Former Fonterra chair warns over China trading

One of New Zealand's most distinguished business leaders has warned exporters to be wary of fraudulent behaviour when doing business in China saying: "Don't ever trust them ... never".

Speaking at a businesswomen's conference in Tauranga at the weekend, former Fonterra chairman Sir Henry van der Heyden said doing business in China was full of surprises.

"You've got to go and do business with your eyes wide open," he said.

Asked by an export manufacturer how small New Zealand businesses could ensure they were not ripped off when trading in China, Sir Henry said bad experiences should be used as opportunities to learn.

"That's my point about China, you will be full of surprises. Don't ever trust them ... never."

Sir Henry later told the Bay of Plenty Times the real intent of his comment was "be wary, be very careful".

Sir Henry told conference delegates Fonterra had learnt the hard way following the Sanlu melamine scandal in 2008 and board members had discussed at length whether to continue producing milk in China.

"For us we made the decision 'Look, we're here for the long run'. China is a very, very difficult market, and China's one of those places, I don't think you can sit on this side of the world and say this is how you're going to do business in China because you've actually got to be there, you've actually got to learn from your experiences as you evolve your business."

His comments come as Mount Maunganui-based Zespri is appealing charges of criminal smuggling made against its Chinese subsidiary, saying it had been assured by Chinese officials the dual-invoicing method it was using was acceptable.

After the meeting, Sir Henry told the Bay of Plenty Times he was did not know enough of the details to comment on the Zespri court case but the case reinforced his point.

NZ First leader Winston Peters said China's own premier admitted their country's biggest problem was corruption and agreed that people should get to know the country before doing business there.

"The fact is, when you put your country's reputation in some other country's hands, you take a very great risk. That is why my party always argues for maximum control at every point of the export of the product."

Mr Peters said Kiwis should take heed from Japan's experience in the United States.

"When Japan moved their car sales market to the USA they got taken for an absolute ride. A number of businesses in New Zealand have been ripped off, there are people who have invested a whole lot of money and lost their shirt."

A spokesman for Foreign Affairs Minister Murray McCully said the minister had not seen Sir Henry's full remarks, and was, therefore, unable to comment.

Zespri chairman Peter McBride said he was not prepared to comment while the appeal against Chinese smuggling charges was still before the courts. The Chinese embassy in Wellington could not contacted for comment yesterday.