OPENING DOORS TO CHINA - NEW ZEALAND'S 2015 VISION - NEW ZEALAND MINISTRY OF FOREIGN ...
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opening doors TO CHINA New Zealand’s 2015 vision
Opening Doors to China 1
Opening doors
to CHINA Foreword from
New Zealand’s 2015 Vision Prime Minister KEY
China is a country that has become very important to New Zealand. We want
01 Foreword from Prime Minister Key to expand our links further to grow trade and other opportunities between
our two countries. So I am delighted to introduce the NZ Inc China Strategy
03 China in perspective
– a vision for New Zealand’s developing engagement with China.
07 New Zealand and China
15 The NZ Inc China Strategy It is fitting that the China Strategy is being Premier Wen Jiabao and I agreed that we should
launched at the beginning of the auspicious aim for a doubling of bilateral trade by 2015.
16 Goals and priority actions Year of the Dragon, and also the year marking We’re on track to achieve that goal.
16 Retain and build a strong and resilient political relationship the 40th anniversary of New Zealand’s
diplomatic relations with China. Goods trade is only half the story. Our strategy has
18 Double two-way goods trade a strong focus on services as well. To mention just
The NZ Inc China Strategy is the second in two: China is already New Zealand’s largest source
21 Grow services trade
the Government’s series of centralised plans – of foreign students, and our fourth biggest tourist
25 Increase bilateral investment to levels that reflect the growing commercial relationship developed to strengthen our economic, political market. We plan to develop these further, and we
27 Grow high quality science and technology collaborations and security relationships with countries and see huge potential in other parts of New Zealand’s
regions, and to encourage people-to-people growing knowledge economy – design, information
33 Doing business in China links and two-way investment. technology, film and TV, food safety.
35 Preparing for China
Our strategy for China starts from an explicit Knowledge is in fact set to be a key driver of our
36 On the ground recognition that an excellent political rapidly growing relationship. Clearly it is a two-
relationship is the foundation upon which way street – we want to work with China to drive
everything else must be built. We can’t engage forward science and technology linkages, and we
with China just on the trading front – we need want to exploit the fruits of that collaboration to
to work across all sectors to build the range of the commercial advantage of both countries.
links that will enhance our understanding and
familiarity with one another. The NZ Inc China Strategy will help us build
on the successes we have already achieved.
The strategy is built around developing the trade It is designed to promote a whole-of-government
and economic links between New Zealand and approach. It is designed also to provide a basis
the People’s Republic of China. Both countries for more effective cooperation between the
understand that a strong export base and public and the private sectors.
comprehensive engagement in the international
economy are key elements in achieving
The New Zealand Inc China strategy articulates
economic growth, and boosting the welfare
the vision of a relationship with China that
and future prospects of our people.
stimulates New Zealand’s innovation, learning
Trade with China has been one of the great and economic growth. It is for us to work
success stories of the New Zealand export sector together to turn that vision into a reality.
over the past decade or more. So much so that I
had no hesitation in setting an ambitious future Rt Hon John Key
goal when I visited China three years ago. Prime Minister
Opening Doors to China 3
CHINA in Perspective
One in every six people in the world is Chinese, and their homeland has
amassed its resources to turn a population advantage into economic might.
The statistics demonstrating China’s modern With numbers like these, there is little
growth over the next decade are staggering: argument about China’s dominance and
influence in the global economy.
• The number of Chinese households with an
annual disposable income of over US$10,000 China is a vital part of the global supply
(in nominal terms) will almost quadruple – chain; rather than just being the end-market
from 57.1 million households to 222 million. for imports or manufacturer of exports, it is
increasingly part of a more sophisticated trading
China's foreign reserves, which exceed picture. China is now often a point on the supply
chain where one part is assembled with another
US$3 trillion, are now the largest in before being exported to another market for
final production, and yet another market for
the world. sale. Across Asia intermediate goods make up
more than 60 percent of imports, and China is
• Two hundred of the world’s top 700 cities the top importer of intermediate goods in
will be in China, requiring 97 new airports the world.
and 30,000km of new railways.
This is just one way in which China’s
• China’s per-capita gross domestic product predominant reputation as a powerhouse of
(GDP) is about US$7,500. Due to its cheap manufacturing labour is changing fast.
historically high level of savings (which has
funded the country’s phenomenal growth), China is taking deliberate steps to move
per capita consumption rates remain further up the value chain. As part of the
relatively low at about US$2,500 a year. In 12th Five-Year Plan, the government will boost
the United States, that consumption figure expenditure on research and development to
is about US$30,000 per person. With China 2.2 percent of GDP. It also has ambitious targets
moving to a domestic consumption growth for the registration of patents. This is on top of
model, this figure will rise significantly. existing efforts to encourage internationally-
based Chinese researchers to return to China
• By some calculations China is on track to and to recruit 2,000 foreign experts to work
become the world’s largest economy, yet it is in national laboratories.
still a developing country. China’s economic
growth over the past 25 years is probably the By 2015, China will have the biggest research
largest and most sustained period of wealth and development workforce in the world.
creation in the history of the world. In 1800, This concentrated investment in technology
China generated 25 percent of the world’s has led to China emerging as an innovator in
industrial output. By 1975, it had fallen to 1.5 sectors such as aviation, clean energy, finance,
Clockwise from the top: percent. It is now on its way back to 25 percent. telecommunications and science.
Jin Mao Tower in Shanghai, fortune cookie,
Prime Minister John Key at the New Zealand
Pavillion during Shanghai Expo.
Opening Doors to China 5
BABICH wine
The first five years of the Babich wine Tutty says success in China has
company’s foray into China were slow and complemented the business’s other markets
characterised by the occasional wrong-turn because, where the rest of the world favours
in terms of distribution partners. white wine, the Chinese favour red. It is
expected this favouritism may dilute over
But a year ago, the company signed a rare
time as a new generation discovers white
deal with a national distributor and this year
wine, but for now China’s preference is
China leapt into the top five of Babich’s 35
providing a welcome market for Babich’s
export markets.
pinot noir and Bordeaux-style red.
