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China import & Export (Speech on ISEO 2007)An overview of trends inChina’s essential oils andChina’s import market forIndonesia’s oils
Winnie Yeung Kallin International (Hong Kong,China) [ winnie.yeung@kallin-intl.com ] 2007.11.8
Good morning ladies and gentlemen.
Thanks the organizer of ISEO 2007 to invite me to be a speaker. I sincerely wish this seminar will be the successful event to promote the Indonesian essential oils.
My aim of this speech is to describe an overview on the changes in production and exports of essential oils over the past 10-15 years since the commencement of the economic reform program inChina.
Also, I will introduce the types and requirement of essential oil in Chinese market, especially the potential and chance of Indonesia’s essential oils.
Ι﹒ESSENTIAL OIL PRODUCTION TODAY
The production scale for the major Chinese essential oil and the trends over the past decade are shown in this table.
Overview of Recent Oil Production and the Trends inChina
This table displays a very mixed trend between individual oils at the national level.
Various influencing factors have been at play and their significance within individual provinces has differed. Before discussing particular oils in any detail, let me briefly run over some of the more common factors.
Factors Influencing Change
First, we should briefly consider the political and economic history of the essential oils industry inChinaas a backdrop to the more recent changes.
The industry was established in 1950s by the state under command economy principles with the aim of creating wealth and rural employment, particularly in the more underdeveloped countryside. In those days, ruralChinawas unbelievably poor.
Initially, production was mainly bartered for imported goods with other members of the socialist bloc. By the mid-1980s, trade with other parts of the world developed strongly, and this phase was marked also by an aggressive pricing strategy to gain market share of some oils against the more established suppliers; for example, mint oil / menthol against South America, geranium againstEgypt, and medicinal eucalyptus against all other producers. Most of these marketing initiatives were successful but they were dependent upon the absence of a market economy basis at the production level inChina; i.e. acquisition of foreign exchange was the driving force and production costs were less important.
The introduction of the economic reform in the early 1990s upset the prior cozy economic applecart. This brought many changes seen since that time and which are still in the process of having an impact today in some provinces.
So, let us make a crude listing of the major economic driven changes for oils since 1990:
Initially, overproduction occurred with some essential oils through over optimism and lack of understanding of the mechanism of a true international market economy by growers and the newly emergent private sector traders. This was followed by a counter reaction of cutback in output and some years passing before stabilization were evident between supply and demand.
Reduction of output of some cultivated oils as farmers adopted true market economics and found that returns were unfavourable with other alternative crops or for the first time experienced price competition from foreign producers. In the “special economic zones” of the southern coast, there was the additional factor of rural dwellers voting with their feet and relocating to the better employment and life-style opportunities offered in the rapidly developing industrial areas and cities.
Output of some oils primarily dependent on harvesting of a wild forest plants reduced along with exhaustion of the natural resource or from collectors finding more income opportunities.
The reduced domestic output has resulted inChinaimporting some oils to ensure the supply of feedstock for its rapidly growing aroma chemicals industry.
This development of the aroma chemicals sector has also resulted in a marked change in the type of exports. Some oils that were previously exported almost exclusively in the state are today primarily consumed by the domestic industry and exported after further processing.
The Individual Oils
Let us now consider individual oils in some greater detail and try to untangle the drivers at a local level.
M. Arvensis Oil and Menthol
This slide displays the production trend for M. arvensis oil, which is the feedstock for menthol isolation.
Domestic Production of M. Arvensis Oil (tons)
Imports of Menthol Powder
This was formerly a major industry in provinces Jiangsu, Anhui, and Henan.
In the late 70s,Chinahad the biggest production and trade. In 1979, crude oil production was over 9,000 tons. Before 1980, it was mostly export. However, profitability was reduced by entry of very competitively priced Indian material and output has reduced.
Indian menthol powder is imported by Chinese factories in big quantity since 2000. The cheaper Indian powder helps the Chinese factories simply to keep in business and to serve domestic market demand for menthol. But, this has greatly affected the Chinese traditional factories; some closed, some merged and some changed to produce synthetic materials. Currently, the largest producers are mainly in Jiangsu Anhui, and Zhuhai.
