Christopher Adams

The Business Herald’s markets and banking reporter.

Saddling up NZ for Year of the Horse

With 2013 relations slowly mending, Chinese leaders look to the future

Jane Li is a translator for the World Civilisation Forum. Photo / Natalie Slade
Jane Li is a translator for the World Civilisation Forum. Photo / Natalie Slade

Business relations between China and New Zealand faced big challenges in 2013.

In January, traces of the nitrate inhibitor used on farmland were found in Fonterra milk and New Zealand meat got held up on Chinese wharves in May. There were Zespri's legal issues and then came Fonterra's disastrous botulism false alarm in August.

Despite these issues, demand for Kiwi dairy products continued to surge and China overtook Australia to become our largest and most important trading partner in 2013.

As the Year of the Horse gets under way, we asked a group of influential Chinese New Zealanders for their thoughts on the outlook for the China-New Zealand business relationship in 2014.

Henry Chung, associate professor of marketing, Massey University

New Zealand companies doing business in China should make better use of this country's Chinese population in the Year of the Horse, says Henry Chung.

The benefits immigrants can provide to businesses, particularly export firms, is one of the Massey University professor's specialist research areas.

Chung says Chinese immigrants can find it difficult to find employment in New Zealand, sometimes as a result of language difficulties.

And those who do find jobs are often relegated to areas of businesses where their experience and knowledge of China might not be used, he says.

"Companies can utilise these people's knowledge and contacts to help New Zealand to develop business in China," he says. "That's something we should be doing more in 2014."

Chung says there are many Chinese New Zealanders who previously worked in various arms of China's government.

"They understand the regulations in China very well and have good contacts with their former colleagues," he says.

Chung also says he expects the trend of Chinese firms establishing operations in this country to continue - and possibly even ramp up - during the coming year.

Chinese dairy giants Yili and Yashili are in the process of establishing infant formula plants in New Zealand, which will export products back to China, while the Crafar dairy farms in the North Island are now operated by China's Shanghai Pengxin.

Chung says Kiwis shouldn't have any concerns about Chinese firms setting up operations in New Zealand, provided the process is strictly managed.

"They need to generate job opportunities for New Zealanders."

Arthur Loo, partner, Loo & Koo Barristers and Solicitors, and board member of the New Zealand China Council

Arthur Loo says he cringes every time he hears a New Zealand politician or other speaker stand before a Chinese audience and say, "Ni hao".

Arthur Loo is a board member of the New Zealand China Council. Photo / Richard Robinson
Arthur Loo is a board member of the New Zealand China Council. Photo / Richard Robinson

"That is not the correct or grammatical way to address a crowd," he says. "Somewhere they have been told that 'ni hao' is the word for hello, but it is not an appropriate greeting for a crowd, just as in Maori there is a difference between addressing a single person, two people or a crowd."

But while Loo thinks New Zealanders' Mandarin knowledge needs to "go beyond the superficial", he says a lack of cultural understanding of China is a bigger problem.

"I think the main difference between the business cultures in China and New Zealand is that Chinese look for a long-term relationship," he says. "They want to know that if there are going to be difficulties in the business relationship, that the other party will do the right thing by them and it is not necessarily according to the letter of the contract.

"New Zealanders and [other] Westerners tend to look at the product that they are pushing and if they believe they have a good product, they expect the other party to trade with them with the minimum of preliminaries."

Mai Chen, partner with Chen Palmer and chairwoman of the NZ Asian Leaders organisation

Getting more Asian business people on the boards of New Zealand companies will help their push into China, says Mai Chen.

She says a study of the top-100 NZX listed companies last year found only 5 per cent had Asians involved with governance.

"Many of the companies had their biggest markets in Asia and 5 per cent of them had an Asian board member," Chen says.

"The reason I set up NZ Asian Leaders was to allow these Asian New Zealanders to have a voice, to provide those insights, to provide that wisdom, to provide that understanding of what is happening back in their home countries. These people are often very experienced at bridging the gap and standing between East and West and we need to avail ourselves of that," she says.

Chen says the impact of Fonterra's botulism scare was still going to be felt in the Year of the Horse, particularly for the infant formula manufacturers selling in China who were likely to face a "wall of regulation".

"I do think you will begin to see a tightening in that market," she says.

Chen says there were numerous differences between business cultures in the two countries.

"New Zealand business is the same as Chinese business in that none of us want to do one-off business, we want to find good people that we trust and want to continue to do business with them. But in terms of forging those relationships, the way in which you go about it I think is quite different.

"The Chinese culture requires quite a long period of [time in a] relationship to get into that level of trust whereby people are happy to do business with you. And also the culture can be quite different, even in terms of success fee as opposed to money up front ... they have a different way of going about these things," she says.

Arthur Lim, market commentator

Arthur Lim reckons "xenophobia" around Chinese investment in New Zealand is on the wane as the Year of the Horse begins.

Commentator Arthur Lim. Photo / Richard Robinson
Commentator Arthur Lim. Photo / Richard Robinson


Recent purchases here by China-based firms, such as the Crafar dairy farms sale and the acquisition of Fisher & Paykel Appliances by Haier, have been high profile and generated a lot of commentary, not all positive.