Martin Tutty, director of sales and marketing
for the 90-year-old family business, says: The volume of New Zealand red wine sold in
“It’s been a five or six-year overnight China between 2003 and 2009 grew by 153
success.” Tutty says China has the potential percent annually, while growth in white wine
to be Babich’s third largest market by 2015. over the same period was 269 percent.
Late last year, a report commissioned Philip Gregan, chief executive of
by New Zealand Winegrowers showed New Zealand Winegrowers, says dozens
the industry could double its exports by of New Zealand labels are in China. The
Beijing National Stadium (left), wine exports to concentrating on China and the United industry clearly recognises China’s potential
China have huge potential for growth (right). States. The Price Waterhouse Coopers but Gregan warns the spoils will not come
report said that by 2021, the New Zealand without hard work.
wine industry’s sales potential could grow
by 170 million litres a year to reach almost “It’s going to require money, hard work and
China’s growing economic weight is also leading in many Southeast Asian countries where a lot of worn-out shoe leather. It’s a big
400 million litres – and China and the United
to the internationalisation of its currency, the it is now regarded as a hard currency. country, both geographically and in terms
States could account for half of that growth.
Renminbi (RMB). Now that China is allowing of markets. Time in that market is incredibly
Between 1978 and 2005, China’s economy more
the limited conversion of its currency for Tutty says Babich has learned valuable important in terms of understanding how
than quadrupled in size, and 300 million of its
investment more central banks are starting lessons about working with the right people it operates.”
vast population of 1.3 billion people were lifted
to buy RMB to hold as a reserve currency. and using networks to get a feel for how well
from absolute poverty. It has maintained an Annual wine exports to China have grown
a candidate might fit with the company. After
Although the RMB remains pegged to a basket average growth rate of almost 10 percent per a couple of false starts with distributors who from $3.06m in September 2008 (the month
of foreign currencies and is still only allowed annum (falling to 9.1 percent for 2009, according failed to deliver on their commitments, Babich before the FTA was implemented) to $17.0m
to trade within a narrow band against this to the International Monetary Fund), attracted invested in sending Tutty to an expo in Asia in 2011, representing 456 percent growth.
basket, the People’s Bank of China is allowing sizeable foreign investment, greatly expanded where his small booth cost around $6,500 for New Zealand’s share of the imported wine
its currency to increase gradually in value. its international trade and built up around three days. He talked to everyone he could market in China is around 1.6 percent – the
US$3 trillion in reserves. and developed valuable market instinct and eighth largest exporter of wine to China in
In terms of trade, Beijing’s relaxation on the use
made the contacts which led to the successful 2010 in dollar terms, and the 11th largest in
of the RMB in international transactions means China’s increasing economic success has given relationship with his current importer. volume terms.
that 7 percent of China’s external trade is now it greater influence in regional and international
settled in their national currency (up from 1 politics. Its prosperity has driven prosperity and “It’s about creating your own luck,” he says. Of the top 15 exporters of still, bottled
percent in 2010). The RMB is already welcome stability throughout the Asia-Pacific region. wine to China (which collectively make up
It has cost significantly more to establish in
99 percent of the volume), New Zealand’s
China than any of Babich’s other markets.
average price per litre is the highest, at
CHINA – INCOME GROWTH FORECAST Tutty visits China four times a year, for up to US$8.22 per litre against an average of
three weeks, and has appointed a full-time US$4.49 per litre. The next highest is France,
in-country Chinese sales manager. He says at US$5.01 per litre, followed by Australia
2010 38% 54% 6% 2%
a company which cannot afford to invest (US$4.90) and Germany (US$4.43).
significant time and resources should not
2015 25% 43% 28% 4% attempt to take on China. Wine Intelligence’s China Landscapes 2011
report estimates a target audience of 18.6
“China is more complex than any other market million upper-middle class Chinese who are
0-55k RMB 55-100k RMB 100-200k RMB 200k + RMB we’ve been involved with. There are entire based in urban centres, aged 18-50, and
categories which don’t exist in other countries, regularly drink imported wine.
Source: McKinsey Global Institute such as banqueting and bulk-purchase for
gifting. But now the pay-off from those years www.babichwines.co.nz
of perseverance is starting to show." www.nzwine.com
Opening Doors to China 7
New Zealand and CHINA
New Zealand enjoys a positive profile within China thanks to the ‘four firsts’.
New Zealand was: The FTA between New Zealand and China
• The first Western country to conclude (NZ-China FTA) came into force on 1 October
a bilateral agreement with China on its 2008 and liberalises and facilitates trade in
accession to the World Trade Organisation goods and services, improves the business
(August 1997) environment and promotes cooperation in a
broad range of economic areas.
• The first developed economy to recognise
China’s status as a market economy This early willingness to recognise and trade
(May 2004) with China is repaid with a level of engagement
• The first developed country to enter into which is of substantial economic and strategic
Free Trade Agreement (FTA) negotiations value to New Zealand.
with China (announced November 2004) In the year to October 2011, New Zealand’s
• The first OECD country to sign a high-quality, exports to China grew 34 percent, from $4.3
comprehensive and balanced FTA with billion to $5.8 billion, imports from China grew
China (April 2008) 13 percent, from $6.1 billion to $6.9 billion.
New Zealand AND CHINA TRADE FIGURES
LEISURE $232m
EXPORT TOTAL: $5810 MILLION
IRON GOODS $232m
DAIRY $2080m PLASTIC $240m
WOOD $1244m HOMEWARE $310m
WOOL $398m CLOTHING $993m
SEAFOOD $268m MACHINERY $2561m
WOODPULP $216m
IMPORT TOTAL: $6900 MILLION
MEAT $210m
Source: Statistics New Zealand (for the 12 months to October 2011)
Hong Kong Island; with the International Financial Centre in view.
