Its report, Mergers and Acquisitions – China-NZ, valued 39 Chinese investments in NZ in 2016 at $1.1 billion out of total foreign investment in NZ for the year of $8.7b.
That was up on 2015 when total foreign investment was $7.6b, of which about $1b came from China.
The dairy sector and land development and residential, both at 21%, were the main 2016 Chinese investments, followed by agribusiness at 13%, forestry 11% and meat processing 8%.
Education, pharmaceuticals and waste management attracted 5% and oil and gas and accommodation 3%.
Chapman Tripp expected a move away from dairy investment,” this year.
“There is a view among some Chinese investors that the level of scrutiny (by the Government, the media and public) of Chinese agricultural investments in NZ is disproportionately high.
“This sentiment could result in Chinese investors shifting focus further towards investments which do not involve the acquisition of sensitive land, particularly rural land, in 2017.”
The firm speculated China could seek an increase in NZ’s investment screening threshold from $100m to $200m.
Foreign investment in selected industries of less than $100 million that did not include sensitive land had less onerous criteria to meet.
Those industries included environmental, construction, engineering, computer, tourism and those incidental to agriculture and forestry.
Chapman Tripp speculated pressure could be applied to get that increased to $200m given China had most-favoured nation status and such a change would have occurred had the Trans Pacific Partnership been concluded.
Regulatory changes by the Chinese government to cap capital outflows could also lead investors to look at smaller markets like NZ but not include dairy.
The report said the stereotypical view was that Chinese investment in NZ was centred on dairy farms but in reality it was more diverse, a fact supported by statistics.
“In our experience a key driver for Chinese investors is to develop or obtain brands, products or know-how which can then be exported and sold to the significantly larger Chinese domestic market.”
NZ China Council executive director Stephen Jacobi believed the report might understate the level of Chinese investment because it was based on Overseas Investment Office data and some investment less than $100m threshold that required scrutiny.
Chinese investment was more diverse than people thought and Jacobi said while the food industry remained attractive, he expected the range of investments to diversify.
Significant Chinese transactions approved last year include Golden Wing Mau Agricultural Produce Corporation’s $33.5m for a stake in T and G Global, the Shanghai Maling Aquarius $267m purchase of half the production arm of Silver Fern Farms, Binxi Cattle Industry’s takeover of Blue Sky Meats for $25.3m, China Resources Ng Fung buying a stake in Scales Corporation for $55.9m and Cuilam Industry buying Prime Range Meats for $13.5m.
And KPMG global agribusiness head Ian Proudfoot told the Future Farms conference overseas investors were moving away from buying land to investing in what comes off that land and the NZ story about it.
