8. Taiwan’s Economic Dynamics
8.4. Learning from Successful Cluster Initiatives
One successful case that is worth learning is the Netherlands’ FloraHolland’s success in turning a severely competing flower growers’ case into a global business opportunity40F40F41. The Dutch was facing the similar problem with a severe pricing competition on flower growing and marketing issues. It was facing Asian’s low-price labor rise, and
unpredictable market competition, mostly on very low pricing. On one hand, the
Netherlands has the most stringent labor laws. It is impossible for Dutch to compete with low labor cost, and yet the business needs a good sustainable solution for the jobs and for the wellbeing of Dutch citizens. Flowers have always been European favorite products on daily markets. It is a tradition for European to use flowers for many occasions, so there are local demands for flowers. Instead of being trapped into deeper cut-throat
competitions, the Dutch initiated a Dutch Flower cluster initiative and decided to advance its logistics, storage, auction and quality control system into a turnkey solution and share their new solution with the rest of the world, so that competition becomes a shared-market and expandable value. It helps flower growers in every corner of the world to quickly sell the best flowers they can grow with the highest profits they deserve.
Everyone benefits from this cohesive designed solution. The Dutch turned from disasters into a fair market value system.
https://www.youtube.com/watch?v=Slf_XNroXS8 describe the value of the system well.
This successful cluster initiative is worth Taiwan’s attention. What can Taiwan learn from the Dutch? Flowers have always been most European’s favorite households’ goods.
It warms people’s hearts and sooth their emotions. Holland has slightly bigger land size (41,543km²) of Taiwan (36,193km²) with a little less population (17 million for Holland, 23 million for Taiwan), but Taiwan has one and half times of population density due to the high mountain ridge in the central part of Taiwan. Similarly, both Holland and
41 https://www.floraholland.com/en/ ; https://www.youtube.com/watch?v=Slf_XNroXS8
Taiwan rely on the sea. Taiwan was once Holland’s colony in the early 17th century.
Both Holland and Taiwan have strong economic and political neighbors, Germany and China respectively. It is inevitable for both countries to feel the giants’ pressures. Holland needs to reach out to the world for its economic prosperity since resources are limited.
This is very similar to Taiwan. Holland at its desperation to compete its floral business and came up with a turnkey solution to build its national competitiveness. The strategy can benefit floral growers in the world, and the system has been well accepted by even the cheapest flower growers in other corners of the world. Even China bought into their turnkey solution.
Flower is Dutch’s culture just like French wines. Because their living passion for flowers, it becomes an important part of their businesses as well. This becomes a general local market demand since passion is not something easily abandoned, but a healthy local market also needs to demonstrate its massiveness in order to make it a national specialty and trade internationally. Only when it reaches a certain population can support the market varieties either goods or services. Dutch perfected the flower trading system from flower growers. It has a quick, accurate, and fair evaluation and bidding process that flower growers are incentivized by superior quality if they use the system. The system guarantees the highest bidder gets the best quality flowers. The system is also designed with timeliness bidding system that can trade globally. The nature of cut-flower in general has 7 days to live which means the faster the flowers are in customers’ hands, the higher quality of delivering fresh flowers into buyer’s hands. What FloraHolland has provided is a solution to a very difficult and challenging issue, and the answer is to utilize the most updated technologies to fit the process into solving intensive real-time dynamic problems, which is timely delivery of the freshest flowers to the hands of flower lovers with the fairest price, and at the end the flower growers know how to grow better flowers in order to get the highest return.
The turnkey system is done with the cohesively designed flow and equipment to
accommodate everyone’s demand and communication. An open and sharing system has brought the competition to another level. It is no longer the hatred relationship among flower growers and middle trading men who may buy low and sell high. It is a productive
system for people to measure high and return high. It is a win-win system that all points of providers and receivers gets the best satisfaction out of the beauty of flowers. In order to reach to this point, it takes a group of people to start an initiative and focusing
stakeholders’ effort in a cohesive collectively into a full collaboration. They have
designed outcome first, set goals, draws solutions, and implemented the system. The final outcome was very satisfactory. It is the biggest flower trading system in the world, and they solve the problem of industry agglomeration by using the latest technology by inventing a perfect trading and delivery system. This sets an excellent example of cluster initiative.
Globalization and technologies provide open information and communication channels.
The Dutch flower’s case demonstrates how to utilize the most advance technologies to solve market competition issues. A well-designed system can provide many solutions for many ends individually and as a whole, and the collaborative work in a seamless process can make everyone happy and profitable. In this case, flower growers from China may benefit from growing flowers in a marketable expectation and receives return on a fair and open-bid system. He may play a small roll, but he is receiving a calculated fair return. A FloraHolland researcher spoke about a Chinese wholesaler trying to imitate the system and failed.41F41F42 The system is too complex to be copied. At the end, Chinese
contracted FloraHolland to build a trading system in Kunming’s flower market fair for all growers to benefit. Flower growers pay about 1% of the trading fee that is much lower and secured than the tradition bidding method. Additionally, for FloraHolland, the bestselling product is a weather-proved greenhouse to Chinese growers to ensure the quality of their flowers for the highest return. For Chinese it is too difficult and too expensive to build a complex logistic, storage, and bidding system with knowledgeable quality control personnel that is close to the market. Here the Dutch built the value into a system to serve people utilizing the latest technologies to build a state-of-arts turkey system. It successfully served the stable and highly demanding European flower market.
42 The story was told in the Harvard Business School Microeconomic of Competitiveness course. A staff was invited to speak about their business success in the class.
By the same token, Taiwan has many possibilities to expand their local specializations, especially Taiwan is a technology rich economy.
This is one case demonstrating cluster initiative works from a bottom-up project with success. In Europe, there are more than thousands of the clusters initiatives that has been proposed and are working effectively. The US has just started in 2014 after the cluster tools are built for people to survey the resources to propose for workable local initiatives.
The concept of cluster initiatives has only been used by few Asian countries such as Singapore, Korea, and Japan. Other Asian countries are still new to the concept. cluster mapping is tool designed and built for cluster initiatives proposed by practitioners, researchers, and policy makers. Taiwan is starting its first cluster mapping tool here.