NZ Govt seeks more Chinese investment and doubling of trade

By Pattrick Smellie

Feb. 3 (BusinessDesk) – Chinese investment in New Zealand is tiny compared to Australia and needs to grow “to levels that reflect the growing commercial relationship with China,” the government says in its NZ Inc strategy for engagement with the world’s fastest-growing superpower.

Investment into China by New Zealand firms is also minuscule, at $541 million, compared with $36 billion of Australian investments in China, partly because of New Zealand’s wider track record of exporting commodities for others to process rather than investing in its own high-value production.

Part of the problem, the strategy says, is that “Chinese investors are unaware of New Zealand opportunities”, with resources to improve two-way understanding of commercial opportunities to be beefed up by, among other moves, establishment of a high-level New Zealand China Council.

The relatively small size of investment opportunities in New Zealand was also a factor in limited Chinese inward investment, as well as the strict controls that apply to Chinese companies seeking to invest outside the Chinese mainland.

New Zealand firms’ inexperience of Chinese markets was a major reason there was not more investment flowing from this country into China.

While China invested approximately US$60 billion globally in 2010/11, Chinese-owned assets in New Zealand amount to only NZ$1.87 billion in total, compared with $100 billion invested by China in Australia.

The strategy says “New Zealand would benefit from increased foreign direct investment from China and outward direct investment into China”, but avoids overt comment on farmland sales or other politically contentious issues that are understood to have delayed the strategy’s release by anything up to a year.

On the trade front, the strategy seeks to build on the 152 percent growth in New Zealand exports to China since the free trade agreement negotiated in 2008 kicked in.

The strategy sets a new three year goal of doubling two-way trade in goods with China from $12.7 billion at present to more than $20 billion by 2015, with government targeting of 50 fast-growing, profitable New Zealand companies in China, priority for sectors with high growth potential, and by growing the base of “China-ready exporters.”

While the strategy promotes more New Zealanders learning the Chinese language, Prime Minister John Key indicated after the launch that this was not so far a priority of government education policy.

Also targeted is 20 percent growth in the booming market for Chinese students to study in New Zealand, and a 60 percent increase in tourism by 2015. Other service industries with potential were identified as architecture, consulting, IT, environment, and food safety services.

The education target will be assisted by investigating mutual recognition of professional qualifications and extending the number of New Zealand private training enterprises listed by the Chinese Ministry of Educations “Study Abroad” website.

A further leg of the strategy targets greater collaboration in scientific research and development.

One of the strategy’s main recommendations is that New Zealand needs unified branding in China, where belief in the country’s safety, beauty, and purity was widespread, but individual firms were unknown.

“What we can and should do is market NZ Inc as an umbrella brand…for all New Zealand products and services in the first instance and then individual brands to be covered by this big umbrella,” Michael Gan, chairman of Sino-Kiwi firm Richina told some 200 invited guests at the strategy launch on Auckland’s waterfront.

A Uniliver board member, Gan said the multi-national company had adopted this single brand approach to good effect in China “because of unique challenges and opportunities China demanded.”

“The results are spectacular. New Zealand should do the same thing.”

The strategy document says work is under way now to create unified NZ Inc branding that preserves value in other existing country and firm-level branding.

The strategy also targets opportunities for Maori business, with a push on to establish a beach-head for such opportunities in the south-western Chinese province of Guizhou.

(BusinessDesk)

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