Citronella Oil
Domestic Production of Java type Citronella Oil (tons)
Imports of Citronella Oil fromVietnam
From these data, you can see that starting from the 80s production has begun to decline. Main reasons are:
1) Unattractive returns in new economic development zones. - In the 80s, the largest production is mainly in Guangdong and Hainan. After reform, many farmers in Guangdong change their production to other products that have better earnings than Citronella. Also, many agricultural lands have become industrial sites. For Hainan’s oil, it contains lower aldehyde and alcohol. Therefore, these two provinces have been replaced by Yunnan.
2) Increasing cost to produce in less developed provinces (e.g. Yunnan and Guangxi) plus price competition fromVietnam. - Growing consumption by aroma chemical industry will further reduce volume of oil exported. At its peak demand,Chinaneeded 500 tons for isolate production. Currently, one of the top three multinational companies is also preparing to process by themselves at their new facility inChina, which is under construction. Therefore, imports fromVietnamandIndonesiato supplement industry’s needs.
Eucalyptus Citriodora
Domestic Production of E. Citriodora Oil (tons)
During the 80s,Chinahas reached its highest capacity, about 1,000 tons of Eucalyptus Citriodora Oil per year. Because supply is more than demand, its price had once dropped below USD3.00/kg. This had led the farmers to lose interest to grow more Eucalyptus Citriodora.
In the early 90s, most of the trees were cut down to make wood chips and exported toJapanandTaiwanto make paper. After the trees were cut down, farmer started to plant fruit trees and sugar cane, which will make more money. Therefore, the Eucalyptus Citriodora trees were reduced largely. Currently, the annual production of the oil is only about 300 tons.
Growing consumption by aroma chemical industry is also reducing the volume of oil exported. South America has increased their production. Prices are cheaper and contain 85% aldehyde, which is higher than Chinese 75%. This also creates competition to Chinese product.
Sassafras
Estimates of Domestic Production of Sassafras Oil (tons)
Imports of Sassafras Oil (tons)
* In 2004, Vietnam Government has prohibited its export.
Exports of Sassafras Oil vs. Consumption by Domestic Aroma Chemicals Industry (tons)
China was the major world producer at the end of 1980s and at that time virtually all production was exported.
However, production was dependent on destructive harvesting of wild forest trees and supplies have rapidly diminished.
This was accompanied by development of heliotropine and PBO production to extent thatChinahas now become dominant heliotropine supplier to international market.
This development, together with reduced sassafras availability, led to competition for supplies with domestic processors winning out over crude oil exporters.
Attempts to develop significant scale of production use newly domesticated species especially in Sichuan. However, this objective has as yet proved unrealized.
Developing imports fromVietnam,Laos, and most recentlyBurma.
Currently inChina, Heliotropine production is around 1,000 tons. PBO production is around 400 tons. Helional production is around 100 - 150 tons. The estimate of sassafras oil requirement by the industry today is more than 2,000 tons.
Future of naturally derived heliotropine depends on greater progressive in developing plantations of sassafras oil yielding new species, either from the Chinese Cinnamon species or the Amazonian Piper hispidinervium.
Litsea Cubeba
Domestic Production of Litsea Cubeba Oil (tons)
Litsea Cubeba production was started on harvesting wild trees but which seems to reduce.
Because recent year price has increased, farmers cut the whole tree to conveniently gather its berry. Therefore, wild tree has reduced a lot. Earlier this year during spring, the weather is very cold and still snowing so many flowers have died. When it was blooming, the weather is too hot. This year the availability is estimated to be less than half of usual.
Development of extraction of citral inChinahas reduced quantity of oil available for export. Currently, about 5 factories are processing the 95% and 96% of Citral. However, the ability to process the citral 97% by GC inChinahas only recently succeeded in the laboratory so mass production is not yet ready. Because wild litsea cubeba is getting lesser, currently plantation has established in Sichuan, Yunnan, Guangxi, Guangdong, and Jiangxi. This year limited supply has proven that the large plantation development is not yet likely to result in overproduction. This year because of its shortage, the price of the Litsea Cubeba oil is rising greatly.
