China General Interest
Exporters set their sights on China, but are looking for support to achieve success.
A survey of more than 140 New Zealand exporters, by DHL, the world's leading express and logistics company, has found that 63 per cent of exporters stated a Free Trade Agreement with China would have a positive impact on their company. Of the exporters surveyed, 33 per cent stated that China is their primary market to focus on to develop economic relations. This is closely behind Australia with 36 per cent of exporters citing it as their primary market.
China is New Zealand's fourth largest trading partner, growing faster than any other market, and the government is working to facilitate a Free Trade Agreement by April 2008. The New Zealand government estimates exports to China will increase by $260 million to $400 million per year as a result of an agreement.
However, the majority of exporters surveyed (65 per cent), think there are significant barriers to New Zealand companies exporting to China. The two main barriers cited are concerns about red tape (17 per cent) and China's complex regulatory environment (13 per cent).
"While exporters have identified China as a significant market for receiving New Zealand goods and services across all industries, New Zealand businesses are concerned about the obstacles presented when trading with this emerging global power," says Derek Anderson, General Manager, DHL Express.
Other barriers to trade include language difficulties, issues surrounding intellectual property protection and having no local relationships or partners (ten per cent). Cultural barriers were also considered a barrier by nine per cent of exporters.
The key areas of support seen as a requirement for successful trading with China include mentoring and access to information (24 per cent) followed by a Free Trade Agreement with China (19 per cent). Other factors include facilitating access to local business markets (16 per cent) and subsidies for New Zealand companies wanting to establish trade (13 per cent).
China has been recognised as a potentially lucrative market, says Mr Anderson, but more support and assistance is needed for New Zealand companies wanting to successfully enter this market. "To make the most of this opportunity it requires increased activity from government agencies and the private sector to help New Zealand companies develop business with China."
Of those companies who already export to China, 41 per cent state a partnership or alliance with an existing Chinese business is the best approach to establishing a business relationship. Twenty per cent of those exporters surveyed stated speaking the language and understanding the culture was the best approach, closely followed by 19 per cent claiming that establishing a physical presence in China, for example a branch office, is the best approach.
"It's not surprising to find that those already exporting to China place a premium on partnering with an existing Chinese business. But to get there we first need to see companies getting the right insights and information so they can successfully plan their entrance into the China market," says Mr. Anderson.
May 4, 2007