Green Cities - A Strategic Roadmap to Position Leading Dutch Sectors for Megacities in China

GREEN CITIES A Strategic Roadmap to Position Top Dutch Sectors for Metropolitan Regions in China

Tiffany S.W. Tsui 3

COLOFON Green Cities A strategic roadmap to position top Dutch sectors for metropolitan regions in China Commissioned by: Embassy of the Kingdom of the Netherlands in Beijing Netherlands Enterprise Agency Author: Tiffany S.W. Tsui tiffany.tsui@springtidestrategy.com Graphic design support: POSTURBAN + DESIGNATURE Reviewers: Wouter Verhey Emiel Mulder Acknowledgement The author would like to thank the Embassy of the Kingdom of the Netherlands in Beijing and the Netherlands Enterprise Agency, represented by Mr. Wouter Verhey, Mr. Henk Stigter, Mr. Emiel Mulder, to give me this opportunity to elaborate this study which hopefully leads to a more extensive cooperation between China and the Netherlands in the area of feeding and greening megacities.

Gratitude goes to all interviewed persons for their valuable insights!

Use of material is allowed under Creative Commons License mentioning original author.

Springtide Strategy is based in the Netherlands and specialized in strategic research, integral planning, business development and international project management the area of green cities, metropolitan and vertical farming. info@springtidestrategy.com

PREFACE In recent years, it seems that the theme ‘Feeding and greening the megacities’ has become a strong ’Holland branding’ tool. However, despite the large amount of ambitions, to date there is a lack of concrete projects. When we take a look at the existing public-private initiatives at national and regional level with the purpose to present a ‘collective front’ to the international market, it is interesting to see that the focus is mostly on marketing/branding trying to appeal to the megacities in China/India/Latin America/ Africa but with much less attention on systematically developing knowledge about all these fundamentally very different markets and on lessons learned. The lack of indepth understanding of one’s own real strengths (and weaknesses) and hence the value to others (and vice versa) can lead to misallocation of valuable resources and missed opportunities.

For instance, in the efforts to develop a ‘Holland/Branding’ or national approach in ‘feeding(greening) megacities’, some fundamental questions are not answered such as: what does a ‘national’ approach exactly mean beyond the ‘Holland branding’? Of the hundreds/thousands of (mega) cities all around the world, which ‘cities’ are we talking about?

What are their characteristics and differences and hence the Dutch value propositions? Other than technological systems and knowledge, what kind of social-economic systems, innovations and knowledge are needed?

In May 2019, Netherlands Enterprise Agency and the Netherlands Embassy in Beijing requested Springtide Strategy to carry out a sector study on the development of ‘Green Cities’ in China focusing on strengthening the position of the leading Dutch sectors in the metropolitan regions of China, with particular focus on connecting the interlinking building blocks of water, energy and food.

The Study focuses on bridging the ‘supply’ and ‘demand’ sides: on the ‘demand’ side by carrying out analysis of relevant key stakeholders, key developments and regions in China where Dutch technologies could be applied; on the ‘supply’ side by analyzing the ecosystem of Dutch players to identify the positioning and value propositions for the hot spot developments. In short, the goal is to locate the sectors/industries which provide most opportunities for Dutch companies and know how.

The study lasted from May till October 2019. During the course of the study, several workshops were held in the Netherlands and in China which include: 13 June 2019 at Greentech, 7 July 2019 in Shenzhen, and 13 September during the China Business Week. At each workshop, about 50-100 participants representing governmental agencies, education institutes, design & architectural offices, seed companies, technology companies and consultancy services. At these workshops, the author presented the preliminary findings, held interactive surveys, and received feedback and follow-ups from the audience. The study also builds on large amount of interviews carried out by the author in recent years as well as first hand project experience in China.

ABOUT THE AUTHOR Tiffany Tsui is an international green development expert with strong focus on China. Her education background includes Harvard University and she has worked extensively in the US, China and Europe. She is currently based in the Netherlands.

Tiffany is specialized in bridging different cultures, different disciplines and sectors, and between research and practice. As independent researcher, she conduct strategic research and industry analysis focusing on the developments of best practices and innovative business models for green cities, metropolitan and vertical farming.

She partners with Chinese and Dutch governments, academic institutes and businesses.

She was the founder of EMSI China from 2001 to 2005, the first international firm to pioneer a successful business model for LEED (which stands for Leadership in Environmental and Energy Design) certified ‘Green Buildings’ for the Chinese market. She developed an innovative and integral approach of shaping policy, leading market standards and introducing new technology and holistic building design practices. The LEED standards became the model for China’s own green building program and LEED remains the leading standard in the market.

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After moving to the Netherlands in 2005 till 2014, she joined the internationally leading engineering & consultancy group Royal HaskoningDHV and was the project director for large scale strategic planning projects in the area of sustainable urban/delta developments, metropolitan food clusters and eco-city developments in China.

She was one of the five international expert committee members commissioned by the Guangming New Town government of Shenzhen city to steer large scale green city development projects. She is also the author/coauthor for studies including the book ‘Feeding Tomorrow’s Cities’ and “DNA of Westland”.

Given her international and multidisciplinary background, Tiffany draws from her professional experience and networks for first hand information used in this study.

Pictured above: With mayor and aldermen of Westland municipal government during the research of “DNA of Westland” (April 2016)

Pictured above: with Chinese government decisionmakers as one of the five international expert committee members since 2013 commissioned by the Guangming New Town municipal government in Shenzhen city to steer the large scale strategic green city development projects (June 2017).

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FOREWORD The Netherlands as a model Green City

“China is rapidly urbanizing, by 2030 there will be more than 1 billion urban consumers…’ What does this mean?

Specifically, what does this mean for the Dutch businesses and entrepreneurs? In the Netherlands, the largest ‘city’, Amsterdam, has a population of a little more than 1 million whereas the biggest cities in China are pushing towards 30 million. From a sheer size point of view, it seems that there is little to offer from the Netherlands to China on how to green its megacities. But is that so?

With its green environment and strong agriculture sector, few Dutch people are even aware that the Netherlands is 93% urbanized according to official statistics. What

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is more, the Netherlands is proud for its ‘living with water’ achievements, international connectivity and smart logistics, and high global ranking in food security, innovation and social happiness. From this point of view, the Netherlands itself IS a model ‘Green City’ for the metropolitan regions in China and the world.

The topics of ‘green’, ’sustainability’ and ‘eco cities‘ are not new to China. In the last 20 years, China has also made significant progress in the various aspects. For example, China now boasts the highest volume of photovoltaic installation in the world; it has increased its forest cover

Wouter Verheij Netherlands Agricultural Counsellor for China & Mongolia Senior Commercial Officer

significantly; it has developed its own Green Building standards which are being put in place all around China. To solve the issue or urban flooding, the central government put forward the “Sponge Cities’ program. Other developments are well underway such as ‘smart eco cities’. In the next 5-20 years, metropolitan farming will become the new wave of the green revolution. A revolution that the Dutch governments, knowledge institutes and industry can play a leading role, creating win-win solutions for both sides. Food needs to become an integral part of metropolitan systems connecting to sustainable logistics, food safety and consumer trust, energy, water management and so on.

The Study focus on bridging the ‘supply’ and ‘demand’ sides: on the ‘demand’ side by carrying out analysis of relevant key stakeholders, key developments and regions in China where Dutch technologies could be applied; on the ‘supply’ side by analyzing the ecosystem of Dutch players to identify the positioning and value propositions for the hot spot developments. This study lays the foundation for a mutli-year program to unite the leading Dutch sectors and to develop strategic gateways at the focal metropolitan regions of China.

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EXECUTIVE SUMMARY This Green Cities Sector Study has three purposes.

Firstly, it is a conceptual framework and research study to understand the challenges, needs, trends and driving forces of green development in China: improve livelihood of hundreds of millions, provide education and equal opportunity, invest in infrastructure while protecting nature and environment, reduce air and water pollution, food safety, and so on.

Secondly, it is a strategic analysis of the demand and supply sides to identify the ‘Blue Ocean’ opportunities for the top Dutch sectors in water, energy, food, technology, logistics, trade, and so on.

Thirdly it is a roadmap to develop a ‘triple helix’ approach to bundle the strengths of the Dutch government, knowledge institutes, and businesses and to develop a strategic focus on identified hot spot metropolitan regions.

Chapter 1 is a chapter that focuses on understanding cultural differences and finding common languages. While the topics of ‘green’, ‘sustainability’, and ‘eco’ have been widely studied worldwide, there is no one universally applicable definition.

However, understand the cultural, development, and perception differences between the Netherlands and China is the first step to map out the cooperation opportunities. During 10

the research, several stakeholder workshops were held in the Netherlands, and in China, with participants representing different sectors and interactive surveys were conducted. The most noteworthy results are analyzed and presented here.

The following main chapters are structured according to the interlinking topics of the “Green Cities’ concept, as shown in the diagram. As a conceptual framework, it shows that “Green Cities” is a broad concept that covers the physical infrastructure of buildings, water, and food, and so on.

Equally important are social issues such as societal demands for health, wellbeing, trust, and community. What is more, “Green Cities’ should not be seen as a set of static indicators but a dynamic development process that needs to respond to the changing societal challenges. This process requires knowledge, innovation, entrepreneurship, and collaboration.

As a strategy roadmap, chapter 2 - Green Buildings and chapter 3 - Sponge Cities review and compare the two main green city developments in buildings and urban water management respectively to compare their business cases for the Dutch sectors. Chapter 4 – Metropolitan Farming, 5 – Health & Well Being, and 6 – Sustainable Supply Chain then focus on the next major development with significant business opportunities for the various sectors along the entire business value chain which is driven by Chinese national policy, consumer demand and disruptive supply chain developments.

Chapter 7 – Innovation, Entrepreneurship, and Collaboration is a chapter that focuses on analyzing the Dutch sectors and ecosystems to identify the value propositions for China.

Chapter 8 – Greening Cities and Vertical Farming – touches on other related developments. Finally, Chapter 9 – Strategic Roadmap – maps out the sector opportunities, focal regions, and cooperation areas.

GREEN BUILDINGS

RONM VI

2

T EN

EN

URBAN / VERTICAL FARMING & GREENING THE CITIES

OMY ON

1

GREEN CITY

SOCIE

3

TY

EC

SPONGE CITIES

METROPOLITAN FARMING

KNOWLEDGE, INNOVATION & COLLABORATION

SUSTAINABLE SUPPLY CHAIN

HEALTH & WELLBEING

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Europe missed the boat in shaping the first wave of the green city movement

Sponge City not a business model for the private sector and international players

Chapters 2 and 3 give an overview of two important green city development topics in China in the last 20 years: Green Buildings and Sponge Cities. The Green Buildings movement started around the year 2000, which is the beginning of the first wave of rapid urbanization in China. In 2000, the urbanization rate of China was about 36% and has grown at about 1% per year since then. The primary driver for ‘Green Buildings’ was energy efficiency, especially for the new commercial buildings in big cities. LEED, the market-driven, voluntary green building certification originated from the US, played a significant role in leapfrogging the building standards in China during this period. Chinese central government developed China’s own Green Star program in 2005, 4 years after LEED entered the Chinese market. However, LEED continued to be popular in the Chinese market today, especially for iconic projects.

The directive of implementing ‘Sponge Cities’ was first issued in 2014 during a working speech by Chinese President Xi Jinping. The cause of the high-level attention was major damage and death after flash storm hit cities like Beijing, which is located in a dry climate and normally suffers from severe water shortage. Since then, it became a national priority, and pilot city projects were supported with national and regional governmental funding. The goal of ‘Sponge Cities’ is to create green infrastructure to manage floods, pollution, and water waste from storms and seasonal rains. Unlike the green building market, which has business cases for commercial building developers and users, most funding for the sponge cities projects comes from central and local government budgets. As a result, mainly the state-owned companies can secure access to subsidies or budget from environmentalprotection treatment fees. The business sector, therefore, has either no interest or no access to the bulk of the budgets. While the Netherlands is known for its water management expertise, there is limited scope for sector involvement other than consultancy, training, and some technical services, also due to the limitation in design and construction licenses.

However, it should be noted that ‘Sponge City’ with its specific context for China is just a sub-topic within the broader topic of water management. The wider market opportunities in not covered in the scope of this study.

In comparison, the Netherlands/Europe had started with sustainable building development since the 80s. However, because of the strong government regulations in enforcing a high building performance baseline, there wasn’t a similar market-led drive or ‘movement’ as in the US. One can say that, while being more advanced in technology, know-how, and regulations, Europe/the Netherlands had missed the boat in shaping the green development trend of China during the first wave of rapid urbanization.

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Metropolitan farming the next green revolution

Innovate, collaborate and co-create

Chapter 4 – Metropolitan Farming, 5 – Health & Well Being, and 6 – Sustainable Supply Chain then focus on the next major development with significant business opportunities for the various sectors along the entire business value chain.

Since 2004, the ‘three rural’ issues – agriculture, countryside, and farmers – have been the no. 1 policy issue on the Chinese national agenda. The key issues are the widening developmental gap between urban and areas, agricultural productivity, and environment. The national policy drive is even further enhanced since 2018, with concrete measures on land rights reform and subsidy programs.

Chapter 7 – Innovation, Entrepreneurship, and Collaboration is a chapter that focuses on analyzing the Dutch sectors and ecosystems to identify the value propositions for China. The high productivity, land-independent, industry cluster model of the Dutch horticulture sector is especially interesting for China in the next wave of rapid urbanization because it can bridge the urban-rural divide and overcome resource limitations. Here lies the strategic positioning of top Dutch sectors in shaping the next ‘green revolution’ of Chinese metropolitan regions: knowledge, innovation, entrepreneurship, and collaboration.

Chapter 8 – Greening Cities and Vertical Farming – touches on other related developments, especially of interests to highly densified urban core areas. City greening and urban ecosystem have important public and community values. While the business cases for urban/indoor/vertical farming is still much debated, there is no denying that this is a trend to stay.

While technologically, the Dutch sectors still have a leading edge, many international players from the US, China, and so on are rapidly moving into the market space. It is imperative that the Dutch sectors continuously innovate and open for collaboration to stay ahead of the competitions.

On the consumer side, the demand for healthy and trustworthy products is ever on the rise. However, compared with just five years ago, what will enable and speed up the agro-food system transformation is the disruptive developments in e-commerce and the ‘new-retail’ model, which drastically shortens the chain from farm to fork. Together with the state and private sector investment on infrastructure such as roads and cold chain, the market conditions are ready for the next ‘green revolution’. The weakest link is the production side, which requires technology, knowledge, and talent, and this is where the competitive strength of the top Dutch sectors.

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Blue ocean red ocean

A triple helix approach of internationalization

Chapter 9 – Strategic Roadmap – maps out the sector opportunities, focal regions, and cooperation areas. Based on a business value chain approach, the ‘Green Cities’ value chain can be divided into upstream, midstream, and downstream stages, which correspond to the planning – construction – operation cycle of built environment projects. Upstream activities mainly concern market leadership and position to shape industry standards and strategic policy. Therefore, international branding, lobbying, policymaking, planning, and design consultancy, R&D, education, and capacity building all fall into upstream activities. Midstream activities include turnkey construction and supply of technology, equipment, and products. Downstream activities concern with the operation stage and added value to end-users/consumers.

Chapter 9 further provides a strategic framework for a multiyear, business case driven, ‘triple-helix’ approach to develop strategic collaborations with selected focal partners in China to achieve the following:

The competitiveness and positioning of Dutch sectors across the various markets of buildings, urban water management, city greening, metropolitan farming, and indoor/ vertical farming are compared to identify the ‘Blue Ocean’ opportunities. For instance, the “Green Buildings’ market has become a ‘Red Ocean’ market due to the dominance of existing international (US) players and large Chinese state players. Metropolitan farming that focuses on advanced Dutch horticulture chain technology, branding, high quality fresh for the metropolitan markets offers immense opportunities.

However, international competition in the field of indoor/ vertical farming is rapidly increasing and it may happen that the rest of the world will ‘re-invent the wheel’ by developing new industry standards for controlled environment agriculture (CEA) – just as the case of ‘Green Buildings’ - despite the currently leading position of the Netherlands in horticulture.

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1. Long term, strategic relationship at government to government level in focal regions as the trusted gateway to partners in education/research and business community in identified hot spot sectors 2. Develop business cases and operation models: develop consortia based on a strategic, step by step approach to build trust and willingness for long term cooperation on both sides.

Develop knowledge in the main constraints in the business environment in the relevant sectors as well as the possible business models.

3. Level the playing field: represent a strong voice of entrepreneurship in complementarity with other levels of government relations to form a multi-level integral ‘national’ approach; level the playing field and safeguard collective sectoral interests such as market access, IP, contractual rights protections, trust and branding

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TABLE OF CONTENTS i 1.

Introduction p.18

2.

Green Buildings p.30

3.

Sponge Cities p.42

4.

Metropolitan Farming p.58

5.

Health and Well Being p.88

x 6.

Sustainable Supply Chain p.100

7.

Knowledge, Innovation & Collaboration p.114

8.

Urban/Vertical Farming and Greening the Cities p.142

9.

Strategic Roadmap p.150

10.

Appendix p.174

1 INTRODUCTION

A strategic roadmap to position leading Dutch sectors for megacities in China 18

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What does “urban” mean?

The headline of this study is that ‘more than 50% of the Chinese population lives in cities and it is expected that this percentage will rise to 70% by 2030’. But what does it really mean? It turns out there is no standard international definition of an ‘urban’ area or ‘urban’ population. Each country has its own definition, and collects data accordingly.

The criteria used by countries to decide whether to define a place as ‘urban’ include population size, population density, type of economic activity, physical characteristics, level of infrastructure, or a combination of these or other criteria.

These data are collected by international bodies as the World Bank as shown in the figure.

As shown in the figure, urbanization rate is closely linked to income level and development status of a country. High income Western countries typically have urbanization rate above 85%. The rate for the Netherlands is 91% in 2018.

Figure 2 compares the urbanization rate between China and the Netherlands in the last 40 years. Urbanization in the Netherlands grow steadily from 60% in the 1970s, whereas China grew from a primarily rural economy to the world economic superpower of today.

70 – 100 % 50 - 70 % 25 - 50 % less than 25 % no data Source: GIS Mapping by author, based on World Bank Data

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Figure 1 World map of urbanization rate of different countries

Rapid urbanization in China 1978 - 2018 1978 marks the beginning of the market economy reform of China. In 1979, the urbanization rate of China was less than 20% and increased to 36% by 2000. During this period, the number of cities increased by 447 to a total of 663.

Figure 2 Comparison of urbanization between the Netherlands and China

Between 2000 till today was the period of mega city development. Before 1987, there was no commercial housing and real estate market in China since housing was provided by the state. After 2000, the commercial real estate market exploded in parallel with the massive migration from rural areas the coastal big cities. The urbanization rate of China grew at about 1% per year with rapid increase in population in mega cities like Beijing and Shanghai.

Figure 3 World Urbanization over the past 500 years

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Understand the Differences between the Netherlands and China There is large cultural differences between the Netherlands and China. These differences can be summarized using Hofstede’s model of five aspects of culture – power distance, individuality vs. collectivism, masculinity vs. femininity, uncertainty avoidance and long-term vs. shortterm orientation.

The cultural, political structure and development differences result in the different characteristics of green/sustainable/eco city developments between the Netherlands and China.