Cassia
As you can see, the production has been increasing every year. By year 2000, it is already 4 times more than the 80s because these areas are poor mountain area. In order to improve the farmers’ living standard and income, the local Government has greatly promoted and helped to expand the plantation. Therefore, by year 2004, the whole plantation area has already covered many mountains. By then supply has become larger than demand, so the price for Cassia Oil has started to fall continuously each year. But since this year the inflation cause the price of oil increase again. Below are some references for the Cassia Oil price trend.
The quality also has changes over the years.
Starting from last year, many Cassia Oil samples has been rejected because the cinnamic aldehyde content is too high. During the 80s, the standard quality has a total cinnamic aldehyde content of 85%, with trans-cinnamic aldehyde at around 76 - 79 %. Now, the regular Cassia Oil has total content of 90 - 95%, with trans-cinnamic aldehyde 82 - 88 %. This results from the introduction of new processing methods.
Starting from the 90s, Chinese factories which make isolate brought crude oil from farmers paying them by the percentage of the cinnamic aldehyde content. Base on obtaining higher aldehyde content, the equipment have also been continuously improved. By mid 90s, factories have adapted to the new upgraded processing method as below.
As you can see, new processing method use lesser energy and time but obtain more oil. Therefore, for the past few years, big capacity factories (10 tons above), have already upgraded their equipment to the new technology. Now, only some rural plantation area will have some farmers that still use the traditional method. This is why traditional standard Cassia Oil has become lesser.
. However, with the new processing method, the cinnamic aldehyde content have been greatly increase, which will not be suitable for direct use in flavor and fragrance compound.
Therefore, while buyer (which make isolate) that needed high cinnamic aldehyde welcome the new processing method, compound users prefer traditional oil which have a smoother odor. South China has too many rainstorms so farmers are not able to collect the leaves. For those harvestable leaves, it contained too many water so the oil yield become lesser. This year, the price for the Cassia Oil has been rising.
Tea Tree
Production of Australian type tea tree oil (Melaleuca, terpinen-4-ol rich) has developed over the past decade inChina.
The original projects in Guangxi were based on unselected seed brought fromAustralia. The oil produced gave an inferior quality oil in which the terpinen-4-ol was below 35% and the 1,8-cineole was higher than 8%.
In 1998, the Guangxi Forestry Research Institute commenced a project on elite see selection, mass propogation, and improved agricultural methods. This work has resulted in the establishment of commercial plantations in Guangxi that provide oil of a quality matching that of Australian oil. Current oil production is about 80 tons per year.
However,Australiaprobably should be worried about retaining its position as the unchallenged major supplier of tea tree oil beyond the medium-term. The new Chinese oil is of a high quality and the production costs are competitive. CONCLUSION
In the next 10 years, the essential oils may have the trend inChinaas follow.
1) Production reduced.
a) Resources for the following essential oils, which main source is from the wild mountain, will get lesser as harvest become more. i. Sassafras ii. Cedarwood iii. Litsea Cubeba
b) The following cultivate essential oils will have lesser production. i. Peppermint ii. Spearmint iii. Lemongrass
2) Increase production.
The following essential oils have the potential to have more production as interested buyer increase. i. Lavender ii. Tea Tree iii. Clary Sage iv. Rose
3. Stable future.
The following essential oils have the trend to be stable for the next ten years and continuously to remain its large capacity for export. i. Eucalyptus Globulus ii. Geranium iii. Cassia iv. Star Aniseed v. Citronella
As economy reform develops and improves, the type and quantity of essential oil inChinawill continuously to change according to the global and domestic demand.
CHINA’S IMPORT MARKET FOR INDONESIA’S ESSENTIAL OILS
Up until the end of the 1980s, the world market viewedChinaas one of the major global exporters of essential oils, rather than as a significant market.
Since 1990 and as a result of the progressive impact of the economic reform programme, major changes have occurred inChina:
The domestic market has grown rapidly for consumer products are incorporating F&F ingredients. In the not too distant future,Chinawill be one of the major markets in the world.
