Made in NZ to win Chinese hearts(2)
to cost you everything."
David Yu, the Taiwanese/Kiwi founder of the Vagabond and Livewire chain gaming stores, is less convinced. Yu has set up two of his own companies in China, registering them as foreign-owned entities, and says it is easier to do the registration from New Zealand than Hong Kong.
While it used to be possible to set up a "paper company" in Hong Kong and use it to start a Chinese branch, that is no longer possible, he says. The strict requirements to register a foreign company in China – including supplying financial history and structure – are easier to prove from New Zealand, he says. Once established, the company can register its own trademarks, which is safer than allowing a distributor or joint venture partner to do it, says Yu.
Trade wise, Yu says most products can access China as easily from New Zealand as Hong Kong. In fact, the Hong Kong step could add cost, he says. But Yu sees value in having a Hong Kong branch office for the English language capability, if nothing else.
These days he spends much of his time helping New Zealand winemakers increase their Chinese sales, mainly CJ Pask and Giesen Estate. Yu says there is enormous good feeling for New Zealand food, wine, health supplements and beauty products in China – something less scrupulous locals have also noticed.
"The largest problem we will find in coming years is the counterfeiting of New Zealand products," says Yu. "There is already fake Manuka honey in the Chinese market."
Kiwi wine is doing well, especially in Shanghai, Beijing and Guangzhou, but it is up against some stiff competition.
The French – place-name trademarkers for ages – have thousands of wine brands already established, and the governments of Chile and Spain are also trying to lift sales, Yu says. "Every brand in the world wants to be in China because they see the market size."
Beyond the biggest cities where a lot of ex-pats reside, are innumerable other cities and regions, with their own dialects, climate and culinary mores, potentially wanting to buy premium products.
Which brings us back to soup. Pitango's export manager Ian Pascoe wants to tap new markets, but are the Chinese ready for broccoli and blue cheese soup?
Pascoe says that to be successful, exports must fit in with local eating culture, and here he has experience.
Five years ago, as export manager for Waterwheel Industries (now merged with Pitango), he made a move into China with crackers and cheese twists. They went gangbusters in the United States. They took the crackers to Chinese trade shows. People did not know what to do with them.
"There is a lot of hype about the population numbers and the growth in the middle classes but the reality is that with products like ours, at the prices they are, you are often servicing ex-pats and quite a small layer of local customers," Pascoe says.
Like Boote and Yu, Pascoe sees products, such as wine and seafood, "booming" in China.
"Is it changing and can you tap into the change? The answer is yes but it's a very long term proposition and it takes quite a bit of investment," he says.
Eloise Gibson visited Hong Kong as a guest of the Hong Kong Economic and Trade Office.
CHINA TRADE
NZ Exports to China in 2011: $5.8b, up 22 per cent on 2010.
NZ Exports to Hong Kong in 2011: $798m, down 7.8 per cent on 2010.
Biggest earner categories: Dairy, eggs, honey and wood.
Fastest-growing big categories: Fish and seafood, hides and skins, meat.
Fastest-growing niche category: Wine – $17m and growing fast.
NZ OVERLOOKS CHINA'S REVIVAL
If you hear Tony Alexander speak at a function this year, he will probably say this: Two centuries ago, China
If you hear Tony Alexander speak at a function this year, he will probably say this: Two centuries ago, China accounted for roughly a quarter of the world's gross domestic product and now it is heading back there.
"New Zealand's entire economic history has been one in which the biggest global economic player was absent," says the BNZ chief economist.
Little wonder that China dominated talk at the Asian Financial Forum, a gathering of some 2000 business people and politicians in Hong Kong last month.
Speakers chewed over the effects on China's growth – and therefore the world's – of a slowdown in the over-inflated property market and the weakening European demand for goods.
Most respondents to an audience poll thought Chinese GDP growth would remain strong at about 8 per cent this year, in line with the International Monetary Fund's forecast, with the biggest risks coming from either declining exports or a recurrence of the global financial crisis.
Beijing's plan to keep growth on an even keel spells good news for China's rural poor – if the plan can be implemented successfully.
Despite rapid urbanisation, only half of Chinese live in cities (in developed countries, between 70per cent and 80per cent of the population does) and wages remain low per capita at about US$3500 (NZ$4193) with a savings rate of about 40 per cent, says Kelvin Lau, a senior regional economist at Standard Chartered Bank in Hong Kong.
- © Fairfax NZ News
