For many, the greatest rewards in future will come to those who begin with an eye on the kitchens, restaurants and shopping baskets of real consumers in Shanghai, Tianjin or Beijing, and shape their production to suit.
Much is said about the enormous opportunities for New Zealand food exporters in the growing economies of Asia, in particular China.
Economists believe China's food and beverage sector has overtaken the US as the world's largest. China is now our top dairy export market and our second biggest trading partner after Australia.
Until now, much of the focus has been on optimising production in this country and gaining access to the Chinese market. New Zealand now enjoys unique advantages including a reputation for safe, quality food and China's only free trade agreement with an OECD country.
With exports to China growing at 18 per cent per annum since 2000, some would conclude we are grabbing more than our share.
But a closer look suggests we might not be grabbing enough. China's imports of primary goods have grown even faster, at 24 per cent, suggesting other countries are doing better despite our advantages.
If New Zealand is to fully seize the opportunity, we must have a greater understanding of the consumer in China. For our farmers, processors and marketers, understanding the preferences of our new customers, and where and how they get their food, is essential.
To do so, we need to understand the changes sweeping China. As it grows and modernises, its vast population is flocking to cities. At 690 million, the urban population now outnumbers rural dwellers for the first time and an estimated 200 million more will arrive in the next 20 years. In cities consumers enjoy rising spending power and increasingly demand food that is safe, high-quality and convenient. Many are turning to a diet rich in protein and vitamins, including seafood, meat and dairy, along with fresh fruit and vegetables. In other words, demand is soaring for the types of food and beverages New Zealand produces.
The wealthiest Chinese households spend five times more on dairy and seafood, and twice as much on meat, than those on the lowest incomes. And they will pay more per kilogram for quality, such as better cuts of meat, more "premium" varieties of seafood, and branded, packaged or processed food.
The potential for New Zealand in these high-value segments is illustrated by Fonterra, which has capitalised on growing health awareness among affluent Chinese, boosting dairy sales through the Anlene "bone health" brand. I believe it is the wealthiest 10-20 per cent of urban households - where people not only consume more of our major exports, but will pay more per mouthful for the privilege - our exporters must target. But where and how should we target them?
China's retail industry, along with its infrastructure and distribution networks, are developing to meet consumer needs. Traditional markets are giving way to hypermarkets, speciality supermarkets, online shopping, high-end hotels and restaurants as the outlets of choice for affluent urban consumers. This opens new opportunities to get our products to customers.
To be successful, each industry should target specific food categories along with the markets and consumer channels where it is easiest and most profitable to reach consumers.
A recent study in ANZ's Agri Focus set out to identify "hot spots" for future growth in New Zealand exports to China. This compared regions on a range of indicators, from population density and consumer spending power to the concentration of infrastructure, distribution networks and food outlets. Nine of the top 10 regions are on the East Coast seaboard, led by Shanghai, Tianjin and Beijing. With a combined population of nearly 60 million, these three regions alone offer a market two and a half times the size of Australia.
The opportunities are immense. But so is the need for exporters to understand the market and consumers they wish to target, and tailor their proposition accordingly.
Through ANZ's presence in China, we are helping Kiwi businesses connect to local opportunities, contacts and expertise. Their experiences point to a range of vital success factors.
Exporters need to do their homework on local tastes and business practices. Strong business relationships are crucial, as is the need for local staff or collaborators.
Size matters: even regions in China dwarf New Zealand. Kiwi firms may need to work together to gain the scale to compete (such as, to meet volume expectations, pool experience and/or share costs). Patience and a commitment for the long haul are important as it takes time and investment to get truly established.
Starting out on this journey is not for the faint-hearted, but the long-term rewards can be enormous. For many, the greatest rewards in future will come to those who begin with an eye on the kitchens, restaurants and shopping baskets of real consumers in Shanghai, Tianjin or Beijing, and shape their production to suit.
We can then move forward confident that New Zealand is maximising the returns from our longstanding strength in agriculture by producing the right products, at the right price to get our exports on the right plate.
David Green is ANZ's Managing Director Institutional Banking and an executive board member of the NZ China Council.