8 Opening Doors to China
Mayors of Chinese cities have significant political
power and influence, so New Zealand mayors can
play an important role in opening doors in China.
A business delegation led by a high-ranking political
figure gets more traction.
Total two-way merchandise trade has grown any other major nation in New Zealand’s New Zealand GreenshellTM mussels.
more than 50 percent since the FTA, helping to trading history.
partially offset the turmoil of the global financial One of the most pivotal developments came dominated by milk powder and logs, account
crisis. China is New Zealand’s second-largest In 2010, the New Zealand-Hong Kong, China
with the advent of direct flights from Auckland for 91 percent of New Zealand’s earnings from
market, accounting for over 12 percent of Closer Economic Partnership Agreement (CEP)
to China’s largest cities, initially through Air exports to China.
exports, and the second-largest source of capitalised on Hong Kong’s status as a Special
New Zealand which was joined in the past
imports, at 16 percent. Administrative Region of China with autonomy However trade is diversifying. The Government
year by China Southern Airlines.
in trade matters. Hong Kong is New Zealand’s is working with industry to promote the growth
New Zealand’s export trade with China over ninth largest export market worth $823 million Supported by direct air links, China has been of exports in higher-value goods such as wine
the past two years has grown faster than with per annum. New Zealand’s fastest-growing inbound tourist and seafood, and the outlook is promising.
market for a decade and tourist numbers will Wine exports to China grew from $3 million
nearly double in five years. By 2014, China is in September 2008 to $17 million in 2011
New Zealand China Trade Association projected to become New Zealand’s second- – 456 percent growth.
largest source of visitors.
China's government has made it clear haven’t got something to trade, don’t bother.” New Zealand is recognised as a world leader
New Zealand is a worthwhile, significantly China is the largest source of international in quality food production and China is a
Ferguson, who was chief executive of the students – 300,000 have studied in
valuable and preferred business partner growing market. Our reputation for science and
New Zealand end of the Chinese national New Zealand over the past decade. This
for Chinese businesses. innovation could make a significant contribution
shipping lines for 22 years, says companies business generates not only money, but great to China’s food safety and food security.
Stuart Ferguson, chair of the New Zealand should not be too proud to ask for help in links and networks created while a Chinese
China Trade Association, says this status developing a strategy to approach China. person is studying – and potentially settling Some of the earliest Chinese migrants in
should not be squandered. It presents an The NZCTA can help pair experienced – in New Zealand. New Zealand arrived for the 1860s gold rush.
opportunity for the well-researched entry China operators with new entrants to Today, Chinese New Zealanders are the fifth
of proven New Zealand products and form a mentoring relationship – be it a China’s investments in New Zealand were largest ethnic group in New Zealand – 3.7
services, as long as operators are willing one-off catch-up over a cup of coffee NZ$1.8 billion in early 2010, most of it in the
percent of the total population at the last census
to put in the necessary effort to make or a formalised, in-depth arrangement. forestry sector, followed by manufacturing
and the largest Asian ethnic group. There are 29
their Chinese venture a success. Ferguson says the war stories, wisdom and and commercial construction.
sister city and sister port relationships between
experience of those who have successfully New Zealand and China, from Ashburton and
“Probably a lot of the low-hanging, ripe New Zealand or New Zealand-associated
broken into China are invaluable in Puyang to Wellington and Beijing.
fruit is gone. Those who wish to enter the companies such as ANZ, Richina and Fonterra
preparing newer operators for the
market will need to do considerably more have major holdings in China. Investment in
complexities of the market. Chinese New Zealanders enrich New Zealand
work but all export is difficult. China is important to secure a long-term market
cultural life with events like the Lantern
“There is a market there for people willing for New Zealand products and assists in the
Festival in Auckland, organised by the Asia New
“The biggest mistakes among aspiring to put in effort in terms of research and penetration of China’s enormous developing
entrants to the market are a lack of research consumer market. Zealand Foundation, which attracted 240,000
tenacity.”
and a reluctance to invest time or money. It’s in 2011. While most are yet to visit China,
not a market you can cut your teeth on. If you www.nzcta.co.nz The trade relationship has a very strong New Zealanders are discovering Asia through
commodity base – primary products, food, clothing, electronics and hardware.
10 Opening Doors to China Opening Doors to China 11
“It’s not really a case of identifying the potential. The
Pure New zealand Greenshell Mussels
potential is huge. The question is how we best convert
Over a decade ago, the Greenshell™ mussel secondment from New Zealand Trade and
that potential into real economic growth opportunities
industry made its first foray into China – Enterprise and has since become PNZGM’s for our country.”
with unpleasant results. Shanghai-based general manager. With a
long history in business development for
Prime Minister John Key
Some Chinese distributors duped consumers international New Zealand companies, Zhang
with counterfeit products leveraging brings crucial Chinese business acumen Atrax
off New Zealand’s strong reputation for to the task of re‑establishing a significant
quality and food safety. A small and muddy Greenshell™ mussel market in China. Kevin Maurice says no exporter should Maurice also had to find a factory, and
locally-grown green mussel was found
be paralysed by the fear of intellectual for this he relied on his networks. He
packaged and sold in-market under the “This collaboration is a long-term business
property infringement in China. He’s had and another New Zealand business
guise of New Zealand’s iconic Greenshell™. model looking for long-term profit. We are
his intellectual property (IP) stolen or owner have collaborated to establish a
Distributors sprayed water over mussels and very confident in the future,” Zhang says.
threatened in Germany, Singapore and factory in southern China which fulfils
froze them to add weight so they could sell Pure is sold into the food service sector,
even in New Zealand, but through good both their needs. The businesses have
for more. Perhaps the biggest concern was targeting western chefs familiar with the
management and good luck, he’s yet to complementary technology but are in
the sale of cheap Chinese mussels under the Kiwi delicacy, and Asian chefs looking for
have problems in China. unrelated industries.
