The Peony flowers drop Water Droplets.
Merge the Droplets to make Bottles up to a Ship in a Bottle.
Break the Ship in a Bottle to get a Ship (and Shrapnel).
Merge Ships to get a Container Ship.
The Container Ship drops 4 Crates.
Break the Crates to get a Box (and Screws).
Merge Boxes to get a Scarab Box.
Scarab Boxes drop Scarab Beetles.
Merge Beetles to get a Lotus Flower.
It’s a long process :(
You can check out the Wiki entries for each step for more information.