certain percentage. Short of SOP for large scale production. Mid-size or small orchid nursery have difficulty to maintain steady supply all year round.

Improvements need to be done in Taiwan Phalaenopsis industry Marketing： A great competition in American market will raise due to the entering of Netherlands large orchid company. Precise control of production is urgently needed. Short of cultivation handbook and poor post-sale service. Production doesn't match the need of sales causing low output of the facility.

Strategy of Taiwan Phalaenopsis industry for American market Actively collect orchid industry information from other country. Cooperate with growers in Taiwan or in America to scale up the industry. Provide new variety, creative products and new technology. Export virus-free plants. Increase sale channel or increase production facility for more local market in America.

Strategy of Taiwan Phalaenopsis industry for American market Tightly corporation between domestic and America growers Taiwan (Supply) North America (overseas facility) Breeding materials collection Breeding Propagation Mature plants production Pre-transportation treatment Brand management Protection of intellectual property Market development Logistic Forcing flower

Conclusions: 『Good Quality Low Cost Varieties variation』 『Cooperation 20202020 Conclusions: 『Good Quality Low Cost Varieties variation』 『Cooperation instead of Competition』 20

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