Netherlands

Figure 4 Cultural differences between the Netherlands and China

Source: Hofstede Insights

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China

Figure 5 Different characteristics of green city developments

THE NETHERLANDS

Netherlands

China

CHINA

Planning and policy making processes in the Netherlands will need to seek collaboration with a broad array of stakeholders (including NGOs and citizens)

the process is mostly top down with active participation mainly of consultants and powerful (government and business) interests;

The Netherlands tends to have broad, vague measures of progress

China will use narrower and quantitative assessment criteria;

As a developed and well urbanized nation, the Netherlands can only aim for incremental technological and land use changes

China creates megaprojects and large transformations of space;

The Dutch regulatory bodies aims to create incentives for voluntary behavioral change through communication and mobilization strategies

China is more forceful, utilizing bans and penalties;

The governments in the Netherlands devotes much of its resources to welfare provisions (education, employment, aid, recreation, etc.)

Chinese governments take a strong leading role in prestigious physical projects and business interests.

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Interactive workshops The study lasted from May till October 2019. During the course of the study, several workshops were held in the Netherlands and in China which include: 13 June 2019 at Greentech, 7 July 2019 in Shenzhen, and 13 September during the China Business Week. At each workshop, about 50-100 participants representing governmental agencies, education institutes, design & architectural offices, seed companies, technology companies and consultancy services. At these workshops, the author presented the preliminary findings, held interactive surveys, and received feedback and follow-ups from the audience.

The interactive surveys show that Dutch people and Chinese people have very different mental maps regarding what is ‘rural’, what is ‘urban’, what is ‘green’, what is ‘megacities’, and what ‘Green Cities’ means in terms of the challenges and hence opportunities for the Dutch businesses. For example, what one person might describe as a small ‘city’ might be a ‘town’ or ‘village’ for someone else; one person’s ‘megacity’ might be a cluster of cities from a different perspective. While the official statistics say that the urbanization rate of the Netherlands is over 90%, most Dutch people are not aware of this and rather thinks that the Netherlands is mostly ‘rural’.

The complete survey results from both workshops can be found in the Appendix.

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For example, most people agree conceptually that ‘green’ is broader than ‘greening’, and is closely related to other concepts like ‘sustainability’, ‘eco’, ‘circular’ and so on. But when asked to evaluate pictures of real cities in China, a general rule is that cities with more trees and greening are perceived as more ‘green’; while in reality these cities are ‘sustainable’ or ‘eco-cities’ according to different standards in China. Note that these surveys were not meant to a scientific way to establish the definitions of ‘green’, but they tell an important message: for China (and other developing nations), ‘green cities’ is not just an utopian ideal, but represents the challenges a rapidly developing country faces: improve livelihood of hundreds of millions, provide education and equal opportunity, invest in infrastructure while protecting nature and environment, reduce air and water pollution, food safety, and so on.

Above: Interactive workshop during Greentech in June 2019

Above two: Interactive workshop during Chinese Business Week in September 2019

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SOME EXAMPLES OF GREEN CITY DEVELOPMENTS

Forest City Concepts The image below is an conceptual design for a ‘forest city’ in Guizhou city which is a mountainous touristic area in South China. The concept is developed by Italian architect Stefano Boeri. A main driver for such city forest projects is the worsening air pollution in big cities. Tourist attraction and branding are other main drivers. International big name architects and landscape designers play a big role in championing such projects.

It is clear that that a green image is appealing to public in general even though trees is only a part of what makes a city ‘green’.

Note that these surveys were meant to reveal perceptions and to engage the public. The pictures shown were selected from internet sources and do not convey the complete picture of city developments.

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Shenzhen – the most sustainable Chinese city Shenzhen is a mega city of about 17 million residents. It was the first Chinese city to pilot market economy reform in 1978. In the past, Shenzhen was known for heavy air pollution due to factories and industries. However, in recent years, Shenzhen managed to turn itself around.

Global consultancy McKinsey & Company in 2016 named Shenzhen the most sustainable city in all of China. Through improvement of public transit, public investment in electric bus fleets, and city greening, the city reduced its air pollution levels by around 50 percent in less than a decade.

The results from the survey shows though that for many Dutch public, the images of busy mega cities do not fit with the mental perception of ‘green cities’.

Wuxi water town eco-city Wuxi is a medium size city located in Yangtze River Delta with rich water resources. In Green City developments, the ‘blue’ infrastructure, or the water networks, forms an integral part of the green infrastructure. Also, to drive the construction of energy-efficient buildings, Wuxi issued an innovative investment guidance policy in February 2016: incentives for buildings that meet criteria under two green building certification programs, LEED and China’s national three-star rating system.

Buildings that achieve the highest green building ratings in either certification program receive 500,000 yuan ($73,620) from the district government; buildings with the next-highest level of certification are eligible for a 200,000-yuan ($29,050) incentive. Similar incentives are in place for the use of heat pump technology, solar photovoltaic systems, and other energy efficiency and renewable energy technologies.

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‘HOW DO YOU FEEL PERSONALLY ABOUT THE GLOBAL CHALLENGE OF FEEDING AND GREENING MEGACITIES’?

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Rural urban divide in China In the Netherlands, when talked about ‘rural’ vs. ‘urban’, people in general associate ‘rural’ with more green spaces whereas ‘urban’ with high rise buildings. Many people enjoy living in ‘rural’ areas. However, given that the Netherlands is almost 100% urbanized, there is really no rural-urban dichotomy as in China. In China, the difference between rural and urban residents include huge differences in income, social status, education level, access to opportunities and so on.

Urbanization not a main issue for the Netherlands

Someone else’s mega-cities?

During all interviews and surveys, it strikes the author that most Dutch people do not know or think about ‘urbanization’ any more. When asked, many people intuitively think that the urbanization rate of the Netherlands is even less than 50%. This is understandable since urbanization and its challenges is no longer a pressing societal issue. As a developed and well urbanized nation, the Netherlands can only aim for incremental technological and land use changes. However, this also means there is a fundamental lack of understanding of why the topic of urbanization is important for China or other parts of the world.

When posed with the question ‘how do you feel personally about the global challenge of feeding and greening megacities’, the majority of the Dutch respondents do not relate at personal level or even only see the topic as ‘just business’. The attitude and perception revealed by the surveys point to an important question: while profiling with the ‘Holland Branding’ of ‘feeding and greening megacities’, how convincing is this to the international audience if the Dutch sectors only see this as ‘just business’? In thinking the Netherlands as mostly ‘rural’ and not as part of the world mega cities, do the businesses fundamentally understand what’s driving the policy makers, investors and consumers in these megacities? Cultural understanding and genuine desire to work on solutions together is the foundation for long term win-win cooperation!

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2 GREEN BUILDINGS

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GREEN BUILDINGS SECTOR OVERVIEW

Challenges of Energy Efficiency China is undergoing the largest scale urbanization in history and at an unprecedented pace. Before 1987, there was no commercial housing and real estate market in China since housing was provided by the state. After 2000, the commercial real estate market exploded in parallel with the massive migration from rural areas the coastal big cities. Between 1991 and 2012, China’s urban population increased from 26.4% to 52.6%. Urban built areas have expanded from 12,856 to 45,566 square kilometers over the same period, an increase of 3.5 times in about two decades. Enormous new buildings in cities have been constructed to accommodate the increased population, adding about 1.7 billion square meters of new floor space annually. In the next wave of massive urbanization which will see China’s urbanization rate increase from 56% to more than 70%, the building sector’s energy use can increase by as much as 40 percent in the next 15 years.

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The Green Buildings movement started around the year 2000, which is the beginning of the first wave of rapid urbanization in China. The primary driver for ‘Green Buildings’ was energy efficiency, especially for the new commercial buildings in big cities. LEED, the marketdriven, voluntary green building certification originated from the US, played a significant role in leapfrogging the building standards in China during this period. Chinese central government developed China’s own Green Building Evaluation Label program in 2005, 4 years after LEED entered the Chinese market. However, LEED continued to be popular in the Chinese market today, especially for iconic projects in major cities. legacy to safeguard, and can strive for another one hundred years to come. This is why the immediate profit is not the ultimate factor driving business decisions and why companies are willing to invest to continuous innovate and improve’.

Green Building Certification Programs The Chinese government now requires that 50 percent of new urban buildings be certified sustainable. China’s State Council Green Building Action Plan mandates that public buildings like schools and hospitals meet sustainable building standards of the country’s three-star rating system, the Green Building Evaluation Label. This system takes six categories into consideration including land, energy, water, resource efficiency, indoor environment quality, and operational management. The US’s Leadership in Energy and Environmental Design (LEED) system also has a strong presence in China. In 2015, LEED-certified Grade A office buildings in 10 of China’s major cities were 28 percent of the total market.

When Chinese companies visited Westland, they often amazed at the dedication of Westland companies to perfect the finest details: product innovation to improve water efficiency from 90% to 95%, growers continue to learn the needs of their plants and try to improve performance every week. One Chinese entrepreneur finds the key, ‘ the company is passed down from grandfather, to father, to son, and to son’s son. The company has a fifty or one hundred years of legacy to safeguard, and can strive for another one hundred Figure 6 2018 to 2022 China Green Building Construction Anticipated Amount

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Photo: Author (second left) brought LEED to China in 2001 and was co-founder of the first Green Development Forum held in Shenzhen in 2004 together with international and Chinese industry leaders and governments.

80 60 40 20 0

18.6

2018

26.2

35.8

2019

2020

48.5

2021

65

2022 33

GREEN BUILDINGS AS NATIONAL AGENDA IN CHINA

1991

clearly requires building design to take measures to reduce energy consumption.

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LEED entered Chinese market in 2001

2013

2004 2005

1986

Interim Regulations on Energy Conservation Management (No. 4)

Figure 7 Timeline of green building development as national agenda in China

Ten-year plan for national economic and social development Outline of the eighth five-year plan

The former Science and Technology Department of the Ministry of Construction

the foundation of the concept of “four savings and one environmental protection” in China.

first mentioned “strengthening the work of green building science and technology”

2015

Green Building Action Plan (No.1) issued by the State Office, officially put green building development on national agenda

The last year of the “Twelfth Five-Year Plan” the development of green buildings has reached or even exceeded the expected goals, and achieved major growth.

FINANCIAL INCENTIVES TIED TO CERTIFICATION LABELLING Fifteen provinces and municipalities, such as Beijing, Shanghai and Jiangsu Province, have formulated their own implementation plans for green building action, put forward the overall development goals of green building, and defined the specific requirements for the area of new green building and the proportion of green building in new buildings.

Green Building Incentive Policy Financial Subsidy Beijing, Shanghai, Chongqing, Jiangsu, Shandong, Shaanxi and Zhejiang provinces have formulated local financial incentive policies.

(1) Green Star design certification and operation certification are rewarded separately.

Beijing and Shenzhen require that from June and May 2013, all new construction projects basically meet the onestar standard of green buildings and promote the largescale development of green buildings; Jiangsu Province proposed that in 2015, new urban buildings should be designed and constructed according to the green building standard of one star and above;

Jiangsu Province awards one-star green building design certification projects according to the standard of 15 yuan per square meter, and increases 10 yuan per square meter on the basis of the design certification award standard for projects that have obtained green building operation certification;

Chongqing Municipality requires that public buildings in the main urban areas take the lead in implementing the one-star green building standard from 2013, and that new residential buildings in the main urban areas and urban public buildings in districts and counties implement the one-star green building standard from 2015; more provinces and municipalities have put forward different mandatory requirements for government-invested buildings, large-scale public buildings, public welfare buildings, affordable housing and large residential districts.

Shandong Province for one, two, three-star green building certification award standards are 15, 30, 50 yuan/ square meter, which stipulates that after the design certification , can get the corresponding star 30% bonus, after completion, can get another 30% bonus, after the evaluation certification , get the remaining 40% bonus; Chongqing gives 25 yuan per square meter and 40 yuan per square meter for gold and platinum grade green building certification projects according to the building area, and 10 yuan per square meter and 15 yuan per square meter for projects that have only been completed.

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(2) Subsidy for operational certification Beijing subsidizes 22.5 yuan and 40 yuan per square meter of financial incentives to two and three-star green construction operation projects, respectively; For projects that meet the requirements of green building demonstration, Shanghai will subsidize 50 yuan per square meter for two-star green building operation logo projects and 100 yuan per square meter for three-star green building operation certification projects. (Hujian Building Materials Federation [2016] 432)

INTERNATIONAL CERTIFICATIONS 英国

BREEAM

(3) Subsidy for construction companies and buyers For commercial residential projects in Shaanxi Province, 30% of the reward funds are paid to the construction companies or investors, 70% are paid to the buyers, and other types of construction reward funds are paid to the construction companies or investors.

In Xiamen City, 20% of the deed tax is returned to the owners who purchase two-star green building housing, and 40% of the deed tax is returned to the owners who purchase three-star green building commodity housing, and the principle of first deliver and then rewarding is implemented for the deed tax reward. The construction companies for developing and constructing green buildings are: 30 yuan per square meter for one-star green building (residential), 45 yuan per square meter for two-star green building (residential), and 80 yuan per square meter for three-star green building (residential). In addition, 20 yuan is used for star-green building except residential, financial investment and financing projects.

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德国

DGNB

日本

CASBEE 新加坡

BCA GREEN MARK

美国

LEED 认证

澳大利亚

NABERS

37

LESSON LEARNED FROM BRINGING LEED TO CHINA - SETTING INDUSTRY STANDARDS The LEED system is developed by the US Green Building Council and is a market-driven movement. It started with a small group of progressive industry players to develop a voluntary, third party, market oriented certification system that goes beyond the requirements of the building codes.

While there are many different international certifications, LEED is immensely successful as shown by its explosive growth since the year 2000 worldwide. China is the biggest LEED market outside the US. By entering China a few years before the Chinese national government developed China’s own system, LEED became a prestigious industry standard which means continuous commercial market opportunities for ‘LEED Certified’ technology companies, building operators, designers and so on who entered the market early on and established their positions.

In comparison, the Netherlands/Europe had started with sustainable building development since the 80s. However, because of the strong government regulations in enforcing a high building performance baseline, there wasn’t a similar market-led drive or ‘movement’ as in the US. One can say that, while being more advanced in sustainable building technology, know-how, and regulations, the US successfully ‘reinvented the wheel’ and Europe/the Netherlands had missed the boat in shaping the green development trend of China during the first wave of rapid urbanization.

Figure 8 Total LEED certified buildings worldwide and in China Total LEED Certified Buildings Worldwide (till 2018)

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Total LEED Certified Buildings in China (till 2018)

Registered projects

110,758

Registered Projects

3501

Certified projects

64,864

Certified projects

1272

Figure 9 LEED certifications for different building types

39

DOMINANT CHINESE STATE PLAYERS BECOME VERTICALLY INTEGRATED After 15 years of development, the Green Building market is entering a mature and saturation stage.

The main players are the state or regional large institutes and developers. Especially for public building projects which are required to be certified by the national building labelling program, the state owned or large players have a dominant position in terms of access to funds and decision-makers. As the market consolidates, the major players become increasingly vertically integrated to cover the entire building value chain of planning, design, building material and technology, investment and operation.

In another words, the “Green Buildings’ market has become a ‘Red Ocean’ market for new comers due to the dominance of existing international (US) players and large Chinese state players.

40

Figure 10 Major Chinese players in the Green Buildings market

NAME

STOCK CODE

RELATED BUSINESS

300675

It provides comprehensive solutions covering the whole process of research, planning, design, consultation, testing, project management and operation for green buildings and eco-city construction, and gradually develops into one of the well-known and leading providers of comprehensive technical services for green building and eco-city in China.

State Inspection Group

603060

The company mainly engaged in building materials, building decoration materials, construction quality testing; and to provide customers with product quality, environmental protection, safety, energy certification, management system certification services; in addition to testing certification services, the company in the industry to use its brand, technology and channel advantages, testing equipment development, sales and production safety technical services and other business; and provide business training, standard samples, standard materials research and development, sales, professional skills appraisal and other extension services

China HengDa design

603017

Hengda is a leading real estate company and it has established its own Green Building Research Center

Huajian Group

600629

The subsidiary company has set up a green building research center.

TUS Group Design

300500

Established the existing building renovation research center and Jiangsu Province green engineering technology research center, in the building energy saving, low-carbon green building, especially the ecological renovation of existing buildings, has accumulated rich experience.

Dashi Zhineng

002421

It has a company specializing in green building consultation and certification services.

Shenzhen Academy of Building Sciences

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3 SPONGE CITIES

42

43

SPONGE CITIES AND WATER MANAGEMENT Challenges of Water Resources and Water Management China is facing severe problems with the quality and quantity of its water resources due to the rapid urbanization and industrialization process going on since 1979. China does have plenty of water, but not in the right places and the level of pollution is extremely high.

Nationally, it is high on the agenda for the government to invest heavily in flood prevention, regulation of small and midsize rivers, strengthening risky reservoirs, safeguarding the supply of drinking water and building irrigation and hydraulic structures.

The directive of implementing ‘Sponge Cities’ was first issued in 2014 during a working speech by Chinese President Xi Jinping. The cause of the high-level attention was major damage and death after flash storm hit cities like Beijing, which is located in a dry climate and normally suffers from severe water shortage. Cities didn’t factor in heavy rains as they rapidly expanded and added roadways.

That left sewer systems inadequate to deal with sudden storms or to capture rainfall for times of need. Therefore, the goal of ‘Sponge Cities’ is to create green infrastructure to manage floods, pollution, and water waste from storms and seasonal rains. Since then, ‘Sponge City’ had become a top national priority, and pilot city projects were supported with national and regional governmental funding.

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Water Management Expertise of The Netherlands It is needless to say that the Netherlands has a wide range of expertise in regard to water issues since half of the nation lies below sea level. In short, every square centimeter in the Netherlands has been designed by civil engineers, architects, urban designers and landscape architects. This has resulted in today’s largely urbanized landscape. A prime example is the polder landscape with its characteristic long lines, vast planes and largely empty horizon. The Netherlands has more than 3,000 polders and these have served as a template for spatial developments for centuries. Since the fourteenth century, the reclaimed land has been a haven for urban design and landscape architecture experiments, which consistently pursued an optimal coherence between the water system, the division of land, the system of roads and the network of villages.

Figure 11 Room for the River program of the Netherlands

The goal of the Dutch Room for the River Program (2007 - 2019) is to give the river more room to be able to manage higher water levels due to climate change in the future. At more than 30 locations, measures are taken to give the river space to flood safely. Moreover, the measures are designed in such a way that they improve the quality of the immediate surroundings.