New Zealand name and counterfeit branding interesting new flavours.
into highly valued third markets, such as the Maurice set up design and manufacture
PNZGM is already a multi-million dollar Finally, Maurice had to tackle the issue of
United States. company Atrax about 25 years ago. His
export venture and the target for 2012 is IP infringement. While ensuring he has
to double sales. The price paid for PNZGM weighing and measuring products are
It was difficult for Kiwi companies to address all the necessary registrations in place,
product has risen from US$4.50/kg to sold to other businesses which then install
these issues so, with the added complication Maurice has also taken a much more
US$4.85/kg in the past year. This is critical them in airports around the world. Atrax
of intense competition between New Zealand simplistic approach. He has segmented
to maintaining export returns when the products – from the small scales which
exporters driving down the Greenshell™ sale his business so that there is little contact
New Zealand dollar remains strong. weigh your check-on baggage to the large
price, exporters walked away from China and between the design capability in
scales used to weigh cargo for air freight
refocused on other markets. New Zealand, the manufacturing plant
Zhang says members of PNZGM visit – are in 101 countries from Iraq to The
customers in China. She believes this is in southern China and the sales centre in
It was eight years before sizeable volumes Philippines. One example is Hong Kong
of New Zealand Greenshell™ mussels the most important lesson for aspiring International Airport, where every piece of Shanghai. He routinely ships bulk goods
made a return to the Chinese market in exporters: “People like to see Kiwi faces. baggage, freight or mail passing through back to New Zealand where the products
2010 – and these days, it’s much better It shows your commitment to the market.” the airport is routed over an Atrax scale. are then loaded up with the software. And,
news. As a market, China has more promise whenever he uses a sub-contractor in
Gary Hooper has worked closely The company is well-positioned in China
than most. It offers strong economic China, he will ask them to make a piece of
with PNZGM as marketing director of to take advantage of the surging demand
growth, an emerging ‘consumer class’ with steel or electronic part but never divulge
Aquaculture New Zealand – the industry for air travel and resultant expansion
a desire for quality imported foods, an what it is for.
body that represents Greenshell™ mussels, of airports across Asia. Atrax began
improved regulatory regime (to limit the
New Zealand salmon and farmed manufacturing in China about three years “Some of these things are in conflict
counterfeiters) and a history of appreciating
Pacific oysters. with Western management styles but I’m
Greenshell™ mussels. ago, after Maurice sold off the domestic
“Chinese consumers love our product and arm of his business to focus on exporting. the only guy who knows all the parts of
The other significant difference is that the jigsaw.”
associate New Zealand with quality and
several of the leading mussel producers There were a number of issues to resolve
food safety. The economic growth and
are now working collaboratively under one before Maurice was comfortable with his Maurice encourages other Kiwi business
associated consumption is phenomenal.”
brand – Pure. The shareholder companies in Chinese operation. people to reconsider China if they’ve
Pure New Zealand Greenshell Mussels are Hooper says the collaborative approach previously dismissed it as too hard.
He found it took substantial effort to
Sanford Limited, Sealord, Kono NZ Limited used by PNZGM has sparked interest
document his processes so he could rely “It is a big market. It is close to other parts
and NZ Greenshell. This approach combines in adapting the approach for channel
on them being made to his standards of the world. Meanwhile, we are a far-flung
resources and shares the risk and it is the and market development elsewhere.
offshore. He has now developed the little dot in the South Pacific. You can only
first marketing initiative of this nature and Other export sectors have also asked for
documentation to ensure a consistently do so much business from New Zealand.
scale among mussel producers. information about the model to understand
high standard, but he has also employed You need to get amongst it.”
whether it might be applicable and useful.
Chinese businesswoman Vivian Zhang an engineering manager who spends
helped establish the company while on www.purenzgreenshell.com around half his year in-market. www.atraxgroup.com
“Over half of China's...
1.35 billion... population now live in urban areas.”
China National Bureau of Statistics, 2012
Opening Doors to China 15
The NZ Inc CHINA Strategy
This country strategy is part of a broader government strategy to increase
the internationalisation of the New Zealand economy which, in turn, is part of
the wider Economic Growth Agenda. It supports the Government’s main goal
to deliver greater prosperity, security and opportunity for all New Zealanders.
The strategy is part of a whole-of-government increasing exports. It identifies issues that
approach to growing exports and new markets. impact on New Zealand’s ambitions.
Developing and capitalising on New Zealand’s
relationship with China is crucial in delivering New Zealand 2015 vision
the Government’s Economic Growth Agenda,
including the goal of raising the level of our New Zealand and China have strong and
exports to GDP from 30 to 40 percent by 2025. resilient economic, political and people-
to-people relationships which have
The NZ Inc China Strategy reflects China as an
important bilateral partner. It has a strong trade stimulated New Zealand’s innovation,
and economic focus and sets out ambitious, high- learning and economic growth.
level, five-year goals and actions to achieve them. New Zealand’s ‘four firsts’ with China create
The strategy also provides an overview of the a platform to achieve these goals.
strengths and weaknesses in New Zealand’s The challenge is to translate an excellent
approach in the market. The strategy has
political relationship and trading framework
been developed by ministers and government
into tangible benefits for New Zealand. Our
agencies with important input from industry
companies must be helped to harness value
groups, businesses and organisations involved in
building New Zealand’s relationship with China. as well as volume from the China market.
A central aim of this strategy is greater Not only must we focus on what our businesses
efficiency and effectiveness across all need to succeed in this market, we also need to
government agencies that work in and with consider what we do in New Zealand to learn
China, and more targeted and cohesive services about and work with China as a partner. This
to help successful businesses develop and grow focus would span investment and migration, and
in China. The strategy, however, goes beyond consider tourists, students and business people.
