Where everyone gets a Chinese bargain

Shoppers at a Warehouse store in Albany, Auckland. Photo / Steven McNicholl

Sixty per cent of the goods New Zealanders buy from the country's biggest non-food shopping chain, the Warehouse, are made in China.

A Weekend Herald investigation has found that 82 per cent of the country's clothing imports, 72 per cent of imported footwear, 58 per cent of toys and sports goods and 52 per cent of imported furniture come from China.

The retail buyers who stock the big chains say New Zealand production has almost disappeared.

Even locally designed clothing labels such as Icebreaker are now made in China, and only 13 per cent of the Warehouse's products are still made or assembled at home.

"In the last 10 years there has been a big hollowing-out of the New Zealand manufacturing sector," said the chain's sustainability manager, Trevor Johnston.

"The trend over the last decade has been for continued, progressive, incremental growth in the China sourcing - not big jumps, but even in the last three years, China's share of our sourcing has gone from 56 per cent to 60 per cent.

Mr Johnston predicted that the increase in imports from China "is going to change the face of NZ in a way people don't recognise right now".

A Herald series running every day for the next week will examine the growing influence of China and Chinese people on our economy, our food and culture, our education system, business, lifestyle, crime and politics.

China-born people are a bigger share of our population than in any other country in the rich-nation OECD club.

China is our second-biggest export market after Australia and by far our biggest customer for our largest income earner, dairy produce.

It has passed Japan as our fourth-biggest source of tourists, and a new air service starting today between Guangzhou (Canton) and Auckland will boost that by a fifth.

Mr Johnston said NZ was starting to see a flow of surplus Chinese capital that could transform our business world in the way past investments from Britain and more recently from the US and Australia did.

"We are looking at deeper and deeper integration with their economy," he said.

"I think the real change is going to come through immigration and investment and deeper economic integration, not only on the importing side but in Chinese capital taking root here. And culturally, there will be more Mandarin speakers.Chinese culture will be much more visible.

Mr Johnston said the Chinese "are very hard-working good students and they will ascend to good positions in society."

For the Warehouse, no other country comes anywhere near China's dominance. Indian products account for 0.8 per cent of its sales.

"China has some unique advantages if you compare it to India," Mr Johnston said.

"It has a much better transport infrastructure, and it has not only low-cost finishing-type manufacturing but all the big raw materials, the chemical manufacturing, textile manufacturing, mining - it has it all."

Rod Duke, the major owner of the Briscoes homeware and Rebel Sport chains, said 50 per cent to more than 90 per cent of his main directly imported categories came from China, and he did not see any other country rivalling it any time soon.

"India could do it, but I don't think they will. They are moving more in the direction Korea chose - tech industries rather than commodity industries."

But the merchandise and marketing manager of the Bunnings hardware stores, Peter Derbyshire, said he was starting to shift purchasing to lower-cost countries.

He said about 35 to 40 per cent of his chain's products were still made in New Zealand, and of the rest, about 70 per cent came from China.

But he had not seen much growth in China in the past two years because of rising wages.

"When I started going there 25 years ago, labour was easy," Mr Derbyshire said.

"Now the labour costs have gone through the roof relatively speaking, and the labour they are getting now is wanting more white-collar jobs with higher incomes.

"Taiwanese people who moved factories to China are now looking at setting up in inland China and having to educate people who are still using basic hammers and shovels.

"Or they are moving their factories to Vietnam or Indonesia or India."