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SPONGE CITIES TIMELINE OF DEVELOPMENTS

Figure 12 Sponge Cities timeline of developments

20 January 2015

22 October 2014

Technical guidelines for Sponge City Construction / Construction of Low Impact Development Rainwater System (trial implementation) Ministry of Housing and Urban-Rural Development

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2 April 2015

Notice on organizing the Declaration of Sponge City Construction Pilot Cities on 2015 Offices of Ministries of: FInance, Housing and Urban-Rural Development, Water Resources

List of Sponge City Construction Pilot Cities in 2015 Economic Construction Department of the Ministry of Finance, Urban Construction Department of the Ministry of Housing and Urban-Rural Construction, Planning and Planning Department of the Ministry of Water Resources

16 October 2015

9 April 2015

16 October 2015

10 July 2015

Opinions on Promoting Cooperation between Government and Social Capital in the Field of Water Pollution Prevention and Control Ministry of Finance, Ministry of Environmental Protection

Measures for Performance Evaluation and Assessment of Sponge City Construction Office of the Ministry of Housing and UrbanRural Development

10 December 2015

Guiding Opinions on Promoting Sponge City Construction General Office of the State Council

Notice on Regular Reporting of the Progress of the Pilot Work of Central Financial Support for Sponge City Construction Ministry of Finance, Ministry of Housing and Urban-Rural Construction, Ministry of Water Resources

Notice on Promoting Development Finance to Support Sponge City Construction Ministry of Housing and Urban-Rural Development, China Development Bank Corporation

47

SPONGE CITIES PILOT CITIES

Figure 13 National pilot cities of Sponge Cities program

In September 2015, China’s Ministry of Finance, Ministry of Housing and UrbanRural Development, and the Ministry of Water Resources selected 16 pilot cities: Qian’an, Baicheng, Zhenjiang, Jiaxing, Chizhou, Xiamen, Pingxiang, Jinan, Hebi, Wuhan, Changde, Nanning, Chongqing, Suining, Gui’an New Area and Xixian New Area.

In 2016, 14 more pilot projects were selected which include Beijing, Tianjin, Dalian, Shanghai, Ningbo, Fuzhou, Qingdao, Zhuhai, Shenzhen.

Each city will receive a budget for three years to implement projects that can better absorb, store, drain and purify water. The cumulative investment in these sponge city projects reach 1.9 trillion yuan ($300 billion USD) by the end of 2020.

Shenzhen is implementing the sponge city program in 24 areas, covering 256 km2 in total.

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白城 迁安

北京 西宁 固原

庆阳

天津

鹤壁

玉溪

重庆

贵安新区

青岛

济南

西咸新区 遂宁

大连

池州

镇江

武汉 嘉兴 萍乡 常德 厦门

南宁

福州

深圳 珠海

三亚

上海 宁波

49

SPONGE CITY CASE STUDY GUANGMING NEW TOWN, SHENZHEN Shenzhen is one of the pilot sponge cities. This case study looks at the implementation of the sponge city program in Guangming New Town. Note that every pilot city has different focus and approach.

Between 2014 to 2017, Guangming New Town commissioned an interdisciplinary Dutch consultant team to regularly advise the Guangming New Town Urban Planning Bureau (through several workshops a year) on strategic green city projects.

Its methodology consists of developing strategic frameworks for urban planning development projects, and strengthening the capacity of the municipality by providing guidelines for steering, monitoring and reviewing projects. It is a modest, but long-term attempt to really engage in the improvement of urban and social conditions by intervening in the steering mechanisms of top-down urban planning processes.

The Sponge City project package in Guangming New Town consisted of a list of 52 projects of mainly roads and drainage infrastructure. The other projects include green parks, wetlands, rivers, industrial parks, buildings, business parks and residential housing. The goal of these projects is to meet the requirements of having at least 70% of infiltration, retention and storage of water in the overall area in the next three years instead of the current 20%. The Dutch expert team was asked to evaluate the Sponge City masterplan proposed by the Shenzhen Water Resources Design Institute and suggest areas of improvement.

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Photo: author (front right 3rd) together with other members of the interdisciplinary Dutch expert team including Markus Appenzeller (MLA+), Jasper Hugtenburg (H+N+S Landscape), Christiaan Pfeiffer (City of Almere), Wouter Spijkerman (SITE) and Linda Vlassenrood (INTI) and government decisionmakers and Chinese experts during the Sponge City strategic workshop (2016).

Figure 14 Principle of Sponge City as a Balanced Urban System

The image shows the vision of the Dutch team to implement the Sponge City as a Balanced Urban System. Every project should contribute to that system, not only in managing risks like flooding and pollution, but also by adding urban quality. The projects are re-classified into nine categories (infrastructure, regeneration, buildings, business parks + residential areas, industrial parks, roads, green parks, wetlands, rivers) based on how each category can contribute to the retention, storage and drainage of water within the water system as a whole.

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EVALUATIONS OF THE GUANGMING NEW TOWN SPONGE CITY PLAN

Figure 15 Goal of Sponge City projects to reduce rainwater runoff

52

Disconnect between sponge principles and concrete projects While the sponge principle is to create an integral green and environmental infrastructure, the concrete projects are mostly traditional drainage and roads. Specifically: • Discharge is dominant over retention (sponge) strategies • The performance of the total system is not included in the targets • Quality of the environment is not included in the targets • 30-30-10 targets (infiltration, retention, storage) are not translated into hard targets and systems • Reaching 30-30-10 on smaller development plots is difficult

Figure 16 The Sponge City project package of Guangming 1. No. 42 Road Municipal Engineering Project 2. No. 53 Road Municipal Engineering Project 3. No. 51 Road Municipal Engineering Project 4. No. 13 Road Municipal Engineering Project 5. No. 23 Road Municipal Engineering Project 6. No. 24 Road Municipal Engineering Project 7. No. 57 Road Municipal Engineering Project 8. No. 56 Road Municipal Engineering Project 9. No. 64 Road Municipal Engineering Project 10. No. 63 Road Municipal Engineering Project 11. Municipal Road Project of North of Tourists Station Multi-Service Area 12. No. 35 Road Municipal Engineering Project 13. No. 50 and No. 54 Road Municipal Engineering Project in Plan 14. Tongguan Road Municipal Engineering Project of High-tech Park in Guangming New Town 15. Lanyuan Road, Sanjing Road and Fengmei Road of Gateway Area of Guangming New Town High-tech Park 16. Road of the North Area of Administrative region (Demonstration Project of the Green Space LowImpact Development) 17. Demonstration Project of the Guangming New Town Park ‘s Low-Impact Development with Mutipurpose Use of Rainwater 18. Shenzhen China Star Optoelectronics Technology Co., Ltd (CSOT) Man-made Wetland Project for Industrial Effluents Treatment 19. Demonstration Project of The Green Space Rainwater diversion system 20. Demonstration Project of Water Wetland Flood Detention Zone In Gateway Area 22. Green Ring Eco Park Project in Phoenix City 23. New Photoelectric Components Production Base Project of O-film Company 24. Baolilai Holiday Hotel 25. City Plaza 26. Huaqiang Culture Creative Industry Park 27. China Merchants Smart City

Figure 17 Performance targets for different Sponge City sub-systems

MASTER PLAN CATEGORY

SYSTEM PERFORMANCE TARGETS

Sponge City Parks and Green Area

Runoff rate > 85% suspended solids reduce by at least 92%

Sponge City Buildings and Blocks residential industrial redevelopment

Runoff rate > 70% suspended solids reduce by at least 45%

Sponge Roads and Public Plaza

Runoff rate > 60% suspended solids reduce by at least 40%

Waterways and Ecology

Increase buffer capacity clean(er) water

Flooding and Drainage

Rainwater pipeline 1 in 3 years lodging 1 in 50 years flood safety 1 in 50 years

Water Pollution/pipeline

Separation of rain water with black water, 80% by 2017, 100% by 2020

Grey Water

Grey water reuse 30%, replace drinking water 15%

Drinking Water Safety

Improve pipeline leakage 100% quantity safety 100% quality safety

Monitoring

Operation and monitoring

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SPONGE CITY AS A SYSTEM

The main intervention proposed by the Dutch team is to focus on the backbone of the sponge system, namely to connect the regional wetlands and river systems as an integral part of the urban system. In the current masterplan, wetlands were categorized under public parks while the two have fundamentally different ecosystem functions. Also special attention was called for managing the risks of high polluting industries to make sure the polluting sources are NOT connected with the regional sponge system.

Figure 18 Design principles for ecological wetland proposed by Dutch advisory team 54

Figure 19 Design principle Sponge City as an integral regional system

RETAIN WETLANDS

STORE

DRAIN

RIVERS 55

LESSONS LEARNED FROM THE GUANGMING SPONGE CITY PROJECTS Unlike the green building market, which has business cases for commercial building developers and users, most funding for the sponge cities projects comes from central and local government budgets. As a result, mainly the state-owned companies can secure access to subsidies or budget from environmentalprotection treatment fees. The business sector, therefore, has either no interest or no access to the bulk of the budgets. While the Netherlands is known for its water management expertise, there is limited scope for sector involvement other than consultancy, training, and some technical services, also due to the limitation in design and construction licenses.

However, it should be noted that ‘Sponge City’ with its specific context for China is just a sub-topic within the broader topic of water management. The wider market opportunities in not covered in the scope of this study.

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57

4 METROPOLITAN FARMING

58

Metropolitan Agriculture Metropolitan agriculture can be defined as the system innovation that answers to the challenges of the fast growing ‘megacities’ of the world. The whole food chain is embedded in the urban structure and connected via an Intelligent Agrologistic Network both at regional and global scale.

The development of agriculture (Smeets, 2009) in Northwestern Europe shows that as a response to the changes in food demand, a transition to highly productive, land independent agri-culture is taking place, large parts of which are embedded in the fabric of the metropole itself. Greenhouses, intensive livestock and dairy farms are the modern expressions of metropolitan ag-riculture and they are inside the metropoles or in the green space surrounding it.

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What cannot be produced in these metropoles themselves (fodder, concentrates, staple foods), is being supplemented by imports, while products particularly suited to the area, and hence abundantly available, are exported in return.

In this way megacities establish another global network of agro-food chains that are integrated in the urban structure, from primary production of an enormous variety of food stuffs, via all kinds of processing activities, to trade and distribution. All along this chain added value is created, the more so when the highest standards of quality and market responsiveness are attained in each link.

Rural Production Export

Metropolitan Clusters

Distribution Centers

Figure 20 Conceptual definition of Metropolitan Agriculture 60

Metropolitan Regions

The consolidation centre Freshpark Venlo combines a large flower auction with an auction of vegetables. The total area of Freshpark Venlo is 130 ha. Its locaton is very strategically located between the crossing of large motorways, an inland harbour container terminal and a large freight railway station.

“Westland – The Capital of Dutch Horticulture” This Tiny Country Feeds the World, National Geographic, September 2017

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SUSTAINABLE URBAN FOOD SYSTEMS AND NUTRITION SECURITY Global food footprint In the last century, thanks to technological advances and improved agricultural yields, the world has (for the most part) enough food supply and prices have been stable.

Today‘s world agriculture is dependent from a global food transportation network and as a result, the global food sector is responsible for a third of the global energy consumption.

Study (WWF 2012) showed that in western countries the per capita land footprint is about 2300 m2, which is the amount of the cultivation area needed to produce enough fruit, vegetable, wheat, oil seeds, semi luxury food, milk, meat and fish, but also feed for animal husbandry. In China the average is around 1700 m2 due to a traditionally plant based diet, but it‘s steadily increasing as income grows.

Improving the sustainability of our global food systems requires improving production of commodities such as corn rice, reducing consumption of livestock based foods, and reduce food wastage. Considering that wastage of fresh fruit and vegetables as well as fruit and vegetable products are considerably higher than other food types (WWF 2012), the implementation of shorter supply chains and sustainable greenhouse cultivation for fruit and 62

Figure 21 Per capita land footprint for typical western diet.

Data source: WWF 2012, image @Podmirseg

Figure 22 Comparison of dietary consumption patterns between China and the West

vegetables in the urban and peri-urban environment creates significant societal and environmental values in terms of reduced transport and therefore emissions, maximization of water and energy efficiency, reduction of food wastes and pesticide usage, as well as reconnecting food and people spatially and temporally and to promote awareness of healthy diet.

Horticulture and nutrition security China

Western Countries

Greenhouse horticulture is also very important for ‘nutrition security’, i.e. ensuring sufficient vitamins and minerals.

Studies (Krishna Bahadur et al., 2018 and FAO, 2016) have shown that the production of fruit and vegetables in the world would have to triple to provide a healthy diet for everyone. Since protected horticulture, or greenhouse production has significant benefits over open field production in terms of quality, variety, resource efficiency, reliability, food safety, price, and so on, it is foreseeable that in the near future nearly all vegetables that are consumed fresh will be grown ‘under cover’.

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CASE STUDY CAOFEIDIAN: BRINGING DUTCH KNOWLEDGE TO CHINA Jump Innovation in China

Vision

Greenport Caofeidian Metropolitan Agro Industrial Park Development Strategy & Conceptual Master Plan was the first strategic planning study carried out by a Dutch expert team on the developments of large scale agro parks in China which was fully funded by Chinese local government and private investors.

• To build a world class showcase in sustainable development • To become a driver for economic development through innovative food production • To maximize synergies between rural and urban development • To lead the way for China’s long term food security

The study was a joint effort by Royal HaskoningDHV (then DHV), a large Dutch design, planning and engineering group, with Wageningen University and Research Center.

The two Dutch leading partners brought together a team of specialists with international expertise and skills in the areas of research and design on agro production and processing, logistics and trade, urban development and infrastructure, knowledge management, communication and marketing to develop the conceptual master plan of Greenport Caofeidian Agro Park.

The project concept integrated various functions ranging from primary production, processing, trade, demonstration, R&D, to capacity building and social functions. Products are delivered throughout the whole year as efficient as possible, independent of season and land. The concept of sustainable development or ‘cradle-to-cradle’ is at the core of the development model.

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Total site area: 1000ha Estimated total investment: 400-800 million euros IRR of the project was calculated to be 24%

Image: Artist Impression of Greenport Caofeidian Metropolitan Agro Industrial Park Development Strategy & Conceptual Master Plan (2010)

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BUSINESS CASES OF GREENPORT CAOFEIDIAN

Promising Business Returns – Example High Tech Greenhouse Tomato

Metropolitan Markets of Beijing, Tianjin, Hebei

• • • • •

A market analysis based on the market situation and consumer expenditure shows that:

Due to its geographical position Greenport Caofeidian has the potential to serve three major metropolitan cities: Beijing (20 million inhabitants), Tangshan (7 million) and Tianjin (10 million).

Regular tomato has low price level Availability may-october (2 harvests) Average consumption 18 kg/year/pp Tomato is in top 7 of regionally preferred vegetables Tomatoes are sold branded in top segment

Investment model of high quality greenhouse tomato shows good return

The spatial clustering of different agro-production chains and the spatial combination of agro-processing and non-agro functions enable many prosperous scenarios. The business model is further strengthened by the combination with the ‘Agro-Hub’ functions, which includes the housing of staff, education and R&D, park management offices, leisure and agro-tourism facilities and high-end real estate development. Greenport Caofeidian offers multiple benefits to governments, farmers and investors:

Greenhouse Area: Production Cost: Total Production:

60 Ha 6.7 RMB/Kg 42,000 tons/year 700 tons/Ha 16 RMB/Kg 1.415 Billion RMB 20.3% 5 years

Market Price: Investment: IRR: Breakeven Period :

selling price RMB/kg from AP to retailer in metropole 25.00

Carrefour: 16,76 RMB/kg) Wu mart: 15,89 RMB/kg)

20.00

Beijing

15.00

Tianjin

10.00

Tangshan cost price AP

5.00 0.00 jan

66

feb

mar

apr

may

jun

jul

aug

sep

oct

nov

dec

The Caofeidian New Area, with a total area of 1900 km2, has a strategic geographical location with the development of the natural deep sea port and port industries.

Image: author leading a multi-disciplinary international team of experts in agro park planning, energy and water management, landscape & architecture, and industry analysis from Royal HaskoningDHV and Wageningen University in Caofeidian, 2010

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WHY A GOOD PLAN CANNOT BE IMPLEMENTED? LESSONS LEARNED During the 3 month period of the conceptual design of the masterplan of Greenport Caofeidian, the project received high level attention as well as private investor interests. Large stakeholder meetings were held with all governmental department leaders and local state farm operators. The local Caofeidian Government designated the project as one of the highest priority projects and committed to invest in infrastructure and to provide favorable land and subsidy policy for first movers.

A real estate developer from Zhejiang province expressed strong interest and had reached agreement with the local government to be the primary developer. However, the project subsequently run into implementation difficulties and the plan stalled.

A honest evaluation shows that there was a mismatch between ‘demand’ and ‘supply’ as listed. On the demand side, in the 10 years since 2010, there has been much societal transformations in terms of consumer market, logistics, retain channels and so on. These will be the focus for the chapters hereafter. However, challenges remain in terms of education and management knowhow, and in terms of the need to develop a systematic understanding the necessary conditions to bring about ‘jump innovation’, and to bridge Dutch knowledge with the Chinese market.

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Demand side - limitations in the external environment of China

Supply Side - limitations from the perspective of Dutch knowledge and sectors

Lack of supply chain channel to Beijing – the main consumption center

Lack of systematic approach on value chain systems in different international context

Lack of management knowhow and skilled labor

Limitation of Intl Knowledge - gap between academic and applied knowledge

Lack of cold chain & logistics infrastructure

Clusters ≠ Industrial Parks - Why do clusters only develop in a few regions in the world?

Lack of regional DNA/entrepreneurship in high tech agriculture

Leap innovation in agriculture needs a system approach - Policy, technology, education, business models, entrepreneurship 69

CHINA NATIONAL POLICY: FROM REGION-BASED TO HUB & CLUSTER-BASED STRATEGY

Figure 23 Region based strategy of China (2005 – 2020)

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REGION-BASED STRATEGY

Region-based strategy divides the nation in large geographical groupings and focus on provincial level as unit of analysis.

The national 2006 five-year plan sets out a regional development strategy. The northeast region is developed under the Northeast Area Revitalization Plan. The Eastern Coastal region is the most developed in China and also the main scene for China’s economic and political reform, especially the Guangdong province. Middle, or Central China follows the Rise of Central China Plan. The remaining area is the largest, general western area of China under the develop- the-west strategy implemented since

CLUSTER-BASED STRATEGY

Cluster-based strategy focus on the hub and spoke regional economic structure and city level as unit of analysis Continued urbanization of China will follow the concentrated growth patterns with the rise of a number of ‘super cities’ and metropolitan clusters following the ‘hub and spoke’ regional structure. The ‘super-cities’ are the tier 1 and a few tier 2A cities, with population of 20 million or more.

Under the ‘hub and spoke’ regional structure, clusters of medium- sized and small cities develop around larger ones. In the coming decade, this will have significant implications on infrastructure investment, resource allocation and regional economic division of labor.

Figure 24 Metropolitan cluster based strategy of China (2020 onwards)

71

DEVELOPMENT OF METROPOLITAN CLUSTERS AND NETWORKS (2005-2020)

Figure 25 The National Urban System Planning (2005-2020)

72

The National Urban System Planning (2005 – 2020) depicts the three main metropolitan clusters – Beijing/Tianjin/Hebei Cluster, Yangtze River Cluster and the Pearl River Delta Cluster; and other 8-12 regional/gateway clusters. The corridors connecting these clusters form the backbone of urbanization/economic growth.

Since1980s, transport networks of China have taken a great change and made a very significant time-space convergence between cities or regions.

For example, it only takes less than 30 years in China that the expressway mileage from 0km in 1988 has grown up to 125,400km in 2015 and takes the top position all over the world.

And also, just within 10 years, China’s high speed railway mileage grows from 0 km in 2007 up to 19000km in 2015, also ranks first in the world and takes 60 percentage of the world’s high speed railway mileage.