“China’s way of doing business is already having an
influence around the world. World businesses will
evolve to keep up with it.” McKinsey Global Institute
Clockwise from top left:
Air travel expansion across Asia, Chinese student, Chinese cuisine,
Chinese spice market, the Forbidden City in Beijing.
16 Opening Doors to China Opening Doors to China 17
Goals and Priority Actions
The NZ Inc China Strategy identifies five strategic goals for furthering
New Zealand’s relationship with China.
1 R
etain and build a strong and Police and the Department of Internal Affairs. "An astounding 30 million [Chinese] Following consistent investment in China
resilient political relationship
with China.
Several key steps to implement this strategy are
already underway, including:
consumers are expected to shop online for since 1972, New Zealand has strong political
connections to both central and provincial
2 Double two-way goods trade • A 2012 ministerial work programme is in the first time, every year until 2015. That's governments. These relationships require
ongoing attention and investment as powerful
with China to $20 billion by 2015. place for high-level engagement to push
forward the political relationship, and to lead
a population nearly the size of Canada." provincial economies are emerging as the
new frontier.
3 G
row services trade with China trade missions to China. Boston Consulting Group
For many of our largest and most progressive
(education by 20 percent, tourism • China business training courses have been companies, ‘China is the new China’.
by at least 60 percent, and other attended by over 400 business representatives It is critical New Zealanders appreciate the Mainfreight, Rakon, Zespri, Weta Workshop
services trade) by 2015.
building the capability and market readiness different scope of China’s government and build and Biovittoria are among major New Zealand
of companies at the early stages of entry to the their understanding of successful engagement. companies exploring business in regional China.
4 Increase bilateral investment to levels Chinese market. This strategy identifies the need to support
that reflect the growing commercial China is of central political and strategic companies to build the political and commercial
relationship with China. • Immigration New Zealand’s Shanghai-based importance in the Asia-Pacific and globally. Its goodwill required for long-term success.
service has expanded to enable more efficient policies directly affect New Zealand’s political
5 Grow high quality science and processing of visas for Chinese business interests, security and economy. China is How will we achieve this goal?
technology collaborations with people, tourists and students. increasingly active in international rule-setting
China to generate commercial and practices in areas as diverse as international Commit to ministerial engagement, both
opportunities. • Two new investment advisors have been trade and finance, climate change, fisheries, aid as hosts and visitors to China, to build
based in Beijing and Shanghai, to lead the and the future regional architecture of Asia. the high-level relationships required to
Underneath each goal is a series of priority Government’s investment strategy in China. achieve the strategy’s goals.
actions that will be implemented by relevant It is important that, in dealings with China,
1 Retain and build a strong and New Zealanders’ interests are understood, The 2012 milestone of 40-year-diplomatic
agencies, including: the Ministry of Foreign protected and advanced. relations will present opportunities to
Affairs and Trade, New Zealand Trade resilient political relationship
reinforce our warm relations. The rebuild of
and Enterprise, Ministry of Economic with China The Chinese government plays a major role the New Zealand Embassy in Beijing will also
Development, Tourism New Zealand and in business in China, both as a regulator refresh our flagship presence in China.
the Ministry of Science and Innovation. After the best part of 200 years of marginal and through state run companies. In this
global influence, China has reclaimed a position environment, the New Zealand Government Strengthen existing domestic knowledge
Other agencies working closely on priority as a leading world power. can actively assist New Zealand companies to of China, and provide a base for a
actions include the Asia New Zealand
form alliances with major Chinese enterprises China/New Zealand Partnership
Foundation, the Ministries of Agriculture Its global rise is characterised by economic
and to access services in China. Forum, through establishment of
and Forestry, Defence, Transport, Customs, and social development. China is on track to
a New Zealand China Council.
Immigration New Zealand, Treasury, Ministry become the largest economy in the world within The experience of many New Zealanders doing
of Education, Te Puni Kokiri, Ministry for 20 years, while simultaneously lifting its rural business in China is that they “make friends first; A New Zealand China Council will bring together
the Environment, Education New Zealand, citizens out of absolute poverty. make money later”. leaders in business, public sector and academia.18 Opening Doors to China
Two-thirds of China's population
– an estimated 64 percent – will live
It will build understanding of common challenges in cities by 2025.
and opportunities for NZ Inc to balance and
lead public discussion and support ministers. McKinsey Global Institute
The Council will lead a high-level bilateral
Partnership Forum with Chinese counterparts. This has been underpinned by growth in
commodities, but there are encouraging signs
Establish a bilateral financial and of significant development in higher value,
economic dialogue involving the differentiated products and services. The Aqua Luna, an antique junk boat, which
Reserve Bank and the Treasury. competitive advantages offered through the takes tours around Victoria Harbour (left),
FTA are increasingly apparent and will grow Chinese factory worker (right).