The Chinese aroma chemicals manufacturing industry has grown tremendously and has captured a major share of the international market from the formerly dominant suppliers in Western countries. In addition to the Chinese domestic companies, most of the major multi-national company F&F manufacturers have transferred their operations toChina, where capital investment and production costs are much lower. As we know, top 10 of the biggest F&F already establish the factories.
China has become a significant importer of some essential oils.
The reasons forChina’s transformation to a volume importer of certain essential oils are: 1) Mainly to provide feedstock for the growing aroma chemicals manufacturing industry. 2) Partly to supply ingredients for the growing domestic consumer product market. 3) A decline in domestic production of some traditional Chinese essential oils.
Today, I heard about some introduction of Indonesian natural essential oil, I wish to indicate possibilities for essential oil producers ofIndonesiato develop exports toChinamarket.
1. Java-type Citronella Oil
As the name is Java type,Indonesiais one of the important producers in the world.
Currently, the Chinese market needs more than 1,200 tons of Citronella oil for aroma isolate, domestic use, and export. There is around 300 tonnes per year mainly import fromVietnam. It seems domestic supplies decline further, imports of Java citronella oil will increase and this will provide opportunities also forIndonesia’s producers. 2. Clove Leaf Oil
Clove leaf oil is imported byChina’s aroma chemicals industry for use as a raw material for isolation of Eugenol, which is further transformed into nature identical vanillin.
Additionally, there is a demand for this oil as an ingredient of fragrances and medicines.
Recent import volumes of Clove leaf oil have been around 15-20 full container loads (FCLs), i.e. 250-300 tonnes per year. The major suppliers toChinaareIndonesiaandMadagascar. 3. Patchouli Oil China also produces Patchouli oil, but the quality is not as good asIndonesia’s. The Patchouli alcohol of Chinese one is only 22 – 25 %, but Indonesian’s has 30 - 32 %. Therefore, it is necessary to import the Patchouli oil fromIndonesiafor the F & F inChina. As my knowledge, except the big multi-national company, one of the local factories need nearly 20 tons per year.
The consumption of this oil of Chinese F & F is increasing year by year.
4. Sassafras oil
Sustainably produced Sassafras oil offers a good prospect for sale by new suppliers to the Chinese aroma chemicals industry.
The heliotropine and PBO manufacturers in China consume some 2,000 tones / year of sassafras oil and they are dependent on a progressively declining supply of Sassafras oil obtained by destructive felling of wild sassafras trees in China and in neighboring Asian countries. Continuing adequate supply of sassafras oil is dependent on developing sustainable production on a large scale from the Brazilian plant Piper hispidinervium inChinaand elsewhere in the world.
According to the reported in 2000, Mr. Thomas Plocek described the results of successful trials inSouth Africaduring the late 1990’s with Piper hispidinervium. The project demonstrated that good yields of a Safrole rich oil could be produced. However, this pioneering work appears to have not yet been taken to the commercial production stage.
Therefore, the essential oil producers here inIndonesiawith suitable climatic conditions may seriously to study and consider developing production of Piper hispidinervium oil for export toChina. B. China’s import duty
20 years ago whenChinahas just opened its market, import taxes were very high. F&F compounds were subject to the highest duty, 45%, the rate for essential oils was 20% minimum and 15% for aroma chemical add 17% vat.
FollowingChina’s entry to the WTO in 2001, most import taxes have gradually decreased a few times year by year.
Today,China’s import duties are as follows.
However, the exact duty is depended on the Harmonized Code for each product used for importing.
C. The common necessary documents forChinaimport are as follows:
1) Invoice and Packing List 2) Certificate of Origin and Certificate of Quality and Quantity 3) Sanitary Certificate 4) Phytosanitary Certificate 5) Certificate of Fumigation (if packing are wooden material)
To conclude,China’s growing market offers prospects for sales byIndonesia’s essential oil producers, provided that there is a focus on those items that are in the greatest demand, particularly feedstock consumed byChina’s aroma chemicals industry. I think these will makeChinaandIndonesiacan accomplish a win-win situation for both import and export.