Figure 26 The planning of national expressway layout of China

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DEVELOPMENT OVERVIEW OF PROVINCES

© Springtide

Income Figure 27 Development overview by provinces – Income

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Wealth is concentrated along the eastern coastal region The super cities – Beijing, Shanghai, Shenzhen, Guangzhou – all have per capita GDP similar to western nations.

However, regional development is more even in the Yangtze river delta around Shanghai and in the Pearl River Delta. Jiangsu, Zhejiang, Fujian, Guangdong all have GDP per capita more than 13,000 USD. However, regions around Beijing are economically lagging behind the capital.

© Springtide

© Springtide

Urbanization Rate

Urban Density

Urbanization rate is closely related to income levels. Richer the area, the higher the urbanization rate. However this is not always the case. For example, Inner Mongolia and Qinghai provinces both have high urbanization rates which are influenced by the terrain and climate conditions.

Urban density gives a more accurate picture of income level and urban developments. The Pearl River Delta is the most densely populated region in China.

Figure 28 Development overview by provinces – Urbanization Rate

Figure 29 Development overview by provinces – Urbanization Density

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STRATEGIC FOCUS CHINA: SUPER CITY CLUSTERS (‘EXPORT’ MARKETS), HUBS AND LOCAL CLUSTERS

Super-cities and their metropole clusters are the main centers driving consumer demand for high quality food. Namely, these are the Beijing cluster, Shanghai cluster and the Guangdong cluster, each with more than 100 million population.

These markets represent the ‘export’ market for any production areas in China, similar as the British market and the German market to Dutch producers. Consumers are willing to pay very high prices for products with (a combination of) the following characteristics: from known brands, with international certifications, with ‘stories’ or ‘emotions’.

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© Springtide

Figure 30 Super cities, hub cities and local clusters

Hub Cities connects the local clusters to the national consumption centers. Cities compete for nodal position in the network. Hub cities are not only infrastructural hubs, but also hubs for knowledge, talent, education, investment for the smaller cities in the region.

Local clusters are the new economic engines to develop regional economy. Strong policy push from central government to emphasize on ‘local characteristics’ (DNA). The focus is on rural urban integration, empowering local farmers and compete to ‘export’ to super cities 77

THE SAN NONG ISSUE – AGRICULTURE, RURAL AREA AND FARMER The Chinese central government pays much attention to the development of agriculture and rural area, and enacts document with regards of issues concerning agriculture, rural area and farmer (the so-called “San Nong” issue). It has been the no.1 (first) policy document of the year concerning agriculture and rural development since 2004:

• Stimulate financial services in rural area, include township banks, loan-lending companies, microcredit loans. Guide more social funds/investment into rural financial market and ask the Agricultural Development Bank to offer mid- and long-term loan services in rural development.

• More investment will be channeled into modern agriculture and agro-business development.

• More subsidies will be allocated to improve potato, grain, highland barley and peanut production, agricultural machinery purchase (animal husbandry, forestry, anti-drought and water-saving equipment will be involved in the subsidies for the first time)

• Promote urbanization and township development. Improve welfare and living/working conditions of rural migrant workers (Nong Min Gong, some 100 million of them are currently hovering between farmers and urban citizens).

Stimulate transformation from rural area/ resident to urban/citizens. Attract rural labors.

Strive to vigorous development of modern rural consumption market as one of the country’s sustainable fast eco-nomic growth engine.

• Increase the minimum grain purchase price (government procurement, around 90RMB/50kg wheat and 2RMB/kg rice)

• Improve rural infrastructure construction.

Promote rural electricity system reform, improve reliability and power supply capacity.

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• Improve land contract/transfer and management policies. Encourage development/reform of collective property rights and agro/rural cooperative in primary production and processing etc. Set up industrial agri-culture demonstration park/zone/area/region.

• Support modern agriculture development and establishment of large scale agro-production base.

• Promote standard production of agroproductions. Speed up greenhouse horticulture and large scale animal husbandry and aquaculture development.

• Plan the agro-production wholesale markets (national level, for instance the huge ones around Beijing, Tianjin) as a whole from national level. Promote and stimulate establishment/ reform/improvement of the agro-production wholesale market and logistic network. Give special assistance to link directly the production center with large scale supermarket, campus and company etc.

• Integrate education/research resources of all levels to improve quality and capacity of rural migrant workers.

• Speed up development of traceable quality control, monitoring and testing system.

• Establish sustainable grain production base over 800 major grain production county/region.

• Improve agricultural S&T innovation and implementation/promotion/dissemination capacity, especially in the field of seeds breeding.

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OVERVIEW OF GOVERNMENT POLICIES ON AGRO PARK DEVELOPMENTS Figure 31 Overview of Chinese government policies on agro park developments

North East Region Eastern Coastal Region Central Region Western Region

Shaanxi Province will upgrade the existing provincial-level modern agricultural parks on aspects of industrial scale of production, differentiated industry focus, clustering of businesses, adoption of technology, sustainability, economic output, and multiplying effects. In 3-5 years, systematic improvements are expected and qualified parks will be upgraded to national level.

Xinjiang Uygur

Gansu

Qinghai

By 2022, Sichuan Province will build develop 1000 provincial, municipal and county-level modern agricultural industrial parks with a number of state level ones. Aims to secure national government subsidy fund of 300 million yuan, Ministry of Agriculture pilot fund of 160 million yuan. Provincial financial budget allocation of 280 million yuan.

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Xizang

Hubei province aims to develop 100 modern agricultural industrial parks including 10 each with focus on staple food, vegetable, fruit and tea respectively, 5 on traditional herbal medicine, 15 on livestock and poultry, 10 on aquatic production, 15 on processing (logistics) parks, 5 each on circular economy, leisure and innovation/ start-up respectively.

Hunan Province targets to develop 1000 modern agricultural industrial parks in the entire province Projects that qualify as provincial level demonstration parks receive 1 million yuan award from provincial finances.

Shanxi Province will develop a number of parks with integrated functions of "production + processing + technology + logistics”; 10 of which should be state level. Every county should develop 1-2 agro parks.

© Springtide

Jilin Province targets to build 100 modern agricultural industrial parks and make use of national and provincial level funds and supporting policies.

Hebei Province will upgrade the existing 36 national and provincial level modern agricultural industry parks, and adding another 36 in 2019. The total number of parks will reach 120 by 2022. The focus will be on 10 biggest ones on wheat, corn, oil, dairy, meat, fruit and vegetable, staple food each with economic value of more than 10 billion.

Heilongjiang

Nei Mongol

Jilin Liaoning

Beijing

Shanxi

Ningxia Hui

Tianjin Hebei Shandong

Shaanxi Henan Sichuan

Hubei

Jiangsu Anhui

Chingqing

Zhejiang Hunan

Jiangxi

Guizhou

Yunnan

Shanghai

Guangxi

Hainan

In August 2017, Zhejiang Province issued the Directives for the Establishment of Modern Agricultural Parks in Zhejiang Province, aiming to develop about 100 provincial level modern agricultural parks by 2022.

Shandong aims to develop 1-2 new state level agricultural high-tech industrial development zones, 10 new national agricultural science and technology parks and 20 new provincial agricultural industrial parks with focus on high tech greenhouse production, fruits, aquaculture and marine fishery.

Fujian Guangdong

Jiangxi targets to develop 200-300 modern agricultural demonstration parks in the whole province.

In March 2018, Guangdong officially launched the government drive to provide provincial finance of 7.5 billion yuan over three years to develop 150 modern agricultural industrial parks in the eastern, western and northern regions of Guangdong, basically 1 park per county. The goal is to develop a number of large agro clusters with economic output value of 100 billion yuan each.

Fujian province launched the "3211" project of modern agricultural industrial park to develop 30 tea parks, 20 vegetable and fruit parks, 10 edible fungi parks and 10 livestock and poultry parks by 2022.

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PROTECTED FARMLAND POLICY

Figure 32 Distribution of the 120 million hectares of basic farmland in China

Basic farmland or protected farmland refers to the 120 million hectares of cultivated land determined according to the demand of population and national economy for agricultural products in a certain period and the prediction of construction land, which shall not be occupied without the approval of the State Council during the period of general land use planning, and is the minimum demand for cultivated land that must be ensured to meet the demand of population and national economy for agricultural products in a certain period from a strategic perspective.

In principle, vegetable greenhouses that do not disrupt the soil conditions and do not belong to facility agriculture can be built in basic farmland, but greenhouses are classified as ‘facility agriculture’ can not be built on basic or protected farmland.

Most protected farmland are located in less developed regions such as Helongjiang, Hebei, Shandong. For the developed regions, the protected farmland policy poses conflict with urban development land.

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© Springtide

PROTECTED HORTICULTURE AREA IN CHINA According to statistics by the Chinese Ministry of Agriculture (MARA), the area of ‘covered’ horticulture production area is 3.7 million hectares, accounting for 80% of the world’s protected horticulture area. Another statistics by 2017 by the Agricultural Mechanization Association puts this estimate at 2.04 million hectares.

Different sources confirm that 99% of the current protected vegetable production are low tech greenhouses including daylight greenhouses and plastic tunnels. Statistics from MARA stated that there is 9000 hectares of glass greenhouses, though different industry sources put the number of built high tech Dutch greenhouses at about 300-400 hectares.

The data shows that, while in quantity China seems to have enough amount of vegetable production area, the problems lie in distribution and quality. 60% of the protected vegetable facilities are located in Shandong, Liaoning and Hebei; another 20% in Jiangsu and Henan.

Guangdong province, the most populous region in China, is still relying on very basic form of vegetable cultivation.

This means there is a very uneven development across the country in terms of meeting demand from the urban areas. At peak season, low price production flooded the market whereas there can be severe shortage in off season times.

Shandong Liaoning Hebei Jiangsu Henan Jiangxi Yunnan Inner Mongolia Zhejiang Ningxia Tianjin Beijing Shanghai Guangdong

VEGETABLE AREA

% Of total farmland

1,888,600 500,000 1,242,100 1,431,400 1,751,700 585,400 1,004,000 277,300 618,100 129,300 86,100 54,300 114,300 1,382,000

25% 11% 21% 31% 22% 20% 17% 4% 33% 11% 26% 49% 61% 56%

PROTECTED GLASS HORTICULTURE 1,000,000 730,000 685,333 460,000 350,340 100,000 100,000 100,000 85,000 60,000 37,000 15,700 14,000 11,200

3,350

850

DAYLIGHT 87,000 530,000 242,667

Plastic

442,667 322,000

30,000

47,000 20,000

8,120

6,800

© Springtide

Figure 33 Distribution of the 3.7 million hectares of protected horticulture in China 83

UPGRADE AND UPSCALE OF CURRENT HORTICULTURE IN CHINA

Improve productivity Current greenhouse productivity in China is low. The typical Dutch standard is about 3 times higher with significant saving in water and nutrient usage.

For 1 billion Chinese urban consumers, with 200g of high quality vegetables per person per day: 73.000.000.000 kg high value vegetables….per year 480.000 ha open field vs 160.000 ha High Tech Glass Greenhouse 11.660.000.000 m3 water vs 1.220.000.000 m3 water used….

AND over 12.000.000 truck movements for transporting produce…..over short distance 2.400.000 skilled labors (at 15 workers/ha)

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HORTICULTURE AREA NEEDED FOR HIGH QUALITY VEGETABLES

Figure 34 Calculation of Horticulture area needed for vegetable production around metropolitan regions

Total Demand in production area production area Current Protected ton at Horticulture needed low tech needed high tech 200g/person/day

Difference low tech

Difference high tech

0 0 0 0 0 0 0 0 0 0 11.200 0 0 0 0 0 0 0 14.000 15.700 37.000 60.000 85.000 100.000 100.000

-26.385 -21.597 -20.771 -20.093 -15.823 -14.983 -13.771 -13.633 -13.118 -12.451 -37.115 -10.293 -9.376 -7.562 -7.540 -3.352 -1.981 -647 1.029 4.431 29.128 57.531 60.919 84.169 86.193

-7.916 -6.479 -6.231 -6.028 -4.747 -4.495 -4.131 -4.090 -3.936 -3.735 -3.295 -3.088 -2.813 -2.268 -2.262 -1.006 -594 -194 10.109 12.319 34.639 59.259 77.776 95.251 95.858

2.913

100.000

90.288

97.087

8.940 10.137 7.722 5.410 11.185

350.340 460.000 685.333 730.000 1.000.000

320.540 426.210 659.593 711.968 962.717

341.400 449.863 677.611 724.590 988.815

Region

Total Population 2018

Urbanization Rate

Urban Population

Sichuan Hubei Anhui Hunan Fujian Guangxi Heilongjiang Shaanxi Shanxi Chongqing Guangdong Guizhou Jilin Xinjiang Gansu Hainan Qinghai Tibet Shanghai Beijing Tianjin Ningxia Zhejiang Jiangxi Yunnan

83.410.000 59.170.000 63.230.000 58.980.000 39.410.000 49.260.000 37.730.000 38.640.000 37.180.000 31.010.000 113.460.000 36.000.000 27.040.000 24.860.000 26.370.000 9.340.000 6.030.000 3.430.000 24.230.000 21.540.000 15.590.000 6.880.000 57.370.000 46.470.000 48.290.000

52% 60% 54% 56% 66% 50% 60% 58% 58% 66% 70% 47% 57% 50% 47% 59% 54% 31% 88% 86% 83% 59% 69% 56% 47%

43.373.200 35.502.000 34.144.200 33.028.800 26.010.600 24.630.000 22.638.000 22.411.200 21.564.400 20.466.600 79.422.000 16.920.000 15.412.800 12.430.000 12.393.900 5.510.600 3.256.200 1.063.300 21.322.400 18.524.400 12.939.700 4.059.200 39.585.300 26.023.200 22.696.300

3.166.244 2.591.646 2.492.527 2.411.102 1.898.774 1.797.990 1.652.574 1.636.018 1.574.201 1.494.062 5.797.806 1.235.160 1.125.134 907.390 904.755 402.274 237.703 77.621 1.556.535 1.352.281 944.598 296.322 2.889.727 1.899.694 1.656.830

26.385 21.597 20.771 20.093 15.823 14.983 13.771 13.633 13.118 12.451 48.315 10.293 9.376 7.562 7.540 3.352 1.981 647 12.971 11.269 7.872 2.469 24.081 15.831 13.807

7.916 6.479 6.231 6.028 4.747 4.495 4.131 4.090 3.936 3.735 14.495 3.088 2.813 2.268 2.262 1.006 594 194 3.891 3.381 2.361 741 7.224 4.749 4.142

Inner Mongolia

25.340.000

63%

15.964.200

1.165.387

9.712

Henan Jiangsu Hebei Liaoning Shandong

96.050.000 80.500.000 75.560.000 43.590.000 100.470.000

51% 69% 56% 68% 61%

48.985.500 55.545.000 42.313.600 29.641.200 61.286.700

3.575.942 4.054.785 3.088.893 2.163.808 4.473.929

29.800 33.790 25.741 18.032 37.283

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MARKET GROWTH SCENARIO 50% growth potential in 10 years

Year

Total Hectares

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

1,004 1,648 2,698 4,397 7,114 11,379 17,880 27,364 40,341 56,631 75,000

Assumptions: 86

100% growth potential in 10 years

Max growth potential: 160.000 hectares

Percentage realized in 10 years: 50%

EXPORT POTENTIAL CALCULATIONS

Take 10,000 hectares as calculation base One time investment of greenhouse building would be: 300 euros/m2 x 10000m2 x 10,000 hectares = 30 billion euros (if say 30% of the technology will be exported then export value = 10 billion euros) Seed: 20,000 seeds per year (assuming one crop

Assuming a conservative growth scenario where 30-50% of the needs for high tech greenhouses will be met in the next 10 years, following a exponential growth path, the total hectares of high tech greenhouses to be built will be next 3-5 years can be estimated to be between 300010,000 hectares

cycle) x 1.5 euros/seed (assuming high value tomatoes) x 10,000 hectares = 300 million euros per year Technical support, education, studies etc (let’s say 0.1% of the hardware cost) = 30 million euros

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5 HEALTH AND WELL BEING

88

Consumption ‘upgrade’ by upper middle class Between 2019 and 2030 an additional 200 million Chinese will move from rural areas to cities, where more fresh foods are consumed. From 2002 to 2012, the amount of Chinese middle class raised from 4% of total population to 31% (more than 420 million people).

A study by McKinsey (2013) showed that by 2022, the upper middle class will account for 54 percent of urban households and 56 percent of urban private consumption.

In another words, there will be 500 million upper middle urban consumers willing to pay premium prices for healthy, green and high quality fresh products.

The consumption ‘upgrade’ driven by the shift from lower middle income to upper middle income will be the main engine for consumer spending in the coming years. This shift will be an especially important trend in smaller, inland cities than the eastern coastal regions, which have already high concentration of upper middle and affluent income groups.

Figure: Projection of urbanization and urban populations by author based on China National Statistics

89

Source: Mapping China’s Middle Class.

McKinsey 2013

Figure: Projection of urbanization and urban populations by author based on China National Statistics

90

Category

Annual disposable household income (euros)

Low Income

< €7700

Mass Middle Income

Between €7700 and €14000

Upper-Middle Income

Between €14000 and €30000

Affluent

> €30000

© Springtide

Population Numbers

Figure: Concentration of major big cities. Source: China National Statistics (2018) 91

CONSUMPTION PATTERN SHIFT DRIVEN BY INCOME AND E-COMMERCE

Willingness to pay for ‘green’ food in lower tier cities

Willingness to pay premium prices for green food by city tiers. Source: Xu., et al (2014)

Chinese cities are often referred to according to their ‘tier’ level. The tier level is determined to factors including economic performance, political importance, business environment and overall attractiveness (CBNWeek 2018).

The general trend is that in the next decade, the middle class share will increase in tier 2 and tier 3 cities which will drive the consumption pattern change in the inland areas. Research shows that the willingness to pay premium prices high quality, ‘green’ food starts to converge across consumers in tier-one, two, three cities. In fact, consumers in tier 2 and tier 3 cities are even willing to pay more for consumer brands and trends than consumers in tier 1 cities as the latter become increasingly ‘rational’ under the pressure of high housing prices, child care costs and so on.

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Source: Mapping China’s Middle Class. McKinsey 2013

Table: List of tier 1 and tier 2 cities. Source: cbnweek.com

© Springtide

Map: Cities in tiers. Data based on cbnweek.com (2018), GIS visualization by author

PROVINCE Beijing Guangdong Guangdong Shanghai Tianjin Chongqing Fujian Jiangsu Liaoning Shandong Shandong Zhejiang Zhejiang Fujian Guangdong Guangdong Hebei Henan Hubei Hunan Jiangsu Jiangsu Jilin Liaoning Shaanxi Shandong Shanxi Sichuan Anhui Guangxi Hebei Jiangxi Shandong Yunnan Zhejiang

CITY Beijing Guangzhou Shenzhen Shanghai Tianjin Chongqing Xiamen Nanjing Dalian Jinan Qingdao Hangzhou Ningbo Fuzhou Dongguan Foshan Shijiazhuang Zhengzhou Wuhan Changsha Suzhou Wuxi Changchun Shenyang Xi'an Yantai Taiyuan Chengdu Hefei Nanning Tangshan Nanchang Zibo Kunming Wenzhou

TIER I I I I I IIA IIA IIA IIA IIA IIA IIA IIA IIB IIB IIB IIB IIB IIB IIB IIB IIB IIB IIB IIB IIB IIB IIB IIC IIC IIC IIC IIC IIC IIC 93

CONSUMER DEMAND FOR SAFE, HEALTHY AND GREEN FOOD

Food safety is a big concern for Chinese consumers. Chinese consumers are paying more and more attention to high quality, safe and functional foods with the raising concern about health. However, there lacks standards to define that ‘healthy food’ are. It can mean food with low sugar, low-fat and low-salt. Healthy food can also mean functional food that can provide health benefits or with functional ingredients. Healthy food should also be safe food that do not contain harmful substances such as pesticide residues.