This will aim to build stronger mutual
understanding of finance and economic significantly in the next few years.
policy positions and systems. Orion health
In addition to the FTA, there are environmental
Encourage more New Zealanders to learn factors which present a significant economic Orion Health has been active in China who have studied in New Zealand to grow
Chinese language skills, train teachers opportunity for New Zealand. Among these are: for nine months and is determined to with the company and eventually return
to run Chinese language programmes China’s projected economic growth; continued not repeat its competitors’ mistakes. to China to work for Orion.
in schools and strengthen Asian studies urbanisation; its role in global supply chains;
in universities. demand for resources; and a growing middle Orion is an Auckland-based health Oxenham says Orion is moving slowly
class of consumers who expect food safety and information technology (IT) vendor, and and purposefully. Products have been
Strengthen and maximise areas of security. There are many points of common New Zealand’s largest privately-owned reworked to fit the market – from the
cooperation between security and law interest between China and New Zealand, most software exporter. Its software is used refocusing of marketing collateral to
enforcement agencies in New Zealand obviously in the agritech and food and beverage by clinicians in over 50 countries to highlight what is important to Chinese
and China. sectors, but with growing opportunities in quickly access patient records across customers, to the formation of quality
technologies, natural products and specialised a variety of sources. translation upgrades using Chinese text
2 Double two-way goods trade manufacturing and services. across Orion’s software.
Executive vice president hospital
with China to $20 billion by 2015 solutions, Wayne Oxenham, says Orion China has commanded a lot of resources
New Zealand’s challenge will be to realise
started planning to enter China about and effort but Oxenham says this market –
China is New Zealand’s second-largest bilateral this potential and maximise the relationship
two years ago. It commissioned research where the military alone has 1,000 medical
trading partner with two-way trade worth $12.7 with China in addition to our current global
and developed a high-level market centres and hospitals – is worth it. “The
billion in the year to October 2011. Since the trade profile, maintaining a balanced view of
entry strategy. A priority was a local potential is unbelievable. If we capture
FTA came into force in late 2008, exports from the world. Interest amongst the New Zealand
Chinese operator who had networks two percent of the market, we’ll generate
New Zealand have increased by 152 percent, the business community is strong, but there and local business understanding so
fastest growth with any major trading partner remains a great deal to be done to translate that $100 million in five years. If we’re not there,
Orion appointed a Chinese resident in we’re not truly global.”
in recent times. New Zealand’s annual trade interest into market-ready, commercially-viable New Zealand as China general manager,
deficit with China has also reduced by nearly businesses capable of engaging in a sustainable and it is now recruiting Chinese people www.orionhealth.com
60 percent. and profitable way with China.20 Opening Doors to China Opening Doors to China 21
“Companies must have both the
flexibility to adapt and the skills to
How will we achieve this goal? innovate to keep in step with the basics of doing business in China and
will identify training needs for further
economic goals. As with our goods trade, we
have scope to do better in our traditional service
China high-growth companies project Chinese market’s exciting development.” development for those wishing to intensify exports to China – education and tourism –
A substantial group of New Zealand Trade and their engagement. NZTE will also work with and to develop other areas, such as design,
McKinsey 2011 Annual Chinese Consumer report
Enterprise’s (NZTE) customers have China other agencies and trade organisations to architecture, consulting, IT, environment
as a priority market in the short and medium- stimulate broader interest and awareness and food safety services.
term. NZTE has assessed the needs of these such as aviation, marine, commercial fit-out, of business opportunities with China.
companies and will implement a project to food processing technologies, etc; information Education: grow value of education
help them realise their full growth potential in Representing New Zealand business
and communication technologies; and natural services by 20 percent
China. Through this project NZTE is targeting in China
products and bioactives.
50 or more successful, profitable and fast- The Government has set a goal of doubling the
In close collaboration with other government
growing companies in China by 2015. Each sector programme will realise market economic value of export education services to
agencies, NZTE will monitor and communicate
opportunities for all New Zealand exporters and $5 billion by 2025. China is the largest source of
The project will help exporters to analyse and changes to the business environment in China
heighten the awareness of their capabilities and foreign students in New Zealand with 21,000
understand the market; develop products and that may affect New Zealand’s commercial
expertise amongst Chinese customers. enrolments in 2010. Around 90 percent are in
services for China; and identify appropriate activities. A key component will be to assist
the tertiary sector and it is estimated Chinese
partners and business models. Expert advisors During 2012, the ‘Chef-in Market’ programme companies with the complexities of exporting
students add approximately $600 million to
will also be assigned to assist these companies will be intensified based out of New Zealand to China and deal with the rapidly changing
Central in Shanghai; a comprehensive wine the New Zealand economy annually.
and, where appropriate, raise capital to support regulatory environment. Where appropriate,
their growth. These services will be tailored to promotion will be developed and implemented; NZTE will work alongside companies to With improved targeted promotion by the new
customers and will be additional to the suite of further support will be given to collaborative accelerate their market entry and consolidate Crown entity, Education New Zealand, and
advisory services already offered by NZTE. and individual initiatives in the seafood sector; their position in the market. greater cooperative promotional spend among
a wide-ranging research programme will be
institutions, the Government hopes to increase
Emphasis will also be placed on collaborative undertaken in niche areas; and a programme A close working relationship with counterpart
the market share of Chinese students, without
initiatives where market entry and development of business missions into and out of China will Chinese entities maintained across the
will occur more effectively. compromising the diversity and capacity of
be implemented. NZ Inc network will also help companies
learning institutions.
through a potentially complex and unfamiliar
Target priority sectors Growing the base of China-ready exporters regulatory environment. China expects New Zealand to provide state-
There are some evident sectors of opportunity Recognising the need to grow the volume of backed quality assured international education
for New Zealand businesses in China and New Zealand companies ready for the China 3 Grow services trade with China
services for Chinese students. This is crucial if
structured programmes have been put in market, NZTE will build on its successful (education by 20 percent, tourism the value of the New Zealand education brand
place or are in the process of being developed training programme for businesses at the early by at least 60 percent, and other in China is to be protected and enhanced.
to realise their potential. Priority sectors are stages of their preparation for China. The services trade) by 2015
food and beverages (notably seafood and wine); courses have been offered nationwide since China is also the main market for offshore
agribusiness (including food safety); high-value early 2011 and their breadth and reach will be High value, profitable non-commodity growth delivery of New Zealand education services. Our
manufacturing across a number of sub-sectors expanded. These will assist companies with the will be essential to achieving New Zealand’s competitors are establishing campuses in China.22 Opening Doors to China Opening Doors to China 23
Universities New Zealand
Derek McCormack, Vice-Chancellor of to student and staff exchanges and jointly-
Auckland University of Technology and offered education programmes.
outgoing Chair of Universities
New Zealand, says the export education Chinese students account for about 6000
crash of almost a decade ago showed that of the 17,000 international students in
New Zealand universities and educating
New Zealand could not rely on a mass of
students from a single source country. them will continue to be an important “…companies trying to succeed in China need to
New Zealand needs to think smarter –
looking at a much broader profile of
source of income. But McCormack says
sustainable, high-quality outcomes in remember that a number of Chinese cities are larger
source countries together with
collaborations which provide a richer
business, diplomacy and industry will
grow from postgraduate collaborations.
than many European countries.”
experience and greater benefit to the In this way, New Zealand will be working McKinsey 2011 Annual Chinese Consumer report
countries we work with. alongside and deepening engagement
with China in knowledge exchange.