Thank you for your kind attention.
An overview of trends inChina’s essential oils andChina’s import market forIndonesia’s oils
Winnie Yeung Kallin International (Hong Kong,China) [ winnie.yeung@kallin-intl.com ] 2007.11.8
Good morning ladies and gentlemen.
Thanks the organizer of ISEO 2007 to invite me to be a speaker. I sincerely wish this seminar will be the successful event to promote the Indonesian essential oils.
My aim of this speech is to describe an overview on the changes in production and exports of essential oils over the past 10-15 years since the commencement of the economic reform program inChina.
Also, I will introduce the types and requirement of essential oil in Chinese market, especially the potential and chance of Indonesia’s essential oils.
Ι﹒ESSENTIAL OIL PRODUCTION TODAY
The production scale for the major Chinese essential oil and the trends over the past decade are shown in this table.
Overview of Recent Oil Production and the Trends inChina
This table displays a very mixed trend between individual oils at the national level.
Various influencing factors have been at play and their significance within individual provinces has differed. Before discussing particular oils in any detail, let me briefly run over some of the more common factors.
Factors Influencing Change
First, we should briefly consider the political and economic history of the essential oils industry inChinaas a backdrop to the more recent changes.
The industry was established in 1950s by the state under command economy principles with the aim of creating wealth and rural employment, particularly in the more underdeveloped countryside. In those days, ruralChinawas unbelievably poor.
Initially, production was mainly bartered for imported goods with other members of the socialist bloc. By the mid-1980s, trade with other parts of the world developed strongly, and this phase was marked also by an aggressive pricing strategy to gain market share of some oils against the more established suppliers; for example, mint oil / menthol against South America, geranium againstEgypt, and medicinal eucalyptus against all other producers. Most of these marketing initiatives were successful but they were dependent upon the absence of a market economy basis at the production level inChina; i.e. acquisition of foreign exchange was the driving force and production costs were less important.
The introduction of the economic reform in the early 1990s upset the prior cozy economic applecart. This brought many changes seen since that time and which are still in the process of having an impact today in some provinces.
So, let us make a crude listing of the major economic driven changes for oils since 1990:
Initially, overproduction occurred with some essential oils through over optimism and lack of understanding of the mechanism of a true international market economy by growers and the newly emergent private sector traders. This was followed by a counter reaction of cutback in output and some years passing before stabilization were evident between supply and demand.
Reduction of output of some cultivated oils as farmers adopted true market economics and found that returns were unfavourable with other alternative crops or for the first time experienced price competition from foreign producers. In the “special economic zones” of the southern coast, there was the additional factor of rural dwellers voting with their feet and relocating to the better employment and life-style opportunities offered in the rapidly developing industrial areas and cities.
Output of some oils primarily dependent on harvesting of a wild forest plants reduced along with exhaustion of the natural resource or from collectors finding more income opportunities.
The reduced domestic output has resulted inChinaimporting some oils to ensure the supply of feedstock for its rapidly growing aroma chemicals industry.
This development of the aroma chemicals sector has also resulted in a marked change in the type of exports. Some oils that were previously exported almost exclusively in the state are today primarily consumed by the domestic industry and exported after further processing.
The Individual Oils
Let us now consider individual oils in some greater detail and try to untangle the drivers at a local level.
M. Arvensis Oil and Menthol
This slide displays the production trend for M. arvensis oil, which is the feedstock for menthol isolation.
Domestic Production of M. Arvensis Oil (tons)
Imports of Menthol Powder
This was formerly a major industry in provinces Jiangsu, Anhui, and Henan.
In the late 70s,Chinahad the biggest production and trade. In 1979, crude oil production was over 9,000 tons. Before 1980, it was mostly export. However, profitability was reduced by entry of very competitively priced Indian material and output has reduced.
Indian menthol powder is imported by Chinese factories in big quantity since 2000. The cheaper Indian powder helps the Chinese factories simply to keep in business and to serve domestic market demand for menthol. But, this has greatly affected the Chinese traditional factories; some closed, some merged and some changed to produce synthetic materials. Currently, the largest producers are mainly in Jiangsu Anhui, and Zhuhai.