Chinese government has issued certification programs to provide assurance to consumers.

The figure shows the three different levels of food safety certification programs according to different levels of stringency in terms of pesticide and chemical usage, as well as other harmful residues.

94

Food safety a top concern for consumers when choosing fresh produce (tomato as study case) 40.19%

Brand

16.36% 37.38%

Food safety

66.36% 31.31%

Thickness of skin Exterior texture Flavour Colour

21.50% 55.14% 67.29% 7.94% 68.22% 19.16%

Source: Zhang Y., 2019. Research in fulfillment of InHolland Applied University graduation thesis under supervision of author.

69.16%

Different food certification programs in China

Source: Xu., et al (2014). Willingness to pay premium prices for green food by city tiers 95

Literature shows that the market share of green food is between 5-8% (Ma, 2017). According to field research, green food contributes 20-40% to the whole sales volume per year for most retailers.

71.5% of consumer surveyed1 have bought green food in the past three months. While the Green Food label suffers also from trust issue from consumers, most people are positive about the future of green food as indicated by their willingness to buy.

1, 2 Source: Zhang Y., 2019. Research in fulfillment of InHolland Applied University graduation thesis under supervision of author.

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Graph1: Willingness Willingnessto tobuy buygreen green food food in in the the future1 (Different future(Different education level group) education level group) Degree of willingness (%)

The table compares the differences between two main certification labels: Green Food and Organic Food. Green Food is more widely recognized by Chinese consumers. More than 80% of Chinese consumers recognize the Green Food label, especially for fruit and vegetables (Li & Han, 2018).

However, consumer survey1 also shows that most respondents only know the logo of Green Food (64.95%), followed by knowing also the differences between green food and non-certificated food (42.06%) and knowing the differences between green food and other certificated food (34.58%).

150.00%

95.45%

92.59%

83.54%

High school and below

Junior college

Bachelor

100.00%

66.67%

50.00% 0.00% Master and above

Education level

Table2: Comparison between ‘Green Food’ and ‘Organic Food’ labeling CATEGORY

GREEN FOOD

ORGANIC FOOD

Main concern

Health of consumers

Health of environment

Certification committee

Green Food Development Centre (abbreviation: CGFDC)

China Organic Food Certification Centre (abbreviation: COFCC)

Standards

Standards for A-Grade are less strict than those of organic food, standards for AAGrade match those of organic food in international market

Stricter than standards for organic food in international market

Main market

Domestic market

Product range

Food products

Goals

Reduce environmental impacts, high food safety

Harmony with nature

Traceability

AA-Grade is not as traceable as organic, A-Grade is not traceable

Traceable

Product price

+10-30% with regard to standard food

At least +50% with regard to standard food

Certificated companies in China till Jun,2018

12407

Almost 1000

Certificated products in China till Jun, 2018

29108

Almost 4000

Domestic market share

5-8%

Less than 1%

Foreign market (for exporting) Food products, medicinal herbs and materials

GREEN FOOD RETAILERS

Main retail channels in China

Consumer survey shows that consumers mainly buy green food at supermarkets like Lianhua, RTMart, Yonghui and Carrefour (72.55%), followed by high-end supermarkets like City shop and OLE (47.06%), new retail platforms like Fresh Hema (37.91%), wet market (35.29%), specialty shop like Pagoda (27.45%).

Interviews with retailers in the Shanghai metropolitan region show that price of green food is at a price1.5-2 times higher than conventional fruit and vegetables. Also retailers place high emphasis food safety when sourcing products by assessing attributes such as origin and distributor, followed by traceability, date of production, and certification of ‘green food’ and ‘organic food’

Source: Zhang Y., 2019. Research in fulfillment of InHolland Applied University graduation thesis under supervision of author.

Average score

Average scores of different attributes of fresh tomato given by retailers

Average scores of different attributes of fresh tomato given by retailers 4.6 4.4 4.2 4 3.8 3.6 3.4 3.2 3

4.33 3.83

4.33

4.5

4.33 3.92

4

3.67

3.67 3.17

Attributes

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INTERVIEW: SHANG SHAN YUAN ORGANIC VEGETABLE CHAIN

Shang Shan Yuan Taizhou Farm has been set up for more than three years. It is the biggest farm in eastern China in organic production, it has the most variety, it has the most complete operation model and it is completely organic.

Shang Shan Yuan Taizhou Farm mainly supplies Shanghai, and it can also supply Nanjing because of its location.

It is planned to have 5000 Mu in total. Up till now, it has 2000 Mu of growing area and 300 Mu for raising animals.

Shang Shan Yuan Taizhou Farm is strong in organic vegetables. It has 120-150 varieties of organic vegetables in total and it can provide 30-40 varieties every month.

All the vegetables are certificated as organic food. Among the vegetables, tomatoes contribute to 15% of varieties.

Organic fruit, meat and egg are existing because the members of Shang Shan Yuan’s requirements.

Shang Shan Yuan Taizhou Farm aims at providing organic food for high-end families and sending the food directly to consumers’ home. It uses the membership system.

It has more than 20,000 members in Shanghai and the food provided by Shang Shan Yuan Taizhou Farm can be transported to the whole Shanghai. Members can choose the products they want through ‘Shang Shan Yuan’ APP, and food will be delivered two days later.

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Target customers: High-end consumers who trust Shang Shan Yuan. This target is because if Shang Shan Yuan Taizhou Farm don’t go on for high-end consumers, it will have too much competition. The families’ yearly incomes of the target customers are at least 500,000 yuan. The target consumers always have high education level and live in high-end residential area. According to the manager, Shang Shan Yuan Taizhou Farm wants to achieve 100,000 members in Shanghai, 30,000-50,000 members in tier-two A cities like Suzhou and Hangzhou, and 10,000 members in Ningbo. Shang Shan Yuan Taizhou Farm supply few restaurants and hotels because few of them can accept this high cost. The prices of organic vegetables sold by Shang Shan Yuan Taizhou Farm are higher than the prices of organic vegetables sold in supermarket. The prices of organic vegetables provided by Shang Shan Yuan Taizhou Farm are at least five times higher than unpacked vegetables in supermarkets.

Operation mode: In order to build the brand, Shang Shan Yuan does everything by itself, from building farm, to growing plants and raising animals, to packaging, to transportation and to the cold chain. The main reason for Shang Shan Yuan to do everything itself is that no company can meet its requirements for these stages, even if the Shunfeng Express, because Shunfeng Express doesn’t provide special service for transporting fresh food.

Shang Shan Yuan has its own platform ‘Shang Shan Yuan’.

There is no minimum value for consumers to order through the APP, but consumers can enjoy free delivery if they order more than 200 yuan of products once. If consumers order products less than 200 yuan, they have to pay 40 yuan for the transportation. Common members order once a week. After orders are received, Shang Shan Yuan will sort food, pack food and transport food. Shang Shan Yuan Taizhou Farm can receive over 1,000 orders every day and

it can make the production forecast. Shang Shan Yuan has not only online platform, but also physical shops. There are 15 physical shops of Shang Shan Yuan’s, distributing evenly in different districts in Shanghai, where consumers can visit. These shops can be retail shops and also as warehouses for delivery.

Transporting: Temperature for transporting: 12°C in summer. In winter, the temperature is similar with outside.

Products are transported to its sorting center by tracks (more than 100 tracks a day), and then be repacked in sorting center, and be sent to consumers’ home at last.

Goods from Nanzhang Farm will be transported to Taizhou Farm first and be repacked here. It will take a truck to drive 10 hours to reach here from Nanzhang.

Profit making: In the future two or three years. Taizhou Farm is now in the breakeven point. Its cash flow is fine but it hasn’t made profit yet. The only thing that Shang Shan Yuan needs to do is to increase the members. Taizhou Farm plans to increase 100,000 members if possible, because it has more production than ordered now. If Taizhou Farm increase 20-30% of members, it can gain profit. If the number of members can be doubled, Taizhou Farm can gain more profit.

Technology/Knowhow of interest: • Technology for pest control, like natural enemies • Maintain high quality, constant production • Cold chain storage, postharvest technology (biggest bottleneck), because different vegetables need different storage condition.

• Other business value proposition to consumers such as leisure, health lifestyle.

99

6 SUSTAINABLE SUPPLY CHAIN

100

CLOSING THE COLD CHAIN Cold Chain Logistics refers to low temperature logistics using freezing technology and cooling technology to transport easily degradable products such as food or pharmaceuticals.

Cold chain development is an essential integral element of growth in the food sector and needs to be integrated into the agro-complex of a country. For China, chain infrastructure and management is a major bottleneck for high added-value horticultural development.

The Netherlands has the highest capacity of cold storage per capita in the world. Royal Flora-Holland has one of the world’s largest cooling areas (over 40,000 m²) 101

Closing the cold chain is important because it is essential to (1) keep the quality of the perishable products (including nutrition), (2) prevent or reduce food losses and (3) food safety. Closing the cold chain means that all parts in the chain like precooling, refrigerated transport, refrigerated commercial storage, refrigerated display in retail outlets (and even refrigerating at home) are in place and that transferring products being from one chain entity to another is done without temperature abuse.

Establishing a closed cold chain for perishables and thus maintaining temperature conditions not only requires the infrastructure and technology, but the coordination between multiple stakeholders, capable technical personnel, adequate information, and sound operational management.

Supply input

Precooling at - Farm - Rural markets - Manufactures

Transport

Cooled transport - Refrigerated trucks - Refrigerated vans - Refrigerated railway wagons - Refrigerated cargo containers (reefers)

Figure: Activities related to closing the cold chain 102

Storage

Cold storage - Warehouses - Distribution centers - Collection centers

Transport

Cooled transport - Refrigerated trucks - Refrigerated vans - Refrigerated railway wagons - Refrigerated cargo containers (reefers)

End Consumer

Cooling at - Wholesale markets - Retail/supermarket - Rural / wet market - Restaurants - Canteens

POTENTIAL COLD CHAIN MARKET SIZE Potential Cold Chain Market Size (in billion yuan) Source: China Cold Chain Logistics Study 2014.

China Logistics & Purchasing Society

In 2013, the potential cold chain market was about 3 trillion yuan, equivalent to total tonnage of 90 million ton.

Vegetable represent the biggest potential market for cold chain transport. This is due to the large demand and transport needed for vegetables. Second largest market is aquaculture/seafood which is due to the high unit price.

The value for imported fresh/perishable food is rising rapidly. In 2013, the total value for imported foods was 91 billion yuan, representing 21% year-on-year increase.

The rising demand for imported foods give rise to development of cold chain logistic parks in port areas.

Other than fresh and perishables, medical product and vaccine represent another important market segment with rising demand.

103

CURRENT LOW LEVEL OF COLD CHAIN INDUSTRY DEVELOPMENT Of the potential market for cold chain, products using cold chain transportation in China is less than 40%, which is far less than the 95% in developed countries.

High cost, low profitability and inadequate quality are the biggest challenges facing the industry.

The Cold Chain Logistics Development Plan of Agricultural Products was introduced in 2010. Since then China’s cold chain logistics industry has entered an unprecedented rapid development. In October 2014, the State Council issued the Medium and Long-term Development Plan of the Logistics Industry (20142020) to boost the cold chain logistics industry toward large scale, standardization and modernization.

Composition of Cold Storage. Source: wind

104

Cold Chain Transportation Rate

Comparison between China and Developed Countries

105

COLD CHAIN REQUIRES HIGH QUALITY LOGISTICS SOLUTIONS

Efficient cold chain operation requires not only dedicated refrigeration and transport equipment, but also high level of professional management knowhow and services. The time and quality sensitivity of perishables requires high precision of micro-climate control as well as highly coordinated chain operations.

Figure

Comparison of Cold Chain Cost with Regular Logistics Cost Chain Segment Dedicated Route Transport

Comparison Regular

Cost Examples Shanghai to Beijing: 0.5 to 0.6 yuan/kg Shanghai to Qingdao: 0.35 to 0.4 yuan/kg Shanghai to Beijing: 1.9 yuan/kg

Refrigerated

Regular Storage Refrigerated

Shanghai to Qingdao: 2.1 yuan/kg Tier 1 Cities: 30 yuan/month/m3 Tier 2 Cities: max. 24 yuan/month/m3 Tier 1 Cities: 120 yuan/month/m3 Tier 2 Cities: max. 100 yuan/month/m3

Source: China Merchants Security Fresh Logistics Report. Http://www.logclub.com 106

Summary Transport costs on dedicated routes for refrigerated products is 4-5 times that of regular product Storage costs for refrigerated products is 4 times that of regular product

COLD STORAGE AND TRANSPORT CAPACITY GROWING RAPIDLY The cold storage capacity has grown from 12 million m to roughly 100 million m3 from 2007 to 2015, with an average of 20.5% annual increase. Inland provinces like Guizhou, shanxi, shaanxi, Qinghai and ningxia are the top fast growing provinces; while eastern provinces like Shandong, Guangdong, Jiangsu, shanghai and Henan rank top in terms of total capacity.

3

Figure Cold storage capacity of provinces

The total number of refrigerated vehicles grew from 13,000 to 90,000 between 2007 and 2015. Comparing cold storage capacity and total cold transportation trucks, it is clear that provinces around Bohai area are leading in China. In Inner Mongolia, cold storage capacity is relatively small but the cold transportation trucks are ranking top. This can be explained by that Inner Mongolia is the biggest diary producer, so the transportation requirement is large.

Figure Refrigerated trucks of provinces

107

CHINA’S COLD CHAIN LOGISTICS INDUSTRY: MAJOR MARKET PLAYERS

Figure

COMPANY NAME

FOUNDED

HEADQUARTER

TURNOVER IN RMB (YEAR)

EMPLOYEES (YEAR)

FLEET STRUCTURE

GEOGRAPHICAL COVERAGE

Beijing CCL Company (北京中 冷物流有限公司)

2002

Beijing

￥60-130 million

202

Can deploy more than 800 trucks with installed freezer.

Covers 7 cities.

Black Dog (黑狗物流)

2015

Beijing

￥50-100 million

500-999

More than 500 distribution vehicles. Uses compressor for refrigeration.

Full coverage in Beijing available in Shanghai, Wuhan.

China Merchants Americold ( 招商美冷(香港)控股有限公司)

2010

Guangdong

￥93 billion

DCH Logistics Company Limited (大昌行物流)

1949

Hong Kong

Henan Xianyi Logistics (河南 鲜易供应链股份有限公司)

2009

Zhengzhou, Henan

JD (京东)

1998

Beijing

Rokin Logistics ((希杰荣庆物 流供应链有限公司)

1985

Shanghai

2003

Shanghai

2011

Shuanghui Logistics ((漯河双 汇物流投资有限公司)

http://www.higoexpress.com/index.html

Mainland China, Hong Kong, Macau, http://www.dchlogistics.co Taiwan, Japan, Singapore, Canada. m/tc/aboutus.php The company has 1000 refrigerated Cold chain transport services except http://www.hnxianyi.com/in ￥3.5 billion (2015) more than 1000 transport vehicles. And it can deploy about from Hong Kong, Macao, Taiwan, Tibet, dex.html 3000 vehicles Xinjiang and Qinghai have been covered.

Covers 35 cities in China with seven ＄28.847 billion 105,936 https://fresh.jd.com/ Owns more than 300 trucks. Using SCANIA. major logistics centers Owns more than 450 cold chain transport Beijing, Shanghai, Guangzhou, Qingdao, more than 5000 vehicles to provide sporadic freight http://www.rokin.cn ￥2 billion Suzhou, Wuhan, Chengdu. transportation Concentrates on East-China Present in http://www.speedfresh.co 200 trucks in the east-China area. 249 cold588 18 cities in 2006 to set up modern shortage trucks in Shanghai, around m.cn/aboutus.asp refrigerated distribution centers.

13,000

Shanghai

￥100 million

1000

2003

Luohe, Henan

￥ 1,300 million (2014)

2850

Shunfeng Express (顺丰冷运)

1993

Shenzhen, Guangdong

Sinotrans Container Lines (中 外运上海冷链物流有限公司)

2006

Shanghai

SinoTransPFS (中外运普菲斯 冷链物流有限公司)

2009

Shanghai

WDL Cold-Chain Logistics (武 汉万吨冷链物流有限公司)

2010

Wuhan, Hubei

Xuchang Zhongrong Cold Chain Logistics (许昌众荣冷 链物流有限公司)

2009

Henan, Zhengzhou

108

http://www.cclcold.com.cn/

Owns106 refrigerated transport vehicles. Transportation network covers the major http://www.cmac.com.hk/ Can deploy more than 500 rented trucks. provinces and cities in China.

￥22.1 billion

Shanghai Speed Fresh Logistics (上海领先物流有限 公司) Shanghai Zhengming Logistics (上海郑明现代物流 有限公司)

WEBSITE

￥48 billion

120,000

600 refrigerated transport vehicles. Can deploy about 3000 vehicles.

Mainland China.

http://www.zhengmingsh.com

1300 refrigerated transport vehicles, can 17 regional provincial logistics companies http://www.shuanghui.net/ deploy about 1800 refrigerated transport in China. Logistics network throughout vehicles. 7 private railway lines. the country, http://www.sfdelivery in mainland China and cold express.com/cn/sc/express Owns 120 cold chain transportation vehicles storage. Available to most first and and 7733 outsourcing cold chain /sf_cold_chain/food_ease second tier cities in China. transportation vehicles. /cold_chain_home_deliver y The company has direct branches in http://www.sinolines.com Dalian, Tianjin, Beijing, Qingdao,Ningbo, Nanjing, Fuzhou, Xiamen and Shenzhen.

Based in Shanghai and Tianjin, along http://www.preferredfreeze Around 100 freezer trucks owed by Yangtze River Delta and Beijing Tianjin r.cn/ companies.

Tang economic circle.

Different size trucks (4.2,7.2 and 9.6 meters long)

Covers 13 provinces in China.

http://www.wandun.cn/

13 branch offices covering Shanghai, It owns more than 400 refrigerated Guangzhou, Tian jin, http://zrllwl.chinapyp.com transport vehicles, the length of which vary Shenyang,Changchun, Lanzhou, Xiamen, from 4.2 meters to 16.5 meters.

Baotou, Xi'an, Qingdao.

CHINA’S COLD CHAIN LOGISTICS INDUSTRY: MAJOR MARKET PLAYERS Fresh agricultural products (FAP) e-commerce will undoubtedly further penetrate into the whole Chinese society according to the policy of the 13th Five-year Plan period.

During 2010-2014, the size of online retail sales predominately of cities expanded rapidly with an annual growth rate reaching 53.13% according to the statistics published by China’s E-commerce Research Center (CECRC) in 2016.

