BANGKOK -- The protectionist climate in the U.S. is pushing Thai orchid exporters to seek more fertile ground in China, in another example of how trade tensions can reshape markets of all kinds.
The U.S. is the No. 1 importer of Thai orchids, bringing in $20 million worth of the flowers a year. But Washington in 2018 removed a tariff exemption on the blooms, which had been granted for decades under the Generalized System of Preferences, a program for promoting the growth of developing economies.
This slapped a 6.6% tariff on Thai orchids.
"That will bring a sharp drop in Thai orchid exports to the U.S.," said Kasa Chavanapanit, the president of the Thai Orchid Exporter Association. "We have to look for other markets to help offset falls in the U.S., and we're eyeing China, where the popularity of Thai orchids is rising."
Kasa said that efforts to cultivate the Chinese market started years ago, and that exports to China have been rising gradually. Brisk tourism from China to Thailand, he suggested, has helped introduce Chinese consumers to Thai orchids.
Now, Kasa said, "we're also changing our marketing strategy to match changing Chinese consuming behavior as e-commerce is booming."
Thai exporters are capitalizing on that boom by selling through Chinese e-commerce giant Alibaba Group Holding's online mall, Taobao. The exporters association has also partnered with Huazhi Flower, a Chinese company, to promote Thai orchids to luxury hotels and restaurants, along with offline and online promotional campaigns.
All told, Thai orchid exports are worth around 2.2 billion baht ($67 million) a year. But that number is expected to jump thanks to higher Chinese demand and the new online sales strategy.
For now, China is the No. 3 importer, buying $5.3 million worth of the flowers compared with second-ranked Japan's $18 million.
As Chinese consumers gain purchasing power, overall demand for fresh-cut flowers is surging. The market expanded to $54.9 million in 2017, from $16.5 million in 2012, according to research by the Produce Marketing Association, a trade organization representing companies from every segment of the global fresh produce and floral supply chain.
"That implies a huge market opportunity for Thai orchids in China, and we will try to promote our orchids to attract Chinese buyers to import more, instead of other cut flowers from America," said Chatchawan Katekaew, a member of Thai Orchid Exporter Association.
The U.S.-China trade war could help create more room for Thai orchids, by dissuading Chinese from importing American flowers.
Exporters said they expect China to surpass the U.S. as the biggest importer of Thai orchids in the next few years.