Local horticultural knowledge is needed to develop the horticultural sector
Chinese greenhouse horticulture is developing rapidly: investors and governments are eager to set up new companies. This offers a wealth of opportunities for Dutch suppliers. But according to Sylvia Xu from Signify, these opportunities are not just there for the taking.
“China lacks people with horticultural knowledge, who know how the sector works. That know-how is needed to implement Dutch high-tech solutions in China. Signify became a partner of the Dutch Greenhouse Delta (DGD) consortium this year. With DGD’s extensive network in the horticultural sector, government, and science, they can help transfer knowledge and make the horticultural sector in China more sustainable.”
If there is anyone who knows Chinese greenhouse horticulture inside out, it is Sylvia Xu. She grew up in the Chinese metropolis of Shanghai and started working eighteen years ago at Signify, which at the time was still called Philip Lighting. Initially working in the Home and Outdoor divisions, for the past ten years Sylvia has been active in the company’s horticultural division. Here, she is currently working as Horticulture LED Solutions Business Development Director for Asia. “That’s quite a mouthful, but in practice it mainly means that I transfer the knowledge we have about the use of LED lighting in horticulture to Chinese growers and our local teams on the ground,” says Sylvia. “In other words: I want to help ensure that the Signify’s in-house expertise is put to the best possible use in Chinese horticultural practice. In pre-Corona times, I often flew to China. In the last year, the transfer of knowledge has mainly taken place digitally.”
According to Sylvia, there is a great need for knowledge within Chinese horticulture. The sector is undergoing a huge transformation. The country has the largest area of covered horticultural crops in the world, about 3.7 million hectares. Of these, approximately 950,000 hectares are of the type of solar arch greenhouses; 9,000 hectares are of glass greenhouses, from which about only 10-12% are high tech greenhouses that are equivalent to the normal Dutch standard. In recent years, high tech horticulture in China – both vegetable and ornamental – has been taken off. However, high tech horticulture knowledge and local talents are still very much at scarcity in China. “Glass greenhouses have been built in China since the mid-1990s, but initially these greenhouses were small-scale to serve research and demonstration purposes and rarely used for commercial purposes. Many times, these greenhouses were solely financed by the government.”
Nowadays, large commercial size high-tech greenhouses are on the fast rise, throughout the entire country. Real estate companies, online retailers, IT companies and state-owned companies that have developed further see opportunities in horticulture. They often work together with local or regional authorities and set up their new Agri business divisions. Meanwhile, the established names in Chinese horticulture are also developing further and investing in modern, high-tech greenhouses.” The ambition for China is clear. They want to transform its low-tech agriculture to high tech. With the increasing demand for high-tech horticulture, Dutch technologies and turnkey companies are often inquired. Thanks to their knowledge, experiences, and competitive prices, many of these high-tech greenhouses are built by Dutch greenhouse builders. “But upgrading the mid-tech greenhouses, in order to improve yields and quality, shall also offer opportunities for Dutch companies.” All in all, the opportunity for China is there and it is now. To keep the competitiveness from local companies, Dutch company shall keep innovation and adapt its business strategies for China along the way.
The fact that more and more parties are investing in greenhouse horticulture projects is not without reason. According to Sylvia, China provides twenty per cent of the world’s population with food, but only nine per cent of global agriculture land for growing crops. “That means more intensive cultivation is needed. In addition, the pressure on outdoor crops is increasing as a result of climate change. Heavy rainfall and desertification, among other things, are making it increasingly difficult to produce outdoors. Logically, this brings greenhouse horticulture more and more into the spotlight. In other words: the transition from open-air production to greenhouse horticulture is a vital necessity in order to safeguard food safety and the food supply in China for the coming decades. The Chinese government is also strongly committed to this. According to the Chinese Academy of Social Sciences, if nothing is done, in the worst scenario, there could be a food shortage as early as 2025. In addition to feeding its own population, China also wants to play a bigger role in the global food supply, responding to the fact that the world population is growing and the need for fresh and safe food is ever increasing.”
But there are also challenges. Because high-tech greenhouse horticulture is a relatively new phenomenon in China, there is still a great lack of knowledge and experience to run these modern technologies into a commercial success. That is why parties won’t invest in LED lighting that easily, says Sylvia. “They don’t yet know whether supplemental lighting adds value to their crop and their particular area. And if they do know, the question is whether they should invest in HPS or LED. Because there is still relatively little practical experience and investors are coming from outside the horticultural sector, many parties are principally influenced by the costs. In that case, LED is often not seen as an attractive option. In order to be able to take advantage of the opportunities that the Chinese market offers, we at Signify must therefore – together with our partners – not only demonstrate but also educate Chinese investors, growers, government, the added value that LED can offer.