E-commerce supply chain models, with fewer actors, are shorter than the other types of retail chain models.

E-commerce DC (distribution center) is the main warehouse and control center, which received information from suppliers, pre warehouses and consumers. Pre warehouses are a new concept put forward by the e-commerce giants in China. They could be the scattered offline shops or the small warehouses that are close to the end consumers.

Table: Categories of wet markets, supermarkets and e-commerce in China.

Wet market

Supermarket

E-commerce

Open markets

Target middle-end consumers

Big platforms

Wholesales markets Neighborhood markets

Target high-end consumers

Specialized for the locals Vertical supply New retail (O2O)

Figure: the most common e-commerce supply chain with the goods flow and the information flow. Source compiled from Kong, 2018 and Jiao et al., 2017.

109

E-COMMERCE RETAILERS AND ‘NEW RETAIL’

E-commerce can be generalized into four types (Table 1).

Firstly, e-commerce with big platforms are for example JD and Tmall & Taobao from Alibaba, in which all kinds of retailers or wholesalers can collaborate with this big platform and sell their products online. It also includes Dmall and daojia.JD, by which fresh products or meals are promised to arrive within 1-2 hours. Secondly, E-commerce specialized for the locals are for example Yummy77 and mmchong.com which only supplied Shanghai but Yummy77 became bankrupt in 2016; and Fresh Legend, which only supplies Hefei City. Thirdly, vertical e-commerce targets high-end consumers, sources fresh products all over the world and delivers them directly to consumers’ homes, such as Yiguo.com, Missfresh and so on.

Finally, online to offline (O2O), or so-called new retail, is actually an offline sales model but it integrates online sales data to provide customers better offline shopping experience.

The new retail is inherently the connection and empowerment of consumer big data. Through the research on consumer big 110

data, not only can you accurately understand the pain points faced by manufacturers, but also find effective solutions to optimize marketing. The online and offline fusion interactions are reflected in the whole process of shopping. 80% of consumers have used APP in the store consumption process.

In terms of shopping experience, the new retail is more focused on creating a multi-format mixed-scenario shopping experience. In other words, new retail also undertakes the function of, for example, the restaurants in which customers can choose either eat right now or take away.

Examples of new retail players are Fresh Hema of Alibaba, 7Fresh of JD and Super Species of Yong Hui. The rapid development of these O2O shops further triggers the evolution of terminal urban delivery logistics (Jiao et al., 2017).

These new retail shops are supported either by e-commerce giants or supermarket giants with relatively well-constructed supply chains, so the cold chain systems are mainly selfoperated.

FOUR TYPES OF E-COMMERCE

LOGISTICS

EXAMPLES

Vertical

Local insourcing + nonlocal outsourcing

Missfresh (每日优鲜)；Yiguo.com (易果生鲜)； SFbest.com (顺丰优选)；tootoo.cn (沱沱工社)； Benlai.com (本来生活)

Big platform

Depend on entering brand or self-operated

Tmall Fresh(喵鲜生); Fresh.jd (京东生鲜); Dmall (多点); daojia.jd (京东到家)

Specialized for local

Self-operated cold chain

mmchong.com(虫妈邻里团)；Fresh Legend (生 鲜传奇); Taste in memory (儿时味道)

New retail (O2O)

Self-operated cold chain

Fresh Hema (盒马鲜生); 7Fresh； Super Species (超级物种); Shang Shan Yuan (上膳源)

Table: Top e-commerce retailers and their cold chain logistics operation model

111

WILLINGNESS TO PAY FOR TRUST Chinese consumers are increasing willing to pay very high prices for products with (a combination of) the following characteristics: from known brands, with international certifications, with ‘authentic stories’ and so on. In another words, they are paying for trust.

To understand how consumers in different tier cities trust the fresh supply chain and their willingness to pay for trust, field interviews and surveys1 were carried out targeting both consumers and chain players. A total of 200 consumers around Shanghai region as well as close 50 professional managers of fresh supply chains were interviewed with some selected results shown here.

1 Xie J., 2019. Research in fulfillment of InHolland Applied University graduation thesis under supervision of author.

112

The main factors influencing consumers’ trust in the fresh supply chains are: intelligent logistics for traceability; international cold chain accreditation; scale of farms; high tech input in production; country of origin; and labelling such organic or green.

Interestingly, tier 1 urban consumers have lower trust in the current fruits and vegetables retail channels compared to the second- and third-tier citizens (Figure). Notably, the trust of first-tier citizens in new retails is lower than their trust in traditional e-commerce platforms. This may be explained by the individualized services provided by many small e-commerce platforms. New retails are also featured in this kind of tailored services, but big data is not so precise as oneto-one manual service.

Figure

Figure

113

7 KNOWLEDGE, INNOVATION & COLLABORATION

114

115

SUCCESS FACTORS OF DUTCH AGRO FOOD SYSTEM

History & Legacy Entrepreneurship Knowledge & Innovation

The article by National Geographic (September 2017) states: ”… the Netherlands is a small, densely populated country, with more than 1,300 inhabitants per square mile. It’s bereft of almost every resource long thought to be necessary for large-scale agriculture. Yet it’s the globe’s number two exporter of food as measured by value, second only to the United States, which has 270 times its landmass. How on Earth have the Dutch done it?”

In classical economic definition, agriculture is a primary sector. Especially for developing countries, this implies land dependency, low technology input, low economic added value and low rural status. In contrast, The Dutch horticulture is uniquely defined by: land-independency, high technology input and high value products, export orientation/international competitiveness. To compare, other major agricultural exporting countries such as US and Australia are mostly developed nations with abundant amount of arable land. The land-independent characteristic and continuous technology development mean the horticulture sector can bridge the urban-rural divide and overcome resource limitations.

116

International Network Position Precision & Specialization Resilient & Future Proof

Therefore, the Dutch model of horticulture is especially relevant for developing countries with large-growing-urbanizing population and limited arable land championed by China and India, not just for ‘feeding and greening the cities’, but also for the dynamic economic and technological developments. Here lies the strategic positioning of top Dutch sectors in shaping the next ‘green revolution’ of Chinese metropolitan regions: knowledge, innovation, entrepreneurship and collaboration.

CLUSTERS, GREENPORTS AND ECOSYSTEM The development of clusters is a widely studied topic internationally. There are several related concepts including industrial district, innovation milieu, regional innovation systems, learning regions and so on. A most often used cluster definition is by Porter (2000), that a cluster is a geographically proximate group of interconnected companies and associated institutions in a particular field, linked by commonalities and complementarities.

The presence of industry clusters and innovation activity in a community have been proven in the research to be associated with increased entrepreneurial success. Innovativeness and industry clusters provide opportunities for increased entrepreneurial activity; therefore these elements have been added to this study’s list of important assets in the region’s entrepreneur ecosystem. A quick definition of the terms innovation, entrepreneurship and industry clusters is necessary here because they are so tightly linked.

One of the many definitions of entrepreneurship is having the capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit.

Innovation

Entrepreneurship

Cluster

Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries and associated institutions in a particular field that compete but also cooperate. Clusters have been shown to cultivate entrepreneurship and provide advantages in productivity and the capacity to innovate. Clusters provide natural opportunities for networking and linkages that fosters additional entrepreneurial activity.

Innovation is about the manifestation of novel ideas, but innovation without entrepreneurship may be an idea that does not create value. Delia Smith of Green Field Ventures notes, “If innovation is the creation of new capacities for wealth creation, entrepreneurship is the exploitation of these capacities.”

117

CLUSTERING & REGIONAL DNA

The importance of understanding own ‘DNA’ to future-proofing regional development and strengthening innovation capacity has become an important topic in Dutch policy making. For instance, the SER (Sociaal Economische Raad) had stated (2015, p.5) : ‘Elke stad heeft zijn eigen DNA en potenties en zal vanuit dit startpunt aan haar toekomst moeten werken, inspelend op autonome ontwikkelingen en trends - go with the flow’. Dit betekent: niet tegen de stroom inroeien; wel actief potenties ontwikkelen en kansen benutten’.

Figure

118

Map: Hotspot of Dutch Horti Industry

119

DEFINING THE GREENPORT CLUSTER MODEL Figure

The Dutch greenport cluster model has the following characteristics: - Cluster of spatial and functional concentration with downstream and upstream chain integrations; - In classical economic definition, agriculture is a primary sector which implies low technology input and low added value, especially in developing countries. Greenport model is an integrated economic form that integrates primary production, industrialization (high input of technology and investment) and service economy (logistics, retail, marketing).

- It is also a cluster of social relations and knowledge networks. The DNA of the region which includes shared culture, identity, heritage, social norms, skills are as important as physical infrastructure, market conditions, government policy, finance and education institutions.

- Greenport has an integral coupling with the mainports (airport and port). The strong international/regional trade position, together with a strong local production base, forms an integral regional development value proposition. Innovations in logistics and Closed Cold Chain systems are central to this proposition.

Physical flow of products

120

Data flow & Cross-over knowledge flow

- Greenport is a logistics hub for fresh products, as well as a hub for knowledge, talent, education and investment in the horticultural cluster. The Greenport model is a model for connecting international horticultural clusters to form a network of hubs.

121

Evolution of the “Glass City” DNA of the region

Westland in 1912

Westland, as a collective identity, existed long before the political-administrative establishment of the municipality Westland.

Shared culture, identity, heritage and trust form the strong social fabric which is a fundamental source of regional strength.

The DNA of the region which includes shared culture, identity, heritage, social norms, skills are as important as physical infrastructure, market conditions, government policy, finance and education institutions.

122

Chain & cluster development supported by innovation ecosystem ‘glued’ with strong social fabric

Outside-in: Dialogues with China

‘What is the fundamental interest that binds together the growers, the traders and other actors in the chain?’

Dean, Qingdao Agricultural University One of the biggest problems in the agricultural sector of China is that the farmers are at the lowest segment of the value chain. The price differential from growers/producers of fresh produce to consumers in the Netherlands/Europe is about 3-5 times. In China, this can be up to 35 times!

In Westland the century old tradition of specialized cooperatives is developed on the fundamental value of trust. The characteristics of a close-knit community which include shared culture, strong social norms, and common values play a crucial role to make sure the cooperatives represent the interests of the growers – small or large. Trust is also fundamental to the sharing of knowledge, collaboration and healthy competition.

123

Entrepreneurship Farmers needs to become entrepreneurs

In many countries, traditional, land-based agriculture is protected for food security reasons. In China, there is the national ‘red line’ strictly protecting the 120 million hectares of primary agricultural land. In contrast, since Since beginning of the century, the Westland horticulture cluster thrives by self-reliance and competing on international market with high quality product. Market driven, risk-taking, competitive, adaptive – this ‘export quality’ mindset fundamentally shapes the entrepreneurial culture of the region.

In the coming decades, China faces the huge challenge of upgrading the agricultural economy, improving the lives of hundreds of millions of rural populations, and ensuring nutritional security for all citizens. This is not just an issue of technology but requires fundamental social-economical changes. One such change is that farmers need to become entrepreneurs, and vice versa, entrepreneurs (from other sectors) need to want to become farmers. The role of the government in nurturing entrepreneurship and innovation in the agricultural sector poses much bigger challenges than planning physical infrastructure or industrial parks.

124

“Export quality” international competition drives best performance & entrepreneurship

Outside-in: Dialogues with China

‘Technology is the not the biggest issue, the biggest questions facing us are: what to grow? And whom to sell to?’

Mayor, Taizhou city, Jiangsu Province In order to develop economically viable and sustainable horticultural clusters, the biggest question is not whether China needs ‘high-tech’ or ‘low-tech’ solutions. Rather, the driver needs to be from the market. The ability to reach middle-high end consumers(demand side) with high quality and trustworthy products will drive the investment in knowledge and technology inputs at the production(supply side).

125

Knowledge & Innovation Invest in capacity building & knowledge generation

Over the decades, Westland created a strong cooperative and knowledgesharing oriented entrepreneurial culture. Knowledge sharing and innovation along all links of the chain is critical to guarantee the quality of the product at the end of the chain. Westland greenport cluster is not only a cluster of spatial and functional concentration, but also a cluster of social relations and knowledge networks.

Horticulture is a highly technical, knowledge dependent and dynamic industry. To sustain growth there is fundamental need for investment in human capacity building and knowledge generation. GHC/WHC Westland is the gateway to applied research, training and capacity building.

126

The Westland Greenport cluster is a high-tech and innovation cluster with high economic added value

Outside-in: Dialogues with China

‘What fundamentally drives an entrepreneur to continuously strive for precision and improvement in performance’?

When Chinese companies visited Westland, they often amazed at the dedication of Westland companies to perfect the finest details: product innovation to improve water efficiency from 90% to 95%, growers continue to learn the needs of their plants and try to improve performance every week. One Chinese entrepreneur finds the key, ‘ the company is passed down from grandfather, to father, to son, and to son’s son. The company has a fifty or one hundred years of legacy to safeguard, and can strive for another one hundred years to come. This is why the immediate profit is not the ultimate factor driving business decisions and why companies are willing to invest to continuous innovate and improve’.

127

International Network Position Trade & Production

The strong international/regional trade position, together with a strong local production base, forms an integral regional development value proposition.

Innovations in logistics and Closed Cold Chain systems are central to this proposition.

For China, chain infrastructure and management is a major bottleneck for high added-value horticultural development but at the same time offers huge potential for improvement and growth in the coming years.

Figure

128

Outside-in: Dialogues with China

Chinese consumers are now paying for ‘emotions’. This means products with an authentic story. In another words, they are paying for trust’ The rise of hundreds of millions Chinese consumers has not only implications for domestic production, but also for the international trade’s network and positioning.

Trade and production forms one integral regional development proposition 129

Precision & Specialization Optimization of all links in the chain

The Westland horticulture cluster is the most spatially concentrated and specialized cluster in the Netherlands. Different companies become highly specialized in every link of the supply chains each tailored to the specific needs of the product.

Specialized cooperatives are developed to safeguard the collective knowledge development and interests.

The Greenport Logistics model achieves 95% full load at all times

OECD (2016), OECD Territorial Reviews: The Metropolitan Region of Rotterdam-The Hague

The price differential from growers/producers of fresh produce to consumers in the Netherlands/ Europe is about 3-5 times. In China, this can be up to 35 times! Cost optimization and flow integration between all links in the chain, from production to consumption critical for horticultural product business cases. In recent years, rapid development of e-commerce in China is speeding up the shortening of the chain.

130

Cost optimization and flow integration between all links in the chain, from production to consumption

Outside-in: Dialogues with China

‘Logistics and cold chain infrastructure is the biggest obstacle to horticultural clusters. My flowers can not reach the high value markets outside of 200 km radius of my production’ Owner of ornamental plant production, Shandong province The potential cold chain market in China is equivalent to total tonnage of 90 million ton of fresh/perishable products (figure in 2015).

Of the potential market, products using cold chain transportation is less than 40%, which is far less than the 95% in Western Europe.

In 2015, there were just 90,000 temperature controlled trucks in the whole of China, though the number is growing rapidly every year.

131

Resilient & Future Proof Innovation and co-create

Unlike the Ruhr region in Germany, Detroit in the US, or the ship-building cluster around Rotterdam, the Westland cluster has proven to be robust and resilient towards major shocks in the last century.

With its complete entrepreneurial ecosystem, The netherlands is the perfect ‘incubator’ for horticultural innovations (with focus on health & well-being, digitization, sustainability) and China the perfect partner for upscaling!

132

Innovate together for the future through knowledge connection globally

Outside-in: Dialogues with China

‘What impressed us the most about Westland is not just technology, but the culture of dedication, craftsmanship and pride. This gap may take at least one generation in China to catch up!’

Interview with a group of owners and managers from Chinese technology and supply companies visiting Westland in July 2017 regarding what they think the strengths of Westland are.

133

OVERVIEW OF THE VERSATILE & COMPLEX DUTCH ECOSYSTEM

© Springtide

PROPAGAT & YOUNG PLANTS COOPERATIVES GROWERS VEGETABLES PROFESSIONAL SERVICES

INDOOR / VERTICAL FARMING

FINANCE

Figure Overview of the versatile & complex dutch ecosystem.

ECOSYSTEM EDUCATION & RESEARCH

CHA GROWERS FLORICULTURE

© Springtide LOGISTICS COLLABORATION REGIONAL INSTITUTIONS

134

© Springtide

TION G S

INTERNAL LOGISTICS

SOFTWARE & OTHER INPUTS

GREENHOUSE CONSTRUCTION

GENETICS IMPROVEMENT

CLIMATE CONTROL SEED & BREEDING

DRONES

ROBOTS

LIGHTING SYSTEMS

AIN

SUBSTRATE

TECHNOLOGY

GREENHOUSE GROWING SYSTES

DATA MANAGEMENT

BIOLOGICAL CONTROL PROCESSING & DISTRIBUTION

CROP MONITORING

WATER & NUTRIENTS

PACKAGING & SORTING

INDOOR & VERTICAL SYSTEMS

© Springtide

135

OVERVIEW MAIN PLAYERS: CHAIN

Processing & Distribution

Seed & Breeding Axia Seeds De Ruiter ENZA Nunhems Rijk Zwaan Syngenta Seeds

www.axiaseeds.com www.deruiterseeds.com www.enzazaden.co www.nunhems.com www.rijkzwaan.com www.syngenta.com

Genetics Improvement Incotec Keygene

www.incotec.com www.keygene.com

Propagation & Young Plants Beekenkamp Groep Fides Hollandplant KP Holland P.F. Onings Plantise Van den Bos Flowerbulbs Vreugdenhil en Klugt Combinatie Wesselman Flowers

www.beekenkamp.nl www.fides.nl www.hollandplant.nl www.kpholland.nl www.onings.nl www.plantise.nl www.vandenbos.com www.plkwvreugdenhil.nl www.wesselmanflowers.nl

Growers Vegetables Agro Care CombiVliet Greenco Harting Holland Koppert Cress Lans Looije Tomaten

www.agrocare.nl www.combivliet.nl www.greenco.nl www.hartingholland.nl www.koppertcress.com www.lans.nl www.looijetomaten.nl

Red Star Group SweetPoint Westland Peppers Zwingrow

www.redstar.nl www.sweetpoint.nl www.westlandpeppers.com www.zwingrow.nl

Growers Floriculture

Figure Overview main players: Chain

Adomex Anco pure Vanda Anthura Bunnik Plants Dummen Orange Holstein Flowers KP Holland Levoplant OK Plant Opti-Flor Pligt Professionals Sion Sjaak van Schie SO Natural Starre Group SV.CO Ter Laak Orchids Van den Berg Roses Van Vliet Flower Group

Indoor/Vertical Farming Brightbox Future Crops Seven steps to heaven

136

www.adomex.nl www.anco-pure-vanda.nl www.anthura.nl www.bunnikplants.nl www.dummenorange.com www.holsteinflowers.nl www.kpholland.nl www.levoplant.nl www.okplant.nl www.optiflor.nl www.pligtprofessionals.nl www.sion.eu www.sjaakvanschie.nl www.sonatural.nl www.starregroup.nl www.svco.nl www.terlaak-orchidee.nl www.vandenbergroses.com www.jvanvliet.com www.brightbox-venlo.nl www.future-crops.com www.seven-steps-toheaven.com

