New Zealand China Trade Association: Commentary

NZCTA: Opening Up Elements of a China Strategy

Sat, 04 Sep 2010 00:00:00 +1200

In its most recent publication, “A Goal is not a Strategy”, the NZ Institute scolds the lack of strategy to accompany our current heady goal to match Australia’s per capita GDP by 2025.

In fact, we seem to recall that former Opposition Leader and career strategist, Don Brash actually did come up with a strategy to catch up with our Transtasman neighbour, but which very quickly got swept under the carpet as politically unsustainable.

But it appears that the Prime Minister agrees you need more than just a goal, as this transcript of his TV interview in China seems to show:

PM: ...it’s one thing to have an FTA, I think it’s quite a different thing to have a China strategy. And why would you want to have a China strategy? Well you’re not going to double two way trade from 10 billion to 20 billion, crossing your fingers and hoping it might happen. I think you’ve actually gotta sit back and say what are the component parts...

The interview goes on to discuss what would be an important element of any China Strategy

INTERVIEWER: So what are you going to do about the fact that we have by your own admission, a woeful level of tuition in Mandarin and Cantonese and Chinese languages in New Zealand schools? Are you going to make it compulsory to learn Chinese?

PM: I don’t think we’ll make it compulsory, but I do think we should start talking much more actively about thinking about what are the skills that we will need.

Is an involvement of Chinese or other Asian culture and language training in schools also politically unsustainable? Whether it is or not is probably secondary to some of the practical issues.

Asia NZ Foundation has a laudable project, supported by the business sector, to increase the level of Asian awareness in our education system.

It brought together representatives of both in a lively, inter-active workshop, where both parties tried to understand each other’s perspective but probably in the event narrowly failed.

The message from principals was don’t even think about promoting Asian programmes in secondary schools until the subject gets accreditation. The Foundation’s target might well have been NZQA or primary schools rather than secondary schools (even though many are robustly recruiting students in Asia).

Then, would “investment” , that is Chinese investment in New Zealand, be an important component of a China Strategy?

Professor Gary Hawke of NZIER writes:

There has been little concern about competition from Chinese products—they are too familiar and ingrained in the New Zealand psyche. There is concern over Chinese investment in New Zealand land. Conventional convictions about farmer control—which constrain capitalisation of Fonterra—is linked with nostalgia for a closed community. Participation in international supply chains cannot be restricted to only New Zealand ownership of assets overseas.

The FTA encourages mutual investment and the New Zealand economy cries out for investors. Currently investment from China is way down the league table of FDI in New Zealand.

So is investment from China (or anywhere else) in the pastoral sector politically sustainable? And exactly what is regarded as a “strategic asset”?

Is the increasingly ready availability of expertise from the Chinese ethnic business community in New Zealand a “strength / opportunity” in our SWOT analysis? Surely it is, so the consideration here is more a “how” – the action plan rather than the strategic consideration.

Our deficit of skilled labour availability is ongoing (except arguably in recessionary times).

China has resources it can offer to plug gaps. Another difficult strategic path to go down maybe but surely a component part.

A natural component part of a China strategy would concentrate on trade promotion and assisting particularly the niche products and services, which are likely to be attractive in China. Whilst new posts have been opened in China in the past 12 months, we still fall well short of the Australian presence and level of resource in China. That surely is politically achievable!

Do we actually need a China strategy? After all , businesses engaging in China are ultimately going to be maximising their own interests and returns and making their own strategic decisions on what resource, investment and commitment they apply to their engagement in the market.

But a China Strategy has to encompass much more than trade levels and export promotion. And as the Prime Minister and the NZ Institute aver, much more than setting an ambitious trade goal.

Both the growing proportion of our population which is ethnically Chinese (Asians in NZ population are predicted to reach 16% of our total population by 2026) and the rapidly increasing influence of China on the World stage dictate that we should confront the broader issues comprehensively and frankly.

But to be sustainable, we probably have to raise our level of strategic thinking above our “nostalgia for a closed society”.

Source: NZCTA: Opening Up Elements of a China Strategy

A China Strategy - Beyond Cows and Trees?

Mon, 02 Aug 2010 00:00:00 +1200

The purchase of a majority share in Synlait by Bright Dairy should be hailed as a positive signal that overseas interests are keen to invest in our productive sector even if successive Governments have encouraged New Zealanders to invest predominantly in residential property rather than taking equity in areas which should produce wealth, jobs and expansion of our economy.