"In the end, when the official overseas investment statistics came out, the Chinese weren't as big as they were made out to be. They were high-profile investments, and that high profile certainly brought about concerns," says Lim.

"But I think there's a ready acceptance of Chinese investment out there now, even among those who were previously severe critics."

One example of this, he says, is the lack of any real backlash over Chinese company New Development Group's plans - unveiled this week - to build a 209m, 52-storey tower in Auckland's CBD.

He says it has been helpful that Qingdao-based Haier has kept promises made during its 2012 takeover of F&P Appliances, including that it would beef up the New Zealand firm's research and development capabilities in this country.

In February last year the more than 80-year-old whiteware maker said it would take on 100 new R&D staff in Auckland and Dunedin.

Lim, who was born in Malaysia after his parents emigrated from the Chinese island of Hainan, says Chinese investment in residential housing, particularly in Auckland, remains a sensitive issue.

"There's no two ways about it, in double grammar zone areas prices have been bid up high," he says. "But beyond that I think the increase in house prices is more a function of supply."

Jane Li, translator for the World Civilisation Forum, a think tank focused on economic issues in the Asia Pacific region

It might be New Zealand's biggest trading partner, but with its 1.4 billion population, vastly different political system and unique business culture, China can be a difficult country for Kiwis to get their heads around.

"Understanding China is something I am constantly faced with as translator at The World Civilisation Forum," says Jane Li.

But after meeting leading China scholars from around the world, the Chengdu-born Aucklander says she's come to learn that the question of "understanding China" is too abstract.

"There is extremely long history and rich culture to consider. It is better to try to understand specific matters, issues or problems."

One of the most serious unsolved problems, Li says, is the damage Fonterra's botulism false alarm caused to the political relationship between New Zealand and China.

"When the Chinese state-run news agency Xinhua translated an article from the Guardian saying that President Xi Jinping 'confronted' our Prime Minister in Bali [following the botulism scare] about 'his country's food safety record', this was a strong signal of the seriousness of the problem to the Chinese President," Li says.

She says that while the China-New Zealand relationship is at "critical point", once a breakthrough is made there's no reason why a whole new era in relations won't begin.

Jian Yang, National Party list MP

Jian Yang paid a visit to the University of Auckland's Confucius Institute yesterday to welcome 41 newly arrived Mandarin language assistants from China.

The MP, who arrived in New Zealand in 1999 and was a senior lecturer in international relations at the university before entering Parliament in 2011, says learning a new language "is a passport to a different way of experiencing the world".

"It allows us to see and hear as people different to us do, and to develop a richer understanding of our neighbours in the Asia-Pacific region," says Yang.

The language assistants visit various schools to help teach Mandarin. "Last year [there were] more than 40 Mandarin language assistants from China working across New Zealand, and every year this number of teachers continues to grow.

"The work they do is crucial to support New Zealand schools and teachers to deliver not just a proficient Mandarin language programme, but a Mandarin programme that incorporates the social and cultural contexts that are an inseparable part of any language."

He says Kiwis' understanding of China is improving, but New Zealand companies doing business there need to pay close attention to their relations with the Chinese media.

"They need people who really understand China and Chinese media," says Yang. "Well-established connections with some major newspapers and TV and radio stations in China can be extremely valuable at a time of crisis."

Lilly Shi, China business executive, Kensington Swan, and co-chair of the China and New Zealand Business Council

The Chinese phrase wan ma ben teng - 10,000 horses galloping ahead - is a metaphor for charging forward at full speed, says Lilly Shi.

Shi reckons the phrase is a good description of how the business relationship between New Zealand and its biggest trading partner will progress in the coming year.

"I'm personally very optimistic about the Year of the Horse," she says. "Business between China and New Zealand in 2014 is like wan ma ben teng."

Shi has been involved in Fu Wah International Group's plans to build an ultra-luxury hotel on the Auckland waterfront, as well as New Development Group's aim to construct the 52-storey tower in the central city.

Both projects have the potential to contribute significantly to Auckland's development, she says.

"These are very good signs for the start of the Year of the Horse."

Shi says New Zealanders generally have a good understanding of China, but there is much room for improvement.

"It's not just about being fluent in speaking the language, it's also about having a deep understanding of the Chinese culture, the business environment, and most importantly, the Chinese way of thinking."

Brian Tsoi, country manager, New Zealand & Pacific Islands, Cathay Pacific Airways

Brian Tsoi says Kiwis' understanding of China has improved dramatically over the last decade, while increasing numbers of Chinese tourists visiting our shores means New Zealand is also becoming much better understood in the world's most populous nation.

"In an anecdotal way, you can gauge New Zealanders' interest in China through the huge numbers of New Zealand-born Kiwis who are attending this weekend's Lantern Festival in Auckland," says Tsoi, who took up his position with Cathay in Auckland last year.

"That helps to improve understanding of Chinese culture and society in the same way that the Chinese learn more about New Zealand by travelling here, which they are doing in increasing numbers. We are seeing more Chinese arranging self-drive holidays, rather than the traditional bus tours, so that is a great way to get to know more about a country."

- NZ Herald

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