Best Fresh Group Decorum Company DOOR Partners bv Fleura Metz FloraHolland UA Green Pack Harvest House Nature's Pride Nieuwkoop Groep Noviflora Prominent Tomatoes Rainbow International Rainbow Kleinpak Royal Lemkes Group The Greenery Tovano Van der Windt Group Vida Verde Westland Bloemen Export (WBE) Zijtwende International

www.bestfreshgroup.com www.decorumcompany.com www.doorpartners.nl www.fleurametz.com www.royalfloraholland.com www.green-pack.nl www.harvesthouse.nl www.naturespride.eu www.nieuwkoop-europe.com www.noviflora.com www.prominent-tomatoes.nl www.rainbow-growers.nl www.rainbowgrowers.nl www.lemkes.nl www.thegreenery.com www.tovano.nl www.vanderwindt.com www.vida-verde.com www.wbe.nl www.zijtwende.com

Logistics APM Terminals B&L Fruit Logistics Barendrecht Diepvries United Bergschenhoek ABC Logistics BV ADB Cool Company Allport Netherlands Cool Control Maasdijk D & W Trans B.V. De Winter Transport BV DL Fresh Logistics Eurofrigo Rotterdam Freight Line Europe B.V. Gebr van den Bos Transporten BV Greenport Logistics HIWA Rotterdam Port Cold Stores International Fruit Forwarders Kloosterboer Cool Port Logistic Business Partners (Rotterdam) B.V. Rijnplant Services B.V. Sea-invest Rotterdam

www.apmterminals.com www.blfl.nl www.diepvriesunited.nl/ www.abclogistics.nl www.coolcompany.nl allportnetherlands.nl www.coolcontrol.nl www.denw-trans.nl www.dewinterlogistics.nl www.dl.nl www.eurofrigo.nl www.freightlineeurope.com www.bosdaalen.nl www.greenportlogistics.nl www.hiwa.nl www.fruitforwarders.nl www.kloosterboer.com www.lbprotterdam.nl www.rijnplant.com www.sea-invest.com

Transportbedr Gebr V Staalduinen BV www.staalduinen.nl Transportbedrijf Koos van Gaalen B.V. www.koosvangaalen.nl Transportbedrijf van Duijn en Zonen B.V. www.vanduijntransport.nl

CHAIN

137

OVERVIEW MAIN PLAYERS: TECHNOLOGY

Robots

Software & Other Inputs Berg Hortimotive Bosman Van Zaal BVB Substrates Certhon Grodan Hoogendoorn Horticoop Hortilux Jiffy Group Koppert Biological Supplies Metazet Prins Group Priva Ridder Royal Brinkman International BV Van der Knaap Group

www.berghortimotive.nl www.bosmanvanzaal.com www.bvb-substrates.nl www.certhon.com www.grodan.com www.hoogendoorn.nl www.horticoop.nl www.hortilux.nl www.jiffygroup.com www.koppert.nl www.metazet.nl www.prinsgroup.nl www.priva.nl www.hortimax.nl www.brinkman.com www.vanderknaap.eu

Climate Control Bosman Van Zaal Hoogendoorn Prins Group Priva Ridder

www.bosmanvanzaal.com www.hoogendoorn.nl www.prinsgroup.nl www.priva.nl www.hortimax.nl

Biological Controls Koppert Biological Supplies www.koppert.nl Pats Drones pats-drones.com

Substrate BVB Substrates Cultilene Grodan Horticoop Jiffy Group Van der Knaap Group

www.bvb-substrates.nl www.cultilene.nl www.grodan.com www.horticoop.nl www.jiffygroup.com www.vanderknaap.eu

Robots Aris Gearbox Priva TTA

www.arisbv.nl www.gearboxinnovations.com www.priva.nl www.tta.eu

Drones Applied Drone Innovations Pats Drones

www.applieddroneinnovations.nl pats-drones.com

Crop Monitoring 30MHZ HortiKey Phenospex Technolution

www.30mhz.com www.hortikey.nl www.phenospex.com www.technolution.eu

Indoor/Vertical System

Figure Overview main players: Technology

138

Bosman Van Zaal Certhon CODEMA Logiqs Prins Group Priva Seven steps to heaven Signify

www.bosmanvanzaal.com www.certhon.com www.codema.nl www.logiqs.nl www.prinsgroup.nl www.priva.nl www.seven-steps-to-heaven.com www.signify.com

Aris Gearbox Priva TTA

www.arisbv.nl www.gearboxinnovations.com www.priva.nl www.tta.eu

Data Management Berg Hortimotive Bosman Van Zaal Certhon CODEMA Grodan Hoogendoorn HortiKey Hortilux KUBO Letsgrow Phenospex Priva Ridder Royal Brinkman International BV SERCOM REGELTECHNIEK WPS

www.berghortimotive.nl www.bosmanvanzaal.com www.certhon.com www.codema.nl www.grodan.com www.hoogendoorn.nl www.hortikey.nl www.hortilux.nl www.kubo.nl www.letsgrow.com www.phenospex.com www.priva.nl www.hortimax.nl www.brinkman.com www.sercom.eu www.wps.eu

Drones Applied Drone Innovations Pats Drones

www.applieddroneinnovations. nl pats-drones.com

Crop Monitoring 30MHZ HortiKey Phenospex Technolution

www.30mhz.com www.hortikey.nl www.phenospex.com www.technolution.eu

Data Management Berg Hortimotive Bosman Van Zaal Certhon CODEMA Grodan Hoogendoorn HortiKey Hortilux KUBO Letsgrow Phenospex Priva Ridder Royal Brinkman International BV SERCOM REGELTECHNIEK WPS

www.berghortimotive.nl www.bosmanvanzaal.com www.certhon.com www.codema.nl www.grodan.com www.hoogendoorn.nl www.hortikey.nl www.hortilux.nl www.kubo.nl www.letsgrow.com www.phenospex.com www.priva.nl www.hortimax.nl www.brinkman.com www.sercom.eu www.wps.eu

Greenhouse Growing Systems

Climate Control Bosman Van Zaal Hoogendoorn Prins Group Priva Ridder

www.bosmanvanzaal.com www.hoogendoorn.nl www.prinsgroup.nl www.priva.nl www.hortimax.nl

Biological Controls Koppert Biological Supplies www.koppert.nl Pats Drones pats-drones.com

Substrate BVB Substrates Cultilene Grodan Horticoop Jiffy Group Van der Knaap Group

www.bvb-substrates.nl www.cultilene.nl www.grodan.com www.horticoop.nl www.jiffygroup.com www.vanderknaap.eu

Internal Logistics BERCOMEX Bosman Van Zaal Flier Systems Logiqs Metazet Visser Horti Systems WPS

www.bercomex.com www.bosmanvanzaal.com www.fliersystems.com www.logiqs.nl www.metazet.nl www.visser.eu www.wps.eu

Turnkey Construction of Greenhouses Agricultural Projects Holland www.apholland.nl Alumat Zeeman www.alumatzeeman.com Boal Group www.boalgroup.com Bom Group www.bomgroup.nl Dalsem Groep www.dalsem.nl Debets Schalke www.debets.nl Elektravon-Haket BV www.elektravonhaket.nl Gakon Horticultural projects www.gakon.nl Havecon www.havecon.com KG Greenhouses en.kgpgreenhouses.com KUBO www.kubo.nl Olsthoorn www.olsthoorn.eu Peter Dekker Installations www.pdinl.com Prins Group www.prinsgroup.nl Van der Hoeven www.vanderhoeven.nl VB Group www.vb-group.nl Visser Horti Systems www.visser.eu

Water & Nutrient Bosman Van Zaal Certhon CODEMA Havecon Hoogendoorn Prins Group Priva Ridder Royal Brinkman International BV SERCOM REGELTECHNIEK Stolze

www.bosmanvanzaal.com www.certhon.com www.codema.nl www.havecon.com www.hoogendoorn.nl www.prinsgroup.nl www.priva.nl www.hortimax.nl www.brinkman.com www.sercom.eu www.stolze.nl

Bosman Van Zaal Certhon CODEMA Holland Gaas Hordijk Groep KUBO Metazet Ridder Royal Brinkman International BV Stolze VB Group WPS

www.bosmanvanzaal.com www.certhon.com www.codema.nl www.hollandgaas.nl www.hordijk.nl www.kubo.nl www.metazet.nl www.hortimax.nl www.brinkman.com www.stolze.nl www.vb-group.nl www.wps.eu

Software & Other Inputs Berg Hortimotive Bosman Van Zaal BVB Substrates Certhon

www.berghortimotive.nl www.bosmanvanzaal.com www.bvb-substrates.nl www.certhon.com

Grodan Hoogendoorn Horticoop Hortilux Jiffy Group Koppert Biological Supplies Metazet Prins Group Priva Ridder Royal Brinkman International BV Van der Knaap Group

www.grodan.com www.hoogendoorn.nl www.horticoop.nl www.hortilux.nl www.jiffygroup.com www.koppert.nl www.metazet.nl www.prinsgroup.nl www.priva.nl www.hortimax.nl www.brinkman.com www.vanderknaap.eu

Packaging And Sorting Aris AWETA BERCOMEX Crea-Tech Flier Systems Gearbox Greefa HAVATEC ISO group KOAT Metazet Terra International TTA Visser Horti Systems

www.arisbv.nl www.aweta.nl www.bercomex.com www.crea-tech.nl www.fliersystems.com www.gearboxinnovations.co m www.greefa.com www.havatec.com www.iso-group.nl www.koat.nl www.metazet.nl www.terra-international.nl www.tta.eu www.visser.eu

TECHNOLOGY

Lighting Systems Dool Industries Hortilux Rofianda Signify Stolze

www.doolindustries.com www.hortilux.nl www.rofianda.com www.signify.com www.stolze.nl

139

OVERVIEW MAIN PLAYERS: ECOSYSTEM

Education Delft University of Technology www.tudelft.nl Inholland University of Applied Sciences www.inholland.nl The Hague University of Applied Sciences www.dehaagsehogeschool.nl The Lentiz Educational Group www.lentiz.nl TNO www.tno.nl Wageningen University & Research www.wur.nl World Horti Center www.worldhorticenter.nl

Regional Institutions City Westland Greenport Aalsmeer Greenport Boskoop Greenport Duin en Bollenstreek GreenPort Noord-Holland Noord Greenport Venlo Greenport West Holland Innovation Quarter Province South Holland Rabo Bank Top Sector Horticulture

www.gemeentewestland.nl www.greenportaalsmeer.nl greenportboskoop.nl www.greenportdb.nl www.greenportnhn.nl www.greenportvenlo.nl greenportwestholland.nl www.innovationquarter.nl www.zuid-holland.nl www.rabobank.nl www.topsectortu.nl

Cooperatives Decorum Company Demokwekerij Westland DOOR Partners bv FloraHolland UA Greenport Logistics Harvest House Horticoop Prominent Tomatoes Rainbow International The Greenery Tomatoworld

Figure Overview main players: Ecosystem

140

www.decorumcompany.com www.demokwekerij.nl www.doorpartners.nl www.royalfloraholland.com www.greenportlogistics.nl www.harvesthouse.nl www.horticoop.nl www.prominent-tomatoes.nl www.rainbow-growers.nl www.thegreenery.com www.tomatoworld.nl

Finance Innovation Quarter Rabo Bank Top Sector Horticulture

www.innovationquarter.nl www.rabobank.nl www.topsectortu.nl

Professional Services Agro AdviesBuro Delft Research Group Delphy Florpartners Hagel Unie VEK Adviesgroep Vijverberg Advies Wayland Developments

www.agroadviesburo.nl www.agrocontrol.nl www.delphy.nl www.florpartners.nl www.hagelunie.com www.vek.nl www.vijverbergadvies.nl www.wayland.nl

Network, Collaboration and Incubators AVAG Brightbox Dutch Greenhouse Delta Hortiheroes Hortivation ROBO Valley Rotterdam Food Cluster SIGN

www.avag.nl www.brightbox-venlo.nl www.dutchgreenhousedelt a.com www.hortivation.nl www.robovalley.com www.rotterdamfoodcluster. com www.innovatieglastuinbou w.nl

ECOSYSTEM

141

8 URBAN / VERTICAL FARMING & GREENING THE CITIES

142

143

PROTECTED FARMLAND AND HIGHLY DENSIFIED MEGA CITIES

Figure

144

The Greater Bay Area (GBA) consists of the megacities of Guangzhou, Shenzhen, Hong Kong and surrounding cities in the Pearl River Delta. This area has a population of over 100 million people and is the most economically dynamic region in China. The GBA region is often compared with the Tokyo Bay Area, New York Bay Area, San Francisco Bay Area, and the Yangtze River Delta area. In the table below, the two metropolitan clusters in the GBA – Guangzhou & Foshan, and Shenzhen & Donguan – both have much higher built area urban density than other bay areas such as Tokyo. Still, these clusters only represent 2% of total national population in China, compared with the 30% of Tokyo. This means there are many more such metropolitan clusters in China!

CITY AREA

BUILT AREA

METROPOLITAN CLUSTER

AREA (KM2)

POPULATION (MILLION)

AREA (KM2)

POPULATION (MILLION)

AREA (KM2)

POPULATION (MILLION)

BUILT AREA DENSITY (PERSON/KM2)

CITY DENSITY (PERSON/KM2)

METROPOLE DENSITY (PERSON/KM2)

% Of total national population

2398

25

6729

25

28356

37

10681

3807

1315

3%

1453

19

2862

19

11047

22

13601

6903

2006

2%

1929

20

4457

20

4458

20

10366

4486

4682

2%

Tokyo

4503

34

6432

34

13500

38

7722

5405

2825

30%

London

1780

11

2508

11

12861

14

6290

4465

1091

21%

1973

11

2778

11

12012

12

5632

4000

1011

18%

7514

18

9511

18

17405

20

2450

1936

1166

6%

Metropolitan Clusters Beijing Tianjin Guangzhou Foshan Shenzhen Dongguan

Paris New York

Figure

145

Urban Greenhouse Challenge Chapter 4 has elaborated on the Chinese national policy on protected farmland. Guangdong province has a total of about two million hectares of protected farmland, with about the same area of urban land (see appendix). However, how to utilize these protected area in highly densified big cities like Dongguan, Shenzhen is a big challenge. As show in the photos, these remaining plots protected farmland form a stark contrast from the surrounding city landscapes. The current farming practice uses limited input of technology and is labor intensive. Farmers are mostly migrants from other regions.

The site shown is a project site for the Urban Greenhouse Challenge organized by Wageningen University and the Country Garden Agriculture Group. Country Garden is one of the largest real estate developers in China and is starting to invest in agriculture in recent years. The project is an very interesting case for international students to develop understanding and innovative approach addressing the interlinking issues from water, energy, farming, to innovation, architecture, technology and to consumer psychology and regional DNAs, which can be used for other regions in the world.

Photos: Country Garden Project Site in Dong Guan for the Urban Greenhouse Challenge 146

Guangming Urban Farming in Shenzhen The Guangming Urban Farm is located in Shenzhen, a super city with more than 17 million people. Guangming Urban Farm has an area of 200 hectares of protected farmland, which is 10% of the total area of protected farmland in Shenzhen.

Guangming Urban Farm is exploring planning strategies and sustainable business models to utilize the farmland area.

One of the main strategies is to create public attraction value by combining agriculture, landscape and tourism. However the challenge is how to develop an sound industry cluster that can create value in the long run. Another strategy is to develop high added value and innovative concepts such as flower trading platform, seed breeding and vertical farming.

Photos: Guangming Urban Farm in Shenzhen combining agriculture with leisure functions 147

VERTICAL FARMING Challenges of high investment and energy The development of high power light emitting diodes (LEDs) have spurted the growth of plant factories, which are enclosed spaces where crops are grown under artificial light and controlled environment and root zone conditions, to deliver constantly high yields of nutritious and pesticide-free products.

The vertical farming market was valued at $2.3 billion in 2018 and investments grew significantly from $60 million in 2015 & 2016 to $414 million in 2017 & 2018. However, there remains many challenges for vertical farming including high investment cost and high energy costs.

A study (vfi, 2015) using the climate conditions of Shenzhen on the viability of substituting daylight with LED showed that for most produces the energy usage is way to intense. Even by covering the whole building envelope with the highest efficient pv-cells, it only covers 17% of power demand for food production.

148

Source: Vertical Farm Institute

Source: Vertical Farm Institute (2015)

URBAN / INDOOR / VERTICAL FARMING – FUTURE DEVELOPMENTS While the business cases for urban/indoor/vertical farming is still much debated, there is no denying that this is a trend to stay. Value propositions for highly densified urban core area for urban/indoor/ vertical farming can include the following: • High value products such as seedlings and medicinal plants and/or high market value attained due to the growing system (pesticide free, ultra-freshness, cleanliness, taste, functional ingredients, and so on) • Potential of developing new building typologies to combine vertical farming with public and community values such as social gathering, market and trade area While technologically, the Dutch sectors still have a leading edge, many international players from the US, China, and so on are rapidly moving into the market space. It is imperative that the Dutch sectors continuously innovate and open for collaboration to stay ahead of the competitions. It is especially of interests to shape future developments by actively developing industry standards for Controlled Environment Agriculture (CEA).

149

9 STRATEGIC ROADMAP

150

151

STRATEGIC ROADMAP

This table uses the ‘Blue Ocean’ ‘Red Ocean’ framework to give an conceptual comparison of value chain positioning and market chances across the different sectors related to “Green Cities”. The symbol represents a market segment which is saturated/mature, or limited chances for the Dutch sectors, or with high entrance barriers. The symbol represents another side of the spectrum where the Dutch sectors have clear competitive advantage, leading position or niche value proposition.

The ‘Green Buildings’ market is a mature market with limited chances for new (international) players. “Sponge Cities’ offers opportunity for technical services, design consultancy and training & capacity building. Similarly for ‘Greening Cities’. Metropolitan Farming/high tech agro parks offers Blue Ocean opportunity for the various Dutch sectors in the entire value chain given the clear international leading position of the Netherlands. However, in the new market of ‘Vertical/Indoor/Urban farming’, other new players from US, China and other parts of the world are quickly developing and filing up the market space which means continuous innovation is needed for the Dutch sectors to maintain international competitiveness.

152

No Presence / Red Ocean Minor Player Follower Clear Leader / Blue Ocean One of Leaders

Figure

Value Chain Position

Products / Markets

Green Buildings

Sponge City

Greening Cities

Metropolitan Farming

Vertical Farming

International Recognition

upstream (services /ecosystem)

Standards/Certifications Technical Services & Consultancy Education & Training Capacity building (Turkey) Construction

Midstream

Technology Equipment and material Investment Operation/Production

Downstream

Operational Training Consumer/Market Added Value 153

“TRIPLE-HELIX” APPROACH OF INTERNATIONALIZATION The triple helix approach, which refers to a set of interactions between academia, industry and governments to foster economic and social development, is often presented as a Dutch national strength for innovation. However, just stating that government, industry and academia need to work together is not enough. Rather, it is the ‘how’ and ‘why’ that sets countries apart. The figures to the right show the different models of the triple helix approach.[1] At one end of the spectrum is the ‘statist model’ with a strong state driving the interactions between the three components in a top down implementation. This is typical for ‘developmental’ states like China. At the other end is the ‘laissez-faire model’ typical for western liberal economies such as the Netherlands. In the Dutch model, the three components of university, industry and government are more equal and independent. The state exert its influence through regulatory frameworks such as intellectual property rights, and through funding of public knowledge institutes. 

