Flower Industry in Netherlands

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Hawhsin Yang                Flower Industry in Netherlands

Flower Industry in Netherlands

Haw Hsin Yang

Rutgers University-Camden

  1. International Trade
  • Balance of payments-analyses and implications

Netherlanders create a total GDP of €453 billion in 2003 which equals €27,900 per capita. Export and import of goods as % of GDP respectively reached 58% and 68%, and she is the sixth largest exporter and investor in world. A sizable current account surplus is produced by food processing, chemicals, petroleum refining, and electrical machinery. The country continues to be one of the leading European countries for attracting foreign direct investment. Though economic growth slowed considerably in 2001-03, as partly the global economic slowdown, for the four years before recession, annual growth of GDP averaged nearly 4%, which exceeded the EU average.

Source: IMF Financial Statistics Year Book 2003

  • Trading relationships

The Netherlands has been a leading trading nation for many centuries. Her prosperous and open economy depends heavily on foreign trade. In 1602, the very first international trade company, Dutch East Indian Company, was founded by Netherlanders. Although the Netherlands no longer occupies the governing position it held in the 17th and 18th centuries, her trading position still remains relatively strong. With 0.25% of the world population and a little under 1% of total global production, the Netherlands generates 3.2% of world trade - nearly four times as much as might be expected purely in terms of the size of her economy.

Since signing the Treaty of Paris to found ECSC (European Coal and Steel Community), Netherlands has become one of the very beginning member countries of EU. Along with 11 of its EU partners, Netherlands began circulating the euro currency on 1 January 2002. Major trading partners of Netherlands are EU (especially Germany: 24%, Belgium and Luxembourg: 12%, France: 10%, and UK: 10%), USA: 5%, and Asian countries: 7%.

  • Top exports and imports

Netherlands economy is renowned for stable industrial relations, moderate unemployment and inflation, a sizable current account surplus, and an important role as a European transportation hub.

The major exports of Netherlands are machinery and transport equipment, which account for 32% of total exports, chemicals, 17%, manufactured goods, 22%, food, drink, tobacco products, 15%, raw materails, 6%, and fuels, 8%.

Top imports of netherlands are foodstuffs: 33%, machinery: 28%, consumer goods: 14%, mineral fuels and crude petroleum:12%, transportation equipment: 12%, and clothing: 5%.

  • Foreign direct investments

FDI to and from  declined for the second consecutive year in 2002, although at 714 billion guilders, inflows were still above the 1995-1999 average.

The openness of the Dutch economy is reflected in its success in attracting foreign companies. Favorable tax treatment for profits earned by multinationals has boosted the Netherlands’ attraction as a location for foreign direct investment. Moreover, international comparisons of the major economies (by the World Competitiveness Yearbook from the International Institute for Management Development) have consistently ranked the Netherlands as one of the most attractive destinations for FDI. In 2002 FDI inflows totaled €30.8bn, a dramatic decline compared with the €56.7bn in inflows registered in 2001, but still a strong performance in view of the sharp global decline in cross border capital flows in that year. Investment initiatives have attracted a wide variety of foreign firms in recent years, including Polaroid, Esso, Dow Chemical, Fuji, Nissan, Engelhardt, Amsco, Thorn EMI and Rank Xerox. Between 1998 and 2002 FDI inflows from abroad totaled €225.5bn.

  • Tariff policies

As an EU member, Netherlands follows the common external trade policies of EU. The EU tariffs (customs duties) policies that Netherlands applies are based on the international Harmonized System (HS) of product classification. Duty rates on manufactured goods from the U.S. generally range from five to eight percent and are usually based on the C.I.F. value of the goods at the port of entry. The C.I.F. value is the price of the goods (usually the selling price) plus packing costs, insurance, and freight charges to the port of entry. Most raw materials enter duty free or at low rates while agricultural products face higher rates and special levies.

  • Non-tariff barriers

The common external trade policy and measures of EU that Netherlands applies are various which include:

  • Import quota: for textiles, but will be cancelled in 2005.
  • Strict inspection: for agriculture products, need to be qualified by an EU member country and third country outside EU.
  • Prohibition against any form of jelly in order to protect children.
  • Increasing trend of antidumping and anti-subsidiaries on steel, textiles, chemical products in order to protect related industries inside EU.
  • Various direct subsidiaries on ship maintenance and manufacturing industry, such as organization reengineering, consulting services, investments. Indirect subsidiaries are also included, such as fiduciary loans and export credit lines.
  1. Cut Flower Industry in Netherlands
  • Industry overview
  • Brief history and milestones

“We appreciate your flowers!!!” Netherlanders often accept such a grateful sentence from people even as Pope said so in his New Year message.

Cut flower, or fresh flower, refers to blooms that are cut from their stems and made as corsages, wreaths and other special flower arrangements for different occasions, such as weddings, birthdays, and other festivities. Not only that, cut flower can also be used as additives in perfume processing or for other purposes. The cut flower industry has been one of the leading industries in Netherlands for over hundreds of years. Traced back to 1634-1637, the Dutch tulip mania always appears as the most-quoted case of speculative excess, even becoming a jargon for a speculative mania. Since the mid-1970s, the production and distribution of cut flowers in Netherlands have grown at an incredibly speed. Today, up to 50% of cut flowers come from Netherlands; over 35 trillions of flowers and 3.7 billions of plants are traded in the biggest market in Aalsmeer, Netherlands; 6 millions of stems are planted in Keukenhof including the hugest tulip farm, where are approximately 3,000 different breeds of tulip. Moreover, the flower industry supports a total of 100,000 full time jobs related in Netherlands.

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  • Market size

In 2000, the total market of cut flower was up to $7.66 billion while the international trade is characterized by a high degree of concentration by product and sources. Roses, carnations, and chrysanthemums are the main traded products, which make up close to 50% of the world cut flower trade, Germany is the biggest single market for imports, and the Netherlands is the world’s leading exporter.

  • Market structure

More specifically, this market can be divided into four types. First of all, those are self-sufficient markets, such as Japan, 95% of its demand is satisfied by local producers. ...

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