Citronella Oil
Domestic Production of Java type Citronella Oil (tons)
Imports of Citronella Oil fromVietnam
From these data, you can see that starting from the 80s production has begun to decline. Main reasons are:
1) Unattractive returns in new economic development zones. - In the 80s, the largest production is mainly in Guangdong and Hainan. After reform, many farmers in Guangdong change their production to other products that have better earnings than Citronella. Also, many agricultural lands have become industrial sites. For Hainan’s oil, it contains lower aldehyde and alcohol. Therefore, these two provinces have been replaced by Yunnan.
2) Increasing cost to produce in less developed provinces (e.g. Yunnan and Guangxi) plus price competition fromVietnam. - Growing consumption by aroma chemical industry will further reduce volume of oil exported. At its peak demand,Chinaneeded 500 tons for isolate production. Currently, one of the top three multinational companies is also preparing to process by themselves at their new facility inChina, which is under construction. Therefore, imports fromVietnamandIndonesiato supplement industry’s needs.
Eucalyptus Citriodora
Domestic Production of E. Citriodora Oil (tons)
During the 80s,Chinahas reached its highest capacity, about 1,000 tons of Eucalyptus Citriodora Oil per year. Because supply is more than demand, its price had once dropped below USD3.00/kg. This had led the farmers to lose interest to grow more Eucalyptus Citriodora.
In the early 90s, most of the trees were cut down to make wood chips and exported toJapanandTaiwanto make paper. After the trees were cut down, farmer started to plant fruit trees and sugar cane, which will make more money. Therefore, the Eucalyptus Citriodora trees were reduced largely. Currently, the annual production of the oil is only about 300 tons.
Growing consumption by aroma chemical industry is also reducing the volume of oil exported. South America has increased their production. Prices are cheaper and contain 85% aldehyde, which is higher than Chinese 75%. This also creates competition to Chinese product.
Sassafras
Estimates of Domestic Production of Sassafras Oil (tons)
Imports of Sassafras Oil (tons)
* In 2004, Vietnam Government has prohibited its export.
Exports of Sassafras Oil vs. Consumption by Domestic Aroma Chemicals Industry (tons)
China was the major world producer at the end of 1980s and at that time virtually all production was exported.
However, production was dependent on destructive harvesting of wild forest trees and supplies have rapidly diminished.
This was accompanied by development of heliotropine and PBO production to extent thatChinahas now become dominant heliotropine supplier to international market.
This development, together with reduced sassafras availability, led to competition for supplies with domestic processors winning out over crude oil exporters.
Attempts to develop significant scale of production use newly domesticated species especially in Sichuan. However, this objective has as yet proved unrealized.
Developing imports fromVietnam,Laos, and most recentlyBurma.
Currently inChina, Heliotropine production is around 1,000 tons. PBO production is around 400 tons. Helional production is around 100 - 150 tons. The estimate of sassafras oil requirement by the industry today is more than 2,000 tons.
Future of naturally derived heliotropine depends on greater progressive in developing plantations of sassafras oil yielding new species, either from the Chinese Cinnamon species or the Amazonian Piper hispidinervium.
Litsea Cubeba
Domestic Production of Litsea Cubeba Oil (tons)
Litsea Cubeba production was started on harvesting wild trees but which seems to reduce.
Because recent year price has increased, farmers cut the whole tree to conveniently gather its berry. Therefore, wild tree has reduced a lot. Earlier this year during spring, the weather is very cold and still snowing so many flowers have died. When it was blooming, the weather is too hot. This year the availability is estimated to be less than half of usual.
Development of extraction of citral inChinahas reduced quantity of oil available for export. Currently, about 5 factories are processing the 95% and 96% of Citral. However, the ability to process the citral 97% by GC inChinahas only recently succeeded in the laboratory so mass production is not yet ready. Because wild litsea cubeba is getting lesser, currently plantation has established in Sichuan, Yunnan, Guangxi, Guangdong, and Jiangxi. This year limited supply has proven that the large plantation development is not yet likely to result in overproduction. This year because of its shortage, the price of the Litsea Cubeba oil is rising greatly.
