The private sector China Beachhead Advisory Board resigned en masse in a meeting at the New Zealand embassy in Beijing this week saying NZ Trade and Enterprise was undermining its work in helping Kiwi companies do business in China.
NZTE chief executive Peter Chrisp flew to Beijing for the Monday meeting to try to sort out difficulties between his trade officials and the board but without success.
The private sector board is chaired by expatriate New Zealander and highly respected banker David Mahon who has worked in China for 26 years, and the other seven members are either high-flying local business people or other ex-pat Kiwis.
They are at present helping 12 New Zealand companies to expand into the China market.
Mr Mahon told the Herald from Beijing last night: "The board had no option but to resign because it had become clear to us all that we were an unwanted programme by NZTE China, that the NZTE team in China had undermined our work for New Zealand companies because they were reluctant to engage in a full partnership.
"So without trust and respect there was no point in continuing."
Asked about how the board felt undermined, Mr Mahon said: "In order to work wholly with New Zealand companies, we have always needed full information, full transparency and this was not always made available to us by NZTE."
There had been parallel discussions and projects in key sectors that the board had been asked to help companies with - such as the wine sector.
"And because of this lack of transparency and communication it caused, at times embarrassment in respect of the companies and unnecessary duplication of work."
The resignation is likely to be an embarrassment for NZTE and the Government because growing trade with China under the free trade agreement is so highly prized by the Government.
The board has been operating for three years and has been working with the NZTE team in China comprising three trade commissioners in Beijing, Shanghai and Guangzhou, and an overall director.
Mr Chrisp returned to New Zealand yesterday insisting that all the board including Mr Mahon had immense goodwill for New Zealand and had pledged to continue to help New Zealand companies.
He said there had been "a couple of years of operating tensions between the advisory board and NZTE."
"So it really came to a head this week and they resigned."
He did not believe the issue was about strategic direction. "It is the operating end of the spectrum and there are some personality issues there as well."
"It was disappointing the way it has transpired but we have left good friends and relationships are in tact."
Mr Chrisp said NZTE would continue to build up a coalition of good private sector advisers for the China market.
"The China market is growing and we need to grow with it."
He was not sure if the board would be reformed but he said Mr Mahon would continue to be a significant person in China in respect of New Zealand.
Mr Mahon recently published an article which was critical of New Zealand for not making more of the opportunities that the free trade agreement offered.
He argued for a more unified approach, "to break open the silos within its bureaucracy and create a single commercial entity to tackle the China market."