Trade has grown rapidly over that time, with dairying being the most recognised and lucrative of the many exports now sent there to willing buyers. But at a function in Auckland last Friday celebrating the opening of the Bank of China’s first branch in this country, there was much talk of how other sectors could make gains in the Chinese market.
The bank possesses some eye-watering statistics such as being seventh largest in the world by capital strength and ninth among listed banks by market capitalisation. Its assets last year totalled a mind-boggling RMB 13.87 trillion, a sum large enough to make it irrelevant whether it’s converted into NZ or United States dollars.
The bank already has 20 core customers operating in NZ and wants to further that relationship by offering cross-border banking services such as credit facilities, trade settlements, exchange services and cash management. But perhaps most importantly for the dairying sector, it has outlined a wish to promote bilateral financial and investment collaboration even further.
The dairy industry across the ditch is busy talking about increased trading opportunities with China and how it now has equal, if not better, access to that market than its Kiwi cousins, who it has long envied as the first developed nation to sign an agreement. Our head start is a significant advantage but one Australia is keen to pare back as fast as possible.
Asia’s richest woman, Gina Rinehart, no slouch when it comes to spotting business opportunities, has just announced details of a planned $550 million investment in Queensland farms to produce infant milk powder to be exported to China. The belief is that when the relaxation of the one child policy is added to what is already insatiable demand, there are good reasons to see great future prospects.
A herd of 16,000 cows is planned with both milk powder and UHT milk being produced. The venture, which is planned to be exporting as early as the second half of 2016, could produce 30,000 tonnes of the powder a year when in full production. It will also draw on milk from other local farmers and has a Chinese joint-venture partner lined up.
The move builds on several the Australian dairy industry has recently made into the Chinese market with both Norco and Bega Cheese increasing the volumes of fresh milk and UHT respectively that they are sending there.
But perhaps the strongest indication of Australia’s interest in this area was signalled by the attendance of more than 40 Chinese at a Dairy Australia conference on investing in dairying held there earlier this year.
Meanwhile NZ is showing itself ready to move on to the next step and isn’t slowing down on new free-trade agreements with the surprise of the South Korean deal coming out of the G20 Summit in Brisbane.
An often-repeated comment about doing business with the Chinese is that they need to know you for many years to build up trust as well as an appreciation of loyalty. NZ has accomplished this in spades since the early, tentative days back in the early 2000s when agricultural forays into that country were often abandoned after a short time with the comment that the undertaking had been too hard, the goalposts had changed or any one of a number of other excuses.
The last decade and a half has brought huge changes as China and NZ have got to know each other on many different levels and in a much deeper way. The impact of Chinese students coming here to study can’t be over-emphasised. The growing tourism trade also fosters better understanding of two cultures which have a lot to share still in the future.
Now the focus is moving from the agricultural and breeding technology areas into the technology and service sectors, where it’s to be hoped similar growth will occur.
Is it too much to hope that there won’t be a repeat of the San Lu or botulinum scares? But for the great relationship built up between China and NZ, either of those could have disrupted trade and its growth to a much greater extent.
Maybe worse still, especially from a Kiwi pride perspective, it could have given our friendly Australian competitors a much earlier chance to grab more market share from us, which they wouldn’t have hesitated to do.