We see Philips lighting recipe – LED trial – program is starting to pay off in China market gradually after 10 years. Nowadays, horticulture LED lighting is no more a stranger in China, but becoming more and more a standard for sustainable, low carbon, new generation greenhouses. Large commercial projects are increasingly demanding LED light solutions from us. We will continue putting a lot of effort into education, LED recipe trials, business case preparation and actual production follow up in China to differentiate our offers from our competitors; With our local plant specialist, application engineer team, and our global solution-partner network ’Dutch Greenhouse Delta’, we want to let the Chinese parties experience what world-class high-tech horticultural techniques can offer. As we said: China offers plenty of opportunities for suppliers of high-tech horticultural technology, but companies have to be in it for the long haul. You really have to prove yourself here.”
Signify has, nevertheless, already realised several LED and hybrid projects in China. The list of references includes Wu Han AgroPark, where we worked together with Kubo greenhouse projects – to produce fresh tomatoes, cucumbers, peppers, lettuce – and the Linxia International Flower Port project, where we worked together with Bom Group, a cut rose project in Linixia Gansu. Sylvia hopes that these projects will help to convince Chinese parties of the added value of hybrid and LED systems. Our plant specialist is also involved in projects aimed at gathering additional data regarding the use of LED light. “In this context, for example, a collaboration has been set up with Wageningen University and the company LanKuaiKei Agriculture in Shanghai. This project will not only provide more hard data regarding the use of LED, but also provide insight, for example, into what the ideal greenhouse climate is in these regions. In addition, we want to demonstrate the yield potential of using high-tech horticultural techniques, and what the economic prospects are, via cooperation among Dutch and Chinese leading companies and research institutions. This should contribute to policymakers, investors and producers gaining more insight into the possibilities of high-tech horticulture.”
The company is also involved in various vertical farming projects. These include the Orisis project in Shanghai, one of the leading horticulture firms in China. When the project is completed, Orisis will be able to provide freshly harvested, nutritious, tasty, and pesticide-free produce to Shanghai area food-service distributors, grocers, and consumers. “This will be the first vertical farming project in the Shanghai region using our dynamic Growwise lighting control system. We have been working very closely with Priva since the very beginning to customize the system design.” says Sylvia. “However, vertical farming is not yet commercially booming in China; it still mainly revolves around small-scale initiatives or serves as technology demonstration or business model exploration for government or entrepreneurs.” Some Chinese and Taiwanese companies are aiming entering global vertical farm market with its competitive low-cost concepts. From lighting perspective, vertical farming is particularly in high interest in countries in Southeast Asia, Singapore, Vietnam and Hong Kong. “Singapore, for example, has a target of producing 30 per cent of its nutritional needs locally by 2030. To achieve this, vertical farming projects are a must.”
In addition to the lack of practical experience, greenhouse horticulture in China also faces other challenges. “Sustainable cultivation, using as little energy and as much clean energy as possible, is a major issue. With our LEDs, we can of course play a key role in this; Simply switching to Philips LED from Philips HPS lamp in the Dutch farms, we can help reducing the CO2 emissions with at least 38 – 42%. Meanwhile, LED also give off less heat, which means that the vents do not have to open unnecessarily and thus less CO2 escapes into the air, less waste on other cultivation resources.” The importance of the complete supply chain has now also being recognized by Chinese parties. “There are many things happening at the moment in the supply chain but still a lot of work to be done in this respect.”
But the biggest challenge is still the lack of entrepreneurs and managers with horticultural knowledge, who know how the sector works. And that local know-how, adapting China business strategies, continuous education, and great support for after sales services are necessary to enable high-tech techniques from the Netherlands to gain a foothold. It’s only when we are able to raise the level of knowledge in China and support companies in practice that we as Dutch suppliers can actually capitalise on the long-term opportunities that exist in China. In short, transforming agriculture sector in China offers us many opportunities, but it is not a quick win. Hit and run operational style may bring some short-term benefits. But for a long-term success in China, it requires government, companies, and leading research institutions to work together to address these fundamental challenges with Chinese parties. Coming “together” would be very important to win China market for Dutch companies.
Sylvia is convinced that a platform like the Dutch Greenhouse Delta can offer added value in China. Chinese authorities and investors are looking for parties that can provide a total solution. “But in any case, good cooperation is important in order to tackle the challenges faced overseas. Everything is different here: the culture, the climate, the decision-making process, et cetera. It’s almost impossible for an individual company to offer a customised solution. In other words: close cooperation helps to optimally respond to the local needs and circumstances.”