Cassia
As you can see, the production has been increasing every year. By year 2000, it is already 4 times more than the 80s because these areas are poor mountain area. In order to improve the farmers’ living standard and income, the local Government has greatly promoted and helped to expand the plantation. Therefore, by year 2004, the whole plantation area has already covered many mountains. By then supply has become larger than demand, so the price for Cassia Oil has started to fall continuously each year. But since this year the inflation cause the price of oil increase again. Below are some references for the Cassia Oil price trend.
The quality also has changes over the years.
Starting from last year, many Cassia Oil samples has been rejected because the cinnamic aldehyde content is too high. During the 80s, the standard quality has a total cinnamic aldehyde content of 85%, with trans-cinnamic aldehyde at around 76 - 79 %. Now, the regular Cassia Oil has total content of 90 - 95%, with trans-cinnamic aldehyde 82 - 88 %. This results from the introduction of new processing methods.
Starting from the 90s, Chinese factories which make isolate brought crude oil from farmers paying them by the percentage of the cinnamic aldehyde content. Base on obtaining higher aldehyde content, the equipment have also been continuously improved. By mid 90s, factories have adapted to the new upgraded processing method as below.
As you can see, new processing method use lesser energy and time but obtain more oil. Therefore, for the past few years, big capacity factories (10 tons above), have already upgraded their equipment to the new technology. Now, only some rural plantation area will have some farmers that still use the traditional method. This is why traditional standard Cassia Oil has become lesser.
. However, with the new processing method, the cinnamic aldehyde content have been greatly increase, which will not be suitable for direct use in flavor and fragrance compound.
Therefore, while buyer (which make isolate) that needed high cinnamic aldehyde welcome the new processing method, compound users prefer traditional oil which have a smoother odor. South China has too many rainstorms so farmers are not able to collect the leaves. For those harvestable leaves, it contained too many water so the oil yield become lesser. This year, the price for the Cassia Oil has been rising.
Tea Tree
Production of Australian type tea tree oil (Melaleuca, terpinen-4-ol rich) has developed over the past decade inChina.
The original projects in Guangxi were based on unselected seed brought fromAustralia. The oil produced gave an inferior quality oil in which the terpinen-4-ol was below 35% and the 1,8-cineole was higher than 8%.
In 1998, the Guangxi Forestry Research Institute commenced a project on elite see selection, mass propogation, and improved agricultural methods. This work has resulted in the establishment of commercial plantations in Guangxi that provide oil of a quality matching that of Australian oil. Current oil production is about 80 tons per year.
However,Australiaprobably should be worried about retaining its position as the unchallenged major supplier of tea tree oil beyond the medium-term. The new Chinese oil is of a high quality and the production costs are competitive. CONCLUSION
In the next 10 years, the essential oils may have the trend inChinaas follow.
1) Production reduced.
a) Resources for the following essential oils, which main source is from the wild mountain, will get lesser as harvest become more. i. Sassafras ii. Cedarwood iii. Litsea Cubeba
b) The following cultivate essential oils will have lesser production. i. Peppermint ii. Spearmint iii. Lemongrass
2) Increase production.
The following essential oils have the potential to have more production as interested buyer increase. i. Lavender ii. Tea Tree iii. Clary Sage iv. Rose
3. Stable future.
The following essential oils have the trend to be stable for the next ten years and continuously to remain its large capacity for export. i. Eucalyptus Globulus ii. Geranium iii. Cassia iv. Star Aniseed v. Citronella
As economy reform develops and improves, the type and quantity of essential oil inChinawill continuously to change according to the global and domestic demand.
CHINA’S IMPORT MARKET FOR INDONESIA’S ESSENTIAL OILS
Up until the end of the 1980s, the world market viewedChinaas one of the major global exporters of essential oils, rather than as a significant market.
Since 1990 and as a result of the progressive impact of the economic reform programme, major changes have occurred inChina:
The domestic market has grown rapidly for consumer products are incorporating F&F ingredients. In the not too distant future,Chinawill be one of the major markets in the world.