It’s hard to see where else venture capital will come from whilst we continue to indulge our love affair in the housing market.

As it is China is not a particularly large investor in New Zealand at the moment, it’s just when there is interest, there seems to be a subconscious xenophobia, maybe media inspired, which seems to create negativism and resistance.

But surely whilst we are debating the China strategy for the future, we must have in mind both the continued momentum of NZ interests in China as well as the opportunities to create new enterprises in New Zealand with FDI.

A successful China strategy, therefore, first requires an alignment of departmental objectives - overseas investment, education, immigration, customs, tourism to name a few.

Then we probably need to look beyond merely the quantity of mercantile goods traded as the sole measure of success. This measure fails to take into account the contributions of, for instance Rakon and Biovittoria – again to name but a few.

Are there qualitative measures to form the basis of our China goals? Investment – both ways – must come into it but there are other areas where we should be engaging to exploit fully the relationship built up in the wake of the FTA.

As it is, the Prime Minister has set a huge challenge to double trade in five years (based on the import and export returns from the Department of Statistics).

To meet that target and at the same time to bring our level of exports to China to match imports from China requires exports to lift each year by about 24% for five successive years after an increase of around 40% in 2009. Given the predominance of commodities in these trade statistics, that’s an awful lot of cows and trees!

No harm in setting ambitious targets. It focuses the mind and sends the right signals to our trading partner. But could the next stage be to encourage business relationships that go beyond simply waving the export ship goodbye as it leaves our shores and greeting the import ship as it berths in our ports?

Pat English, our Consul General in Guangzhou, speaking to members at a hugely informative meeting taking place as the Synlait/Bright Dairy marriage was being announced, strongly cautioned that China was changing whilst what we were being told about China was not. In other words, the advice and information being purveyed about China was getting out of date.

Even more necessary then to engage within the China market and with the Chinese in China as “made in China” becomes a very important marketing tool when selling in China.

You can learn a huge amount about China by going there, seeing how it’s developing and talking to experts, who being on the spot, are able to keep abreast with trends in China.

NZCTA plans Missions to Shanghai Expo, Hangzhou and Nanchang. The latter, in Central China, is for the 5th Central China Expo, representing six provinces with a combined population of a mere 360 million!

Details are available soon. Update yourself or introduce yourself to China by using this very user friendly way of meeting business people and finding out what’s going on and where the opportunities are.

Enquiries to director@nzcta.co.nz

Source: A China Strategy - Beyond Cows and Trees?

NZCTA: Tribute to Victor Percival, ONZM

Fri, 30 Jul 2010 00:00:00 +1200

It’s our sad task to advise the death of NZCTA Honorary Lifetime Member and former Chairman, Vic Percival on 24 July at his home at the age of 82.

We repeat and update the tribute we made to Vic after he had been awarded his ONZM:

Victor Percival recognised the need to re-align our trading partnerships and therefore the potential of China before the signing of the Treaty of Rome in 1957, some time before UK joined the EU and it's fair to say somewhat ahead of politicians in the late fifties.

He therefore forged relationships in China despite lukewarm support from Government and Government agencies.

Doing business with and in China was difficult and travel was arduous, often by train and with only the most basic accommodation facilities available.

Percival, or Pan Xi Fu (Western Bhudda) as the Chinese named him, was amongst the first “foreigners” to attend the Canton Trade Fair in 1957 and was only “foreigner” attending that fair still alive to attend the 100th Canton Fair in October 2006.

For this he was recognised with an award from Premier Wen (of which more below). In between he attended at least fifty trade fairs.

Through his friendship with Rewi Alley, Vic became a lifetime Trustee of the Rewi Alley Trust. And with Alley and Kathleen Hall, he is one of only three New Zealanders included in the prestigious list of Special Friends of China.

He has been honoured many times in China including Honorary Membership of the China Council for the Promotion of International Trade and at that organisation's 50th Anniversary he was singled out against 200 Foreign Dignatories to be seated beside the Chinese Premier.

Vic was a founding member of the New Zealand China Trade Association in 1981, has twice been Chair and finally Honorary Lifetime Member.