With that in mind, he says, universities “That’s what we should be focusing Two thousand Chinese students are enrolled How will we achieve these export
need to focus on the development of on and growing.” in China-based New Zealand programmes. education goals?
high-quality research and educational
There is potential to more than double this
partnerships, from research collaborations www.universitiesnz.ac.nz Complete an in-depth education market
number and to grow associated earnings from analysis and develop a targeted, China-
consultancy and training services. specific marketing and promotion
Ngai Tahu Holdings
campaign for New Zealand education.
Chinese students have the second highest
Trevor Burt spent five years living and negotiation process may take longer. He transition rates to work and residence in Explore and facilitate possibilities for
working in China before taking his position says, if you can source them, it’s invaluable New Zealand, and therefore make an mutual recognition of professional
with South Island iwi Ngai Tahu. to have people on your team who are qualifications.
important contribution to our labour force,
familiar with Chinese business.
As chair of Ngai Tahu Holdings, he helped helping to lift productivity rates. New Zealand This will enhance the attractiveness of NZ
negotiate the deal to develop a consortium All businesses should recognise that their must invest in thorough assessment and qualifications for Chinese students in a
with Singapore-based Agria and Chinese first partnership with a Chinese entity could verification of applications to study and live in competitive market.
agriculture giant New Hope, which has be beneficial beyond the deal on the table.
New Zealand, while avoiding the establishment Extend the number of NZ private training
taken a majority stake in PGG Wrightson. For example, New Hope has interests in
of unnecessary barriers to bona fide Chinese enterprises listed on the China Ministry
dairying which is an area Ngai Tahu is keen to
Burt says there are similarities in the develop so there is potential for the business students and migrants. of Education Study Abroad website.
outlook of Māori and Chinese businesses. partners to work together in other areas.
Both take a long-term view and consider
their dealings to be those of a family Burt says a good portion of Ngai Tahu international STUDENts by country
business. “When you enter into a Holdings’ earnings flow from China. It is
partnership, you need to align and there the largest export market for Ngai Tahu’s
CHINA 24.7%
is a similarity around the way Chinese and seafood business, and Chinese are the
Māori think.” fastest growing client group for the tribe’s
SOUTH KOREA 13.4%
tourism ventures, which include Shotover
Māori businesses should make the most of Jet and Huka Jet.
this, he says, but not expect that they will INDIA 13.2%
result in any advantage beyond some early The partnership with Agria and New Hope
goodwill. “It’s got to be commercially sound will help Ngai Tahu to better understand JAPAN 8.7%
and sensible. You can’t broker a deal out of the Chinese market so it can make the most
good feeling.” of opportunities to increase the flow of
SAUDI ARABIA 4.7%
tourists through its New Zealand businesses
Burt’s experience is that there is no magic and maintain its lucrative position in the
to dealing with China – businesses just seafood industry. Distribution of international fee-paying students by Country of Citizenship (2011)
need to be forewarned about the role of
Source: Export Education Levy Key Statistics
relationship-building and anticipate the www.ngaitahu.iwi.nz24 Opening Doors to China Opening Doors to China 25
The growth in visitors from China has
been significant in recent years. In the year
ending November 2011, 141,000 travellers
from China visited New Zealand. Average
annual growth of 8.4 percent is forecast
Tourism: grow tourism services
by at least 60 percent
between 2010 and 2016, increasing visitor 4 Increase bilateral investment to
levels that reflect the growing
increasing investment in New Zealand include
Chinese state-owned enterprises, which could
China is our fastest growing and fourth largest arrivals to around 180,000 per year. commercial relationship with China provide investment capital for strategic resource
development and infrastructure funding. Major
international visitor market. Chinese have Tourism New Zealand Bilateral investment flows relative to bilateral outward FDI bids from Chinese firms are subject
traditionally holidayed in New Zealand as trade volumes are low. There are a number of to Chinese government vetting. Private Chinese
part of a tour group under China’s Approved reasons for this: Chinese investors and businesses investors are showing increased interest in certain
How will we achieve these tourism goals? are unaware of New Zealand opportunities; the sectors of the New Zealand economy. Sectors of
Destination Status (ADS) system. However,
New Zealand deal size is relatively small for major demonstrated or possible interest include food and
there has been an increase in the number Tourism New Zealand and other
Chinese investors; outward Chinese investment beverage, natural resources, cleantech, high-value
of independent and semi-independent agencies will develop the brand to tell
is subject to strict controls; and New Zealand manufacturing, IT, and infrastructure. Significant
holidaymakers. The focus is on ensuring the the New Zealand story for specific key
investors are inexperienced in Chinese markets. recent investment by Chinese firms includes
quality of tour group travel and motivating sectors in China, and will invest further
in in-market promotion to support New Zealand would benefit from increased Bright Foods (in Synlait), Haier (F&P Appliances)
independent or small-group Chinese travellers and Agria (PGG Wrightson).
airlines investment in new services. Foreign Direct Investment (FDI) from China,
to visit New Zealand.