[1] Source: Etzkowitz & Leydesdorff (1995). "The Triple Helix: UniversityIndustry-Government Relations: A Laboratory for Knowledge Based Economic Development". Rochester, NY.

154

The particular set of social-political infrastructure and under circumstances unique to each country determines the different roles and interactions between the three components. When these two very different models meet each other such as in the case of China and the Netherlands, there is need to understand and bridge the underlying differences in order to create a level playing field at different levels of government, industry and academia. As illustrated in the diagram, in China, government is the ultimately dominant driving force and hence governmental platforms and endorsements have very different implications than in the Netherlands.

Figure

Government

Government Academia

Industry

STATIST MODEL A strong state is driving interactions between the three components in a topdown implementation. China resembles more this model.

Academia

Industry

LAISSEZ-FAIRE MODEL University, industry and government are more equal and independent. State has a democratic and market oriented culture.

Can best describe the Dutch model.

155

ROLES OF DIFFERENT LEVELS OF GOVERNMENT/ PUBLIC INTEREST BODIES National Government

Sectoral Bodies

• • •

National/ministry level counterparts Trade policy/market access Intellectual Property Rights

•

Knowledge and innovation to strengthen the entire sector

• • Metropolitan Areas

•

The competitiveness of the Dutch horticulture sector is shaped by policy decisions at many different levels of government. It is not an issue between ‘national’ or ‘local’, rather it is important to clarify the roles and responsibilities of different levels of government (and other public interest bodies) and to develop collaborative policies to support the sector competitiveness.

City level government counterparts Lobbying of collective interests at regional/national level for market access, funding etc.

Develop a prioritized strategic agenda

Figure • Local/cluster developments

156

•

‘Voice’ for industry and entrepreneurship Connect urban-rural developments

157

STRATEGIC AREAS OF COOPERATION

Training, education & entrepreneurship development

Figure

This chapter provides a strategy framework for a multiyear, business case driven, ‘triple-helix’ approach to develop strategic collaborations with selected focal partners in China to achieve the following: 1. Focus on strategic policy and long term, pragmatic relationship at government to government level in focal regions as trusted gateway to partners in education/ research and business community in identified hot spot sectors. Complement other regional initiatives to form the ‘triple-helix’ model of internationalization.

2. Develop business cases and operation models: develop consortia based on a strategic, step by step approach to build trust and willingness for long term cooperation on both sides. At different levels (B2B and B2G) knowledge is being exchanged, tested and developed with a mutual interest to co-create values in new business models, cross-sectoral innovation, employment and regional and international competitiveness for both China and the Netherlands.

3. Level the playing field: represent a strong voice of entrepreneurship in complementarity with other levels of governmental relations to form a multi-level integral ‘national’ approach; level the playing field and safeguard collective sectoral interests such as market access, IP, contractual rights protections, trust and branding.

158

Regional development, cluster and cross sectoral development Joint applied research, incubation & upscaling innovations Regional development, cluster and Markets / cross sectoral Trade development

Technology, Production & systems Regional development, Logistics / cluster and cold chain cross sectoral development

AREAS OF COOPERATION CHINA / THE NETHERLANDS AREAS OF COOPERATION CHINA/THE NETHERLANDS

STRATEGIC THEMES

Figure

BUSINESS CASES/ COLLABORATION MODELS

COUNTERPARTS CHINA

Operationalize the Greenport Develop business cases and operation models: develop model as strategic international consortia based on a strategic, step by step approach to collaboration platforms with build trust and willingness for long term cooperation on selected cluster2cluster partners both sides. Start with smaller projects (focused city region, in China with a business case pilot projects) and step up to large scale system level driven 'triple-helix' approach to projects (joint curriculum, campus, trading platforms, large achieve the following: scale agro-parks) 1. long term, strategic relationship at local government to Business intelligence on policy, market developments and government level as trusted trends. Develop strategic framework and criteria to gateway to partners in Chinese regional and evaluate the different regions/economic zones/industry local level government education/research and business clusters who want to become "Westland Greenport China GREENPORT CLUSTER community to develop horticulture Partners". Identify the opportunities that can best support decision-makers (cities, DEVELOPMENT economic zones, high cluster and chains; the consortium member interests and overall 2. represent a strong voice of tech/innovation parks) Westland/GHCW development goals balancing chance of entrepreneurship in success/risks. complementarity with other levels of governmental relations to forms Facilitate match-making on both sides: Dutch companies and institutes set up JV/collaboration in China; and multi-level integral 'national' attracting Chinese investors/companies to the Netherlands approach; 3. level the playing field and safeguard collective sectoral Develop knowledge exchange and collaborations with interests such as market access, players from other sectors: e.g. e-commerce, healthy & IP, contractual rights protections, well-being, urbanization, water, energy. trust and branding

STRATEGIC PARTNERS NL (INCLUDING BUT NOT LIMITED TO)

RVO, Top sector, ministries Other regional governments e.g.

-Province South Holland - Brabant - Capelle aan de Ijssel - Lansingerland - Groningen

159

AREAS OF COOPERATION CHINA / THE NETHERLANDS AREAS OF COOPERATION CHINA/THE NETHERLANDS

Training & capacity development

STRATEGIC THEMES

Figure

BUSINESS CASES/ COLLABORATION MODELS

COUNTERPARTS CHINA

Facilitate the dissemination of academic/training programs in horti-related areas (technology, management, health, environment) to partner academic institutes in China; develop Chinese local and area development (e.g. joint programs (double degree, training for govt and business Horticulture is a highly technical, economic zones, high decisionmakers, and teachers/trainors) knowledge dependent and dynamic tech parks) industry. To sustain growth there is With partner institutions, develop horti-related training governments; fundamental need for investment in programs with revenue model for multi-level audience e.g.

Chinese universities & human capacity building and strategic managment programs for Chinese govt and technical colleges; knowledge generation. GHC/WHC business decision makers; technical management for staff of entrepreneurs in Westland is the gateway to applied Chinese companies and international companies active in horticultural sector research, training and capacity building China, 'train the trainer' program for Chinese teachers at and other industry academic/technical training institutes. sectors in China

STRATEGIC PARTNERS NL (INCLUDING BUT NOT LIMITED TO)

- WHC/GHC - Horti Heroes - Lentiz - InHolland - LDE - WUR

Developing business cases by student/young talent teams from the Netherlands and China

Markets/Trade

160

Trade and production is one integral regional development proposition.

Market driven, risk-taking, competitive, adaptive – this ‘export quality’ mind set fundamentally shapes the entrepreneurial culture of the region, regardless whether the market is ‘local’ or ‘international’.

- trade platforms - JV or technical/management stake - strategic advisory - develop 'export quality' standard

- Chinese local and area development (e.g. economic zones, high tech parks) governments; - Chinese platform operators (e.g. Ecommerce) - Chinese companies (producers, traders, packaging etc)

- Royal Flora Holland - Dutch traders, e.g. Best Fresh Group, Nature's Pride - Groenten Fruit Huis - Westland growers

Figure

AREAS OF COOPERATION CHINA/THE NETHERLANDS

STRATEGIC THEMES

BUSINESS CASES/ COLLABORATION MODELS

Joint applied research, incubation & upscaling innovations

With its complete entrepreneurial ecosystem, The netherlands is the perfect ‘incubator’ for horticultural innovations (with focus on health & wellbeing, digitization, sustainability) and China the perfect partner for upscaling!

- joint research/testing/product standard development - upscaling Vers+ and similar innovation projects driven by business cases - development of other niche, premium, branded products in Westland and upscale in China - research and business cases of application of Dutch technologies/innovation in Chinese market

Logistics/cold chain

Logistics and cold chain infrastructure is the biggest obstacle to horticultural industry developments in China but is also an area with dramatic improvement and growth opportunities. Cost optimization and flow integration between all links in the chain, from production to consumption critical for horticultural product business cases

- feasibility studies/market intelligence - Product specific chain solutions - new business models with producers, traders and logistics providers - training/education/capacity building in chain management

Products & systems

products and know-how for horticultural production; Innovation in greenhouse production systems: climate adaptation; resource efficiency; different scales - urban farming to agro-parks; remote production systems

- Export of Dutch products and systems - Product specific production solutions - Product quality standards - Training of greenhouse managers - new business models with producers, traders and logistics providers (e.g. 'export quality' model)

COUNTERPARTS CHINA

STRATEGIC PARTNERS NL (INCLUDING BUT NOT LIMITED TO)

- WHC/GHC Chinese local and area - Innovation Quarter development (e.g.

- Greenports economic zones, high - Top Sector tech parks) - Leiden/Erasmus governments; Chinese health/life sience cluster universities & technical - Other MNC players e.g. colleges; entrepreneurs Nestle, Heineken in horticultural sector - WUR and other industry - Growers in Westland and sectors in China other regions - Chinese local and area development (e.g.

- Rotterdam Port economic zones, high - Schipol Airport tech parks) - Rotterdam Partners governments; - Tilburg/Brabant - Chinese platform - Dutch logistics/cold operators (e.g. Echain companies commerce) - Westland consultancies - International in business planning, transport/logistics organization models, providers logistics planning etc.

- Chinese companies (producers, traders, packaging etc) Chinese local and area development (e.g.

Tomatoworld, RFH, economic zones, high Rotterdam Food Cluster, tech parks) governments; Chinese The New Farm, RVO, HHI, universities & technical Top Sector, Greenports, GPWH, Greentech, colleges; entrepreneurs Wageningen in horticultural sector and other industry sectors in China

161

METROPOLITAN CLUSTERS

LANGFANG, HEBEI • > 100 million in population • Over 10 years Hebei-South Holland friendship relationship • Cluster2Cluster: Langfang city

Figure

YANGLING, XI’AN • 87 million in population • Hub city Xi’an • Cluster2Cluster: Yangling Agricultural High-tech Zone

PEARL RIVER DELTA CLUSTER • • • • 162

> 100 million in population International business climate due to Hong Kong Trading hub for whole China Cluster2Cluster: Zhuhai city

QINGDAO, SHANDONG • • • •

100 million in population Hub city: Qingdao Strategic position yet untapped potential Cluster2Cluster: Qingdao Agricultura University

DEZHOU, SHANDONG • Cluster2Cluster: Dezhou • Friendship city with Westland • Strategic interests: renewable energy, logistics

TAIZHOU, JIANGSU • • • •

> 200 million in population Economically most important metropolitan cluster in China Cluster2Cluster: Taizhou city Strategic interests: cross-over with life science/well-being sector

JIASHAN, ZHEJIANG • Cluster2cluster: Jiashan city • Already set up a Sino-Dutch industrial park collaboration with Capelle aan den Ijssel. Planned visit to Westland in June 2018 163

FOCAL REGION: YANGTZE RIVER CLUSTER

> 200 million in population > 1,4 trillion euros total GDP

Figure 164

FOCAL REGION: PEARL RIVER DELTA CLUSTER/ GREATER BAY AREA

> 100 million in population The Pearl River Delta cluster centers around Guangzhou and Shenzhen. The regional economic power is further strengthened by the neighboring Hong Kong and Macau.

Trading hub for whole China

165

FOCAL REGION: BEIJING-TIANJINHEBEI CLUSTER

> 100 million in population The Beijing-Tianjin-Hebei cluster centers around Beijing and Tianjin.

Beijing is the political and economic center; Tianjin is strong in port and industry; Shijiazhuang is an important transport and trading hub in the region.

Key development: - new airport & trade hub - XiongAn New City

* Number of logistics routes calculated with internet big data collected and shown in this study. Other data are from National Statistics 2015.

166

FOCAL REGION: SHANDONG PENINSULAR CLUSTER > 100 million in population

> 100 million in population The Shandong Peninsular cluster centers around Qingdao and Jinan.

It derives its economic strength from its ports, well developed infrastructure networks connecting domestically as well as with Japan and Korea.

167

FOCAL REGION: NORTHWEST CHINA CLUSTER

87 million in population

87 million in population The Northwest China cluster centers around Xi’an, Lanzhou and Urumqi. Major infrastructure upgrade are underway for these hub cities.

168

FOCAL REGIONS CHARACTERISTICS

169

POTENTIAL GREENPORT CLUSTER2CLUSTER PARTNERS Potential Greenport Cluster2Cluster Partners

National Cluster Location

Spatial Economic (physical conditions)

General situation

170

Figure

Jiashan county, Jiaxing city, Zhejiang province

Qingdao city, Shangdong Province

Langfang city, Hebei province

Dezhou city, Shandong province

Yangling/Xi'an city, Shannxi province

Yangtze Delta (Shanghai) Cluster > 200 million in population Economically most important metropolitan cluster in China Super city: Shanghai Hub cities: Hang Zhou, Nanjing, Ningbo

Shandong Peninsular Cluster 100 million in population Hub city: Qingdao Strategic position in between the Shanghai Cluster and Beijing Cluster yet untapped potential

Beijing-Tianjin-Hebei cluster > 100 million in population Super city: Beijing Hub city: Shijiazhuang Uneven regional development dominated by Beijing.

Development of the XiongAn New City as a national mandate to integrate regional development and alleviate pressure on Beijing

Shandong Peninsular Cluster 100 million in population Hub city: Qingdao Strategic position in between the Shanghai Cluster and Beijing Cluster yet untapped potential

Northwest China Cluster 87 million in population Hub city: Xi’an Important gateway to connect the hinterland to the coastal developed areas. Strategic location for the "One Belt One Road" national strategy

Jiaxing city has about 5 million population with GDP per capita around 13.000 USD. Jiashan county is located just outside of Shanghai (80km to downtown) where Jiangsu, Zhejiang and Shanghai meet.

Jiashan as a county is economically very strong, and is one of the national level 'demonstration county' for rural-urban integration.

Qingdao city has close to 9 million in population. GDP around 18.000 USD per capita. It derives its economic strength from its ports, well developed infrastructure networks connecting domestically as well as with Japan and Korea. It is one of the most important hub city in China.

Langfang city is just outside of Beijing. It has about 5 million population and GDP close to 9000 USD. The new Beijing airport will be located at Gu'an county, Langfang, which means important growth opporunities with the improvement in infrastructure.

Zhuhai city, Guangdong province

Pearl River Delta cluster > 100 million in population Super cities: Guangzhou, Shenzhen Guangzhou is the most important commerce and trading hub for whole China; Shenzhen is the most innovative city in China and in the world. International business climate due to proximity to Hong Kong Dezhou city has about 6,5 million Xi'an city has about 9,5 million Zhuhai city has less population with GDP about 7000 population with GDP around than 2 million in USD per capita. Economically 12.000 USD per capita. Yangling population but with Dezhou is behind other areas in Agricultural High-Tech Zone is a GDP close to 25.000 Shandong. It has good national level development zone USD per capita. Its infrastructure connection and established since 1997. Yangling development is therefore good potential for itself has an area of 130 square boosted in recent logistics development. kilometers, and is envisioned to years with strategic become the regional hub of infrastructural knowledge, technology, and development such trade and so on. The wider as the Hong Kongregional cluster covers an area of Macau-Zhuhai 26,000 square kilometers, bridge. equivalent to the area of Israel.

Figure

Potential Greenport Cluster2Cluster Partners

Jiashan county, Jiaxing city, Zhejiang province

Qingdao city, Shangdong Province

Spatial Economic (physical conditions)

Jiashan has been in collaboration with Capelle aan den Ijssel for a few years, and they have established a Sino-Dutch Industrial Cooperation Park in Jiashan with an European office in Capelle. Heineken has established its main production base in the SinoDutch park and will continue to develop innovation centers.

Shangdong is an important for Dutch horticultural companies and there are existing cooperations in other parts of Shandong.

Jiashan is at the strategic planning stage of the agro/horti zone development (333 hectares) as part of the Sino-Dutch Industrial Cooperation Zone and would like to collaborate deeply with Westland

Qingdao West Coast Modern Agricultural Zone: has an total area of over 1,000 sq. km., and core area of more than 120 sq. km focusing on high end horticultural production

Strategic/cro ss-sectoral interests

Cooperation areas & potential partners (as discussed Green-port during visits cluster with face to development face meeting with decisionmakers )

Langfang city, Hebei province

Hebei province has a on-going friendship relationship with Province South Holland for the last 10 years. In recent years, horticultural development is increasingly becoming a focal area. Hebei is especially interested in the 'export oriented' Dutch model to upgrade its agricultural development.

Gu'an High Tech Zone is located next to the new Beijing airport, with strategic interests in logistics connection, demonstration, high added value production, and connecting other parts of Hebei to Beijing High Tech Zone.

Dezhou city, Shandong province

Yangling/Xi'an city, Shannxi province

Zhuhai city, Guangdong province

Dezhou city has a friendship city relationship with Westland. Several Dutch greenhouse companies has participated in projects in Dezhou.

Yangling has a friendship relationship with Lansingeland.

The trading relationship between the Netherlands and China started in Guangzhou more than 100 years ago. The trading port position of Guangzhou has important implications for Dutch traders and can be further strengthened in the areas of agro/food.

Yangling Agricultural High Tech Zone wants to become the leading modern agriculture/horticulture cluster in China

Doumen Ecological Agricultural Park of Zhuhai City is located at strategic location to the market in Hong Kong

171

Figure

Potential Greenport Cluster2Cluster Partners

Training & capacity development

Cooperation areas & potential partners (as discussed during visits with face to face meeting Markets/Trade with decisionma kers)

Joint applied research, incubation & upscaling innovations

172

Jiashan county, Jiaxing city, Zhejiang province Jiashan gov't will identify a leading regional (agricultural) university to collaborate with GHC/WHC and partners.

Jiashan would like to collaborate to set up trade platforms in the Agricultural Zone using its geographical advantage to Shanghai Jiashan would like to collaborate with WHC/GHC for the 'Innovation Park' in the Sino-Dutch development zone

Qingdao city, Shangdong Province

Langfang city, Hebei province

Qingdao Agricultural University would like to collaborate with WHC/GHC on a range of topics such as training, curriculum development, strategic development of greenport Qingdao is important for international trades with Korea, Japan and its hub position in agricultural products can be further improved

On-going contacts with Hebei agricultural university and other institutes

Dezhou city, Shandong province

Yangling/Xi'an city, Shannxi province

Yangling is home to the Northwest Agriculture and Technology University providing tens of thousands of graduates every year; Lentiz has started cooperation with Yangling Vocational College

Yangling national Free Trade Zone was approved by the national government in 2016, as the only national status free trade zone with focus on agricultural development.

Renewable energy industry is a strong cluster in Dezhou, potential for cross-sectoral collaborations on energy and greenhouses

Zhuhai city, Guangdong province

Figure

Potential Greenport Cluster2Cluster Partners

Logistics/ cold chain

Products and systems

Jiashan has close promixity to the metropolitan market of Shanghai; good potential to collaborate with Rotterdam logistics cluster Focus on high end horticultural products serving Shanghai, need high performance production systems

Jiashan county, Jiaxing city, Zhejiang province

The West Coast Development Zone has both good connections to Qingdao airport and sea port making logistics a strategic importance The 120 sq. km core area focus on high performance production systems

Qingdao city, Shangdong Province

Langfang city, Hebei province

Dezhou city, Shandong province

Yangling/Xi'an city, Shannxi province

Zhuhai city, Guangdong province

Cooperation with Dutch companies can be further strengthened

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