The Chinese aroma chemicals manufacturing industry has grown tremendously and has captured a major share of the international market from the formerly dominant suppliers in Western countries. In addition to the Chinese domestic companies, most of the major multi-national company F&F manufacturers have transferred their operations toChina, where capital investment and production costs are much lower. As we know, top 10 of the biggest F&F already establish the factories.
China has become a significant importer of some essential oils.
The reasons forChina’s transformation to a volume importer of certain essential oils are: 1) Mainly to provide feedstock for the growing aroma chemicals manufacturing industry. 2) Partly to supply ingredients for the growing domestic consumer product market. 3) A decline in domestic production of some traditional Chinese essential oils.
Today, I heard about some introduction of Indonesian natural essential oil, I wish to indicate possibilities for essential oil producers ofIndonesiato develop exports toChinamarket.
1. Java-type Citronella Oil
As the name is Java type,Indonesiais one of the important producers in the world.
Currently, the Chinese market needs more than 1,200 tons of Citronella oil for aroma isolate, domestic use, and export. There is around 300 tonnes per year mainly import fromVietnam. It seems domestic supplies decline further, imports of Java citronella oil will increase and this will provide opportunities also forIndonesia’s producers. 2. Clove Leaf Oil
Clove leaf oil is imported byChina’s aroma chemicals industry for use as a raw material for isolation of Eugenol, which is further transformed into nature identical vanillin.
Additionally, there is a demand for this oil as an ingredient of fragrances and medicines.
Recent import volumes of Clove leaf oil have been around 15-20 full container loads (FCLs), i.e. 250-300 tonnes per year. The major suppliers toChinaareIndonesiaandMadagascar. 3. Patchouli Oil China also produces Patchouli oil, but the quality is not as good asIndonesia’s. The Patchouli alcohol of Chinese one is only 22 – 25 %, but Indonesian’s has 30 - 32 %. Therefore, it is necessary to import the Patchouli oil fromIndonesiafor the F & F inChina. As my knowledge, except the big multi-national company, one of the local factories need nearly 20 tons per year.
The consumption of this oil of Chinese F & F is increasing year by year.
4. Sassafras oil
Sustainably produced Sassafras oil offers a good prospect for sale by new suppliers to the Chinese aroma chemicals industry.
The heliotropine and PBO manufacturers in China consume some 2,000 tones / year of sassafras oil and they are dependent on a progressively declining supply of Sassafras oil obtained by destructive felling of wild sassafras trees in China and in neighboring Asian countries. Continuing adequate supply of sassafras oil is dependent on developing sustainable production on a large scale from the Brazilian plant Piper hispidinervium inChinaand elsewhere in the world.
According to the reported in 2000, Mr. Thomas Plocek described the results of successful trials inSouth Africaduring the late 1990’s with Piper hispidinervium. The project demonstrated that good yields of a Safrole rich oil could be produced. However, this pioneering work appears to have not yet been taken to the commercial production stage.
Therefore, the essential oil producers here inIndonesiawith suitable climatic conditions may seriously to study and consider developing production of Piper hispidinervium oil for export toChina. B. China’s import duty
20 years ago whenChinahas just opened its market, import taxes were very high. F&F compounds were subject to the highest duty, 45%, the rate for essential oils was 20% minimum and 15% for aroma chemical add 17% vat.
FollowingChina’s entry to the WTO in 2001, most import taxes have gradually decreased a few times year by year.
Today,China’s import duties are as follows.
However, the exact duty is depended on the Harmonized Code for each product used for importing.
C. The common necessary documents forChinaimport are as follows:
1) Invoice and Packing List 2) Certificate of Origin and Certificate of Quality and Quantity 3) Sanitary Certificate 4) Phytosanitary Certificate 5) Certificate of Fumigation (if packing are wooden material)
To conclude,China’s growing market offers prospects for sales byIndonesia’s essential oil producers, provided that there is a focus on those items that are in the greatest demand, particularly feedstock consumed byChina’s aroma chemicals industry. I think these will makeChinaandIndonesiacan accomplish a win-win situation for both import and export.
Thank you for your kind attention.
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