Rod MacKenzie: China not market for dilettantes

The groundwork has been laid for a successful relationship, says Rod MacKenzie

Cartoon / Supplied
Cartoon / Supplied

From a trade and investment perspective, New Zealand is in the nascent stages of significant success with China.

For a country with a GDP 51 times smaller than China, New Zealand can rightly be proud of its achievements and the progress made since the signing of a high quality and comprehensive free trade agreement between the two countries.

Prouder still when you compare New Zealand's trade profile with that of other developed nations still struggling to gain the same levels of market access.

Developing a profitable, stable trading relationship with China is not an easy thing though, FTA or no FTA. The critical differences between the way the two countries operate, the complexities and confusions of the different systems, cultures that at times seem as far apart as the physical distance and any number of other factors conspire against the average New Zealand company setting out to tackle the mainland.

Much has been written about the costs and risks of doing business with China and I don't propose repeating those here. But there are some success factors that have become much clearer as we work with companies at various stages of their maturity in China.

The ones that seem to matter most are speed, commitment, determination, being there and, as a customer put it recently, faith.

Speed is normally something that a business adviser would caution against but it's not meant in this context as a reckless scramble towards a vague goal. It's probably better expressed as "urgency" and the driving will to get a deal done.

That's undoubtedly the Chinese way. If there's a deal that will benefit both parties then it needs to be done. Done properly and with the right safeguards put in place by all means, but dealt with as quickly as prudently possible.

I emphasise this because survey after survey of overseas customers' opinions of New Zealand business people conclude they are great to do business with for their friendliness and approachability but casual to the point of nonchalance and often very slow to respond.

Any doubts about how that plays in China are usually dispelled by a simple observation of the pace of life in the major cities, the staggering sudden appearance (and disappearance) of buildings and the mesmerising emergence of new brands and products that hit the shelves faster than the average New Zealander could ever imagine.

Commitment seems an obvious thing to point out but China is not a market for the absent-minded or the dilettante.

I suppose it was possible once to be a successful exporter from New Zealand by simply producing what you were good at, finding a customer and sending it away. China is not like that for anything other than the most basic of commodities. It takes a dogged determination to create and build a market position in China and to turn that into a profitable enterprise takes, at an educated guess, three times longer than a comparative Western market.

Obviously financial commitment is an important part of this but from observation the more important commitment is to being there. Having a sustained presence in the target region in China is such an important success factor that it probably should have been at the top of this list.

Long distance business relationships work about as well as long distance marriages - they have their moments but too few of them.

Business in China, as it is often said, is based on mutual respect and a strong relationship that is developed over time. And developed in person, not through intermediaries or via the internet.

The need for determination also sounds a bit self-evident but there are many pitfalls along the way to getting things right in China and countless moments that businesses will find themselves staring down a dead end street or falling into a large chasm that they didn't see.

A customer I have in mind as I write this tells me that their business has surged and receded so many times they have often thought about chucking it in, but are at the point where they have simply put too much into it not to continue. And that's what they're going to do.

"Faith" isn't necessarily the advice I would give directly to anyone but there is a dimension to working with China that does require some slightly abstract belief that things will be right sooner or later. No matter how many reverses of fortune are encountered or obstacles placed in the way, things will work out.

This is, after all, an enormously optimistic, wealthy and curious market with a 400 million-plus middle class with discretionary income that grows proportionately every year. Where else in the world do you find that?

The celebration of the New Zealand/China relationship that is occurring with the Prime Minister-led mission this month is symbolically very important to the continuation and growth of the economic closeness between our two countries. The size and seniority of the delegation and the presence of so many senior Government representatives will not be lost on the Chinese constituency that New Zealand business-people deal with.

There will be some important agreements signed during the course of the mission and many more that will occur afterwards.

This is an exciting time for New Zealand to be engaged with China and one that is bearing much fruit. There's much more work to be done however, indeed we are really just at the beginning. But it's a good start and the groundwork has been laid for it to accelerate significantly over the years to come.

Rod MacKenzie is Regional Director, Greater China , New Zealand Trade & Enterprise.

- NZ Herald

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