This was not a sinecure, he remained an active member of the Executive and because he was so well known throughout China was often the first point of contact for visiting delegations, organising programmes and making contacts.

Vic was still transacting business with China and, as mentioned and despite his years, still occasionally travelled there. Notably, he accompanied the official NZCTA led Delegation (“official” in that it was supported by the Chinese Embassy and facilitated by Government agencies in Guanzhou) to the 100th Canton Fair in October 2006.

He played an invaluable role as mentor and guide to many delegates on their first China experience but more importantly played a major role in the official proceedings.

As the sole “foreigner” still alive who attended the first Canton Fair, he not only received an award from Premier Wen but was the only non-Chinese speaker at the Grand Opening Ceremony, addressing the Premier, dignatories, an audience of 5000 at the event and an audience of many millions on live TV.

In his irrepressible way and to the alarm of the interpreter, Vic also deviated from the approved speech to promote the new Air New Zealand service to Shanghai. Premier Wen made a point of singling him out and speaking to him, although the protocol was not to indulge in any informal variances to the programme. For the NZ witnesses to this event, it was breathtaking, awe-inspiring and made them very proud to be New Zealanders.

Vic was truly a pioneer in opening a market which was then at best unfashionable but which is now crucial as evidenced by the current FTA agreement.

His experience and wisdom was passed on through his readiness to offer advice, mentoring and asistance to Government officials and China Traders alike.

His biography was published two years ago, and apart from being thoroughly entertaining, it has become an essential history and guide for future China hands.

In the 2008 New Year's honours list notable for the scarcity of recognition of business people, Vic Percival was awarded a well merited and overdue Officer of the Order of New Zealand Merit (ONZM).

His last formal appearance was only last month when he sat at the top table at the luncheon for China Vice President Xi Jinping.

He was the confidante of prime ministers and ambassadors. When New Zealand in 2008 signed the world’s first country-to-country Free Trade Agreement with China, and other nations lined up to secure such an arrangement, it was Victor Percival whom New Zealand Prime Minister Helen Clark termed: “The man who started it all”.

Source: NZCTA: Tribute to Victor Percival, ONZM

NZCTA: Reaping the rewards

Tue, 29 Jun 2010 00:00:00 +1200

The visit of Vice President Xi Jinping gave the opportunity for a broader segment of New Zealanders to reflect on the importance of our relationship with China.

Those China hands close to the action have recognised and followed the rapid increase in trade and the elevation of China from fourth, then third and now second export partner as well as second overall trading partner.

The 2008 FTA certainly seems to have had some impact, in our export performance, as, in addition to the much publicised increases in milk powder and logs, which were primarily driven by market forces, manufacturing exports increased by 10% over a period when over all markets, our export returns decreased.

But almost more importantly the vice presidential visit emphasises the warm and positive relationship which has developed between the trading partners, which in turn has created an aura within which it has been easier to develop new trade and business partnerships.

The Chinese government has credited to New Zealand the four “firsts”, which underpinned the positive climate in which the negotiations were conducted… the first country to conclude bilateral negotiations with China, paving the way for its accession into the WTO; the first country to recognise China as a market economy; the first developed country to enter into FTA negotiations with China, and then the first to conclude and sign an FTA with China.

In his speech at the Auckland business lunch, Trade Minister Hon Tim Groser added a fifth “first”, the only country to have an FTA with both China and Hong Kong.

Xi stressed that the Chinese side has always taken a strategic and long-term approach towards its ties with New Zealand, regarding it as a good friend and partner in the Asia-Pacific region.

The Vice President put forward four-point proposals on further boosting the bilateral relationship, including more political, economic and cultural exchanges and, significantly, more coordination on major international issues. Several cooperation agreements on trade, finance and cultural exchange were signed during the visit.

The FTA seminar, “Reaping the Rewards”, which NZCTA co-hosted with NZTE and two Chinese partners, the Chamber of Commerce for Import and Export of Machinery and Electronic Products and The Chinese Bureau of Investment Promotion, simply underlined the complementarity of the relationship.

Shi Zhiyuan, General Manager of Qingdao based multi-national Haier, spoke of its international objectives and of Fisher and Paykel’s position within its strategy. That was counterbalanced neatly by NZCTA Board Member and Teknatool Managing Director, Roger Latimer, who is also manufacturing in and exporting from Qingdao.

