Kiwi commerce spreads its wings

   Date:2008/08/18     Source:
MENTION New Zealand to most Chinese people and they respond with two words: beautiful country.

Tourism images of rolling green hills dotted with sheep and the country's status as home of the Lord of the Rings movie trilogy have done their job.

From a business perspective, that's both a blessing and a limitation, New Zealand's trade commissioner in Shanghai says.

New Zealand's traditionally strong export industries ?? agriculture and tourism ?? are meeting with growing success in China, said Jeff Shepherd, with food and beverage products often cornering the premium end of the market.

"Chinese have got a very positive image of New Zealand," Shepherd said.

"They see us as a country that's a small nice place to visit, and beyond that as a food basket to some extent.

"(But) they don't see us as a country with technological skills, sometimes even world-leading technology. And that's probably a challenge for us going forward."

Without a Chamber of Commerce in China, it falls to his agency, Government-funded New Zealand Trade and Enterprise, to promote Kiwi business.

The agency has offices in Shanghai, Beijing and Guangzhou and is considering five second-tier Chinese cities as sites for another office. Shepherd said 23 New Zealand companies had a base in the Shanghai area, while about 70 had a presence on the Chinese mainland.

China is New Zealand's third-largest trading partner and second-largest source of imports.

One big boost for relations came through the signing of a Free Trade Agreement in April - the first China has negotiated with a developed country.

Coming into effect on October 1, the agreement will progressively cut tariffs on various products, ease entry procedures for some sectors and allow more movement of labour between the two countries.

Symbolic power

A company like New Zealand dairy giant Fonterra - one of the world's largest dairy companies - currently has to deal with tariffs set between 7 and 15 percent, general manager in China Bob Major said.

Still, the agreement is probably as useful for its face value as anything else, he said.

"To me, it just underlines the importance of the relationship between China and New Zealand. It's got real symbolic power."

Kevin Lai, general manager in Asia for New Zealand company Actronic Technologies, which builds onboard weighing systems for earth-moving vehicles, agreed.

"The FTA has boosted New Zealand's profile in China," Lai said. "New Zealand as a brand is now more acceptable or at least more (well-known) by local Chinese."

But despite moves to widen New Zealand's appeal, much of the effort is still going into promoting its traditional strengths.

NZTE's Shepherd said groups of New Zealand winegrowers had been touring China, while there are plans to send Chinese journalists to New Zealand.

Fonterra's Major said the company owned a 3,000-cow dairy farm in China and has plans to buy others like it.

After years of selling only infant formula in China, the appetite for dairy products has grown massively in recent years, he says.

Charles Phelps-Penry, Air New Zealand's regional general manager in North Asia, says the Chinese tourist market is also strong, as evidenced by the airline starting a new route from Auckland to Beijing in July.

Flights on the existing Auckland to Shanghai route, which flies three times weekly, are usually about 80 percent full, and he expects both routes to eventually fly daily.
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