and Outward Direct Investment (ODI) into
Meanwhile, Immigration New Zealand’s Policy settings
Air New Zealand has direct flights from China. It would serve our country well if levels
Shanghai-based service, one of its four of bilateral investment reflected our countries’ Acquisition by foreign investors of New Zealand
Shanghai and Beijing but there are capacity China operations, has expanded and growing commercial relationship. farming assets is a sensitive issue for some.
constraints through other Asian hubs, has an outsourcing agreement for the Over the last five years, sales of land to Chinese
especially during the peak summer period. lodgement of applications. Inward investment investors have been less than 1 percent of total
Direct flights from Guangzhou by China Other services It is estimated China invested approximately sales to overseas investors. The Government has
Southern Airlines started in April 2011 and US$60 billion internationally in 2010/11. Total undertaken a review of the Overseas Investment
China is maturing as a market for New Zealand Chinese investment stock in New Zealand is Act to improve its operation and effectiveness.
in November 2011 it moved to daily flights, ideas and skills, as well as goods. The following $1.87 billion; the comparative figure of FDI Officials are working on a detailed policy
bringing greater stability to air connections. areas all have significant potential to grow: from Australia is $100 billion. Avenues for framework to assist in targeting, attracting
On current growth projections, a new air design and architecture; water management;
services agreement will be needed within the film and television company production;
next year to allow further expansion of services. green engineering; entertainment, including Communications in CHINA
Aviation talks will take place this year. advertising; IT and educational resources.
MOBILE PHONE USERS 952 MILLION
New Zealand welcomed 141,000 Chinese How will we achieve these service goals?
visitors in the year to November 2011. In the INTERNET USERS WITH BROADBAND ACCESS 150 MILLION
Improved statistics on services trade would
2010 calendar year, Chinese visitors made capture a more accurate picture of the growth in TELEPHONE CONNECTIONS 288 MILLION
an economic contribution of $362 million. these areas and help identify possible areas for
increased service liberalisation under the FTA. Source: China's Ministry of Industry and Information Technology (2011).
The goal is to grow this figure by 60 percent.26 Opening Doors to China Opening Doors to China 27
From 1949 to 1978, 280,000 Chinese nationals
travelled abroad. In 2004, 22 million went abroad,
rising to 57 million in 2010. Chinese officials anticipate
this will exceed 100 million in the next five years.
Ministry of Foreign Affairs and Trade
and utilising FDI, which will underpin the
5 Grow high quality science and
investment goals of all NZ Inc strategies. technology collaborations with
This will create greater certainty for Chinese China to generate commercial
investors and help in shaping future investment.
opportunities.
How will we achieve greater inward New Zealand science has a world-class
investment from China? reputation, and China provides new
Steel mill (left), Chinese New Year dragon (right).
More resources have been allocated to opportunities for the commercialisation
encouraging focused investment from of science and international scientific
Lanzatech China that creates new opportunities collaboration. New Zealand’s participation
and capabilities. in cooperative research teams provides
Two years ago, LanzaTech co-founder “It’s not a quick thing. One dinner is not going a means to share and protect intellectual
New Zealand officials have been working with property generated from research that
Sean Simpson made his first business trip to do it. It’s more about time rather than
China’s Investment Promotion Agency (CIPA) is commercialised.
to China. throwing money at it. Relationships built
on the preparation of high-quality, up-to-date,
over time are important.”
Today his cleantech company has Chinese-language information on the rules Until recently, the New Zealand science
partnerships with five global Fortune 500 Many Kiwi businesses are afraid of losing their and regulations of investment in New Zealand. effort in China could be characterised as
companies in China, including a joint-venture intellectual property (IP) in China. Simpson Agencies will also prioritise work to finalise predominantly individual academic contact
with Baosteel and a demonstration facility says retaining your IP should be the bottom
New Zealand’s FDI/ODI policy platform. with a developing China science sector, with
at one of the Chinese state-owned iron and line of any agreement. little strategic or commercial impact. Prime
Outward investment
steel company’s Shanghai steel mills. Minister John Key’s meeting with Premier
“If part of the deal is to own the IP, it’s the Total New Zealand investment stock in China Wen Jiabao in 2010 identified science and
That is the speed with which your business wrong deal, it’s the wrong partner. Get out.” is $541 million; this compares to $36 billion technology as lagging behind other aspects
can take off once you climb on board the in Australia. The low rate of New Zealand of the relationship and agreed to remedy
China phenomenon, Simpson says. Despite the hefty time investment to build
investments in all key markets, except Australia, this. Priority areas of collaboration are food,
relationships, and the need to mitigate the
correlates with a lack of New Zealand investment health and biomedical sciences, environmental
LanzaTech uses a unique microbe to turn gas potential for IP infringement, Simpson says up the value chain and a predominant model science, and high technology platforms.
waste into ethanol. The company’s research businesses considering entering China based on production and export of raw materials
and development arm is in Auckland and it should go for it. China is also emerging as a possible test bed
or primary manufacturing and export of goods
has offices in Shanghai and Chicago. for cutting-edge New Zealand technologies,
via third parties, e.g. agents and distributors.
“The people who are contemplating going
LanzaTech’s swift entry to the Chinese market Lifting the level of New Zealand investment particularly in the area of greentech and
there have got balls. It isn’t a scary place if
has necessitated a swift education in Chinese in China is a priority. We need to build on the industrial technology. Auckland-based
you take precautions. Avoid the negativity:
business. Simpson says the first rule is to successes of companies such as Fonterra, Rakon, biotechnology company LanzaTech has signed
China is the future. We’ve got to look East.”
focus on building relationships rather than Nuplex, Sanford and Richina, all of which a partnership with the second-largest steel
talking money. www.lanzatech.co.nz have invested in their own, or joint venture, company in the world, Baosteel, and is testing
operations in China. its emissions mitigation technology in its mills.You can also read