Mme Yao Wenping, Vice President of the Chamber and NZCTA Chairman, Stuart Ferguson urged the business sector to explore and utilise the opportunities presented by the FTA. The Investment Promotion Agency’s Deputy Director General, Mme Zhang Yingzin outlined opportunities for NZ investment in China and Kefeng Chu of NZTE outlined the investment regime in New Zealand. Finally Qi Jinming of the China Railway Materials Commercial Corporation saw opportunities to supply heavy engineering products to New Zealand whilst EMA CEO Alasdair Thompson countered with some good news stories of NZ companies in China.

An audience approaching 400 including 140 members of the Vice President’s Business Delegation from all parts of China were left in little doubt of the opportunities available or of the positive attitudes of both bilateral partners.

Photo: NZCTA's Chairman Stuart Ferguson and Honorary Lifetime Executive Member, Victor Percival listen to Trade Minister Groser's speech at the Langham Luncheon for Vice President Xi Jinping, (seated to left of the Minister's chair)

Source: NZCTA: Reaping the rewards

NZCTA Commentary: Burning bright in the year of the Tiger

Thu, 18 Feb 2010 00:00:00 +1300

The year of the tiger is believed to bring with it mythical heroic powers. The Tiger is said to be lucky vivid, engaging and brave, ready to engage in battle and accept a challenge.

Nonetheless, Chinese Premier, Wen Jiabao, has struck a note of caution about the challenges ahead in the new year, with China facing complex issues in 2010, both at home and abroad. “People must keep a sober mind and an enhanced sense of anxiety about lagging behind", the premier advised.

With 8.7% growth last year, China, in trying to maintain its levels of economic growth and create jobs, must also however balance this with the need to avoid domestic inflation. Its balancing act will have to be performed in the context of a still uncertain global outlook.

Still, the new year is seen as being good for the economy. So there seems little reason why we shouldn’t forge ahead with our efforts to increase and improve the quality of our business with China.

The merchandise trade statistics, just released for the year ended December 2009, show our exports to China grew 43% and our imports from China actually declined by 5.9% during the calendar year. But our total bilateral merchandise trade with China at NZ 9.7 billion dollars grew by almost 8% and this keeps China comfortably in second place amongst our bilateral trading partners (with USA third at NZ 8.3 billion dollars).

Whilst huge increases in exports of milk powder, logs and malt extract have somewhat dominated our export growth, other exports have also increased a healthy 23%, with a good contribution from the fresh fruit sector.

So the year of the Tiger might bring a continuation of export growth, though as always we are reliant on the volatile commodity characteristics of the leading contributors. With the NZ economy showing signs of recovery, the minor glitch in the unrelenting growth of our imports from China is likely to be remedied by further growth.

NZCTA, itself, is ready to take on the challenges that the Tiger years are said to provide.

As we’ve always maintained we can’t do your business for you, but we can keep our ears to the ground on issues and continue to build up our networks, so we can confidently at least point you in the right direction.

Members consistently tell us that the prime value in joining is in the opportunities to learn more about China and interact with other China hands.

So we’re planning this year to spread our catchment area – to be more visible in areas of China activity throughout New Zealand, to be more involved with the academies and their students, where there is also valuable scholarship and research and , perhaps, most importantly, to seek areas of common interest and interaction with the Chinese business community in New Zealand.

As you already know (we hope), a Mission is planned to Shanghai Expo. This has attracted considerable interest and an update will be sent to you soon.

Website spotters will have noticed our news section is up to date and there is a new, more modern home page. Further upgrading is being prepared and there will be opportunities for members to profile themselves soon.

Our level of increased activity over the past two years would not have been possible without the generous assistance of sponsors.

HSBC, Cathay Pacific and Ernst & Young continue to support us as “gold” sponsors and Ports of Auckland, Cosco NZ and Global Visas as “silvers”. And, we’re about to be joined by a new “gold”, Mondiale Freight Services, who have long been loyal members and financial supporters of the China Trade Awards. Welcome Phil Bramwell and his team at Mondiale.

A good measure of a member-based association’s success is the length of the membership registry. Well, despite hard times last year, the list grew well in 2009. Maintaining and enhancing value for membership is our challenge in the year of the Tiger.

Gong xi fa cai!

Source: NZCTA Commentary: Burning bright in the year of the Tiger