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Home / Business

China young gun hot on two-way trade

Fran O'Sullivan
By Fran O'Sullivan
Head of Business·NZ Herald·
8 Apr, 2015 12:53 AM4 mins to read

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The accomplished Lu Hao has been described as “a political thoroughbred”.

The accomplished Lu Hao has been described as “a political thoroughbred”.

Fran O'Sullivan
Opinion by Fran O'Sullivan
Head of Business, NZME
Learn more
Lu Hao singles out investment as key to ensuring stability of bilateral custom between New Zealand and China.

Governor Lu Hao - widely tipped to be a major player in Beijing's "next generation" leadership - has singled out two-way investment as the key to ensuring the stability of bilateral trade between New Zealand and China.

Lu was in New Zealand yesterday as leader of an investment promotion delegation from Heilongjiang province in China's North-East. Heilongjiang is one of the strongest provinces of China in the farming, dairy and stockbreeding industries. It is also the largest importer of New Zealand beef and lamb.

The fundamental point he made to an Auckland briefing is that the challenge to long-term trade is ensuring stability and reliability.

Relying on price competitiveness for goods will not guarantee long-term trade, but two-way investment will guarantee trade in the long run.

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It's a familiar theme in other parts of Asia - particularly Indonesia, Malaysia and Vietnam which also push investment to secure trade in goods.

But what is also interesting is Lu's focus on skills development in China. He plugged overall opportunities ranging from management to advisory work. A range of animal husbandry projects were then spruiked by leading members of the delegation to NZ businesses.

The relevance of the Lu visit is two-fold. First, a signal that Heilongjiang Province - which is on the move when it comes to farming and agribusiness expansion - wants to secure two-way investment, as well as trade, with New Zealand.

Second, an opportunity for Lu to make political and business connections with key New Zealand leaders as he progresses up the ladder.

It's a given that to govern such a vast country as China, aspiring national leaders have to have demonstrated outstanding competency at both local and central government levels.

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Lu - described by the People's Daily as a "political thoroughbred" - is the youngest provincial governor in China. A feat which Trade Minister Tim Groser acknowledged yesterday as just one of a series of firsts in the Chinese politician's career.

The focus on Lu's successes at a relatively younger age than his peers has been singled out by Chinese media.

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The People's Daily profile said he was made head of a state-owned factory in Beijing in 1995 at the age of 28, making him the youngest person to hold such a post in the capital. He was also Beijing's youngest deputy mayor, the youngest first secretary of the secretariat for the Communist Young League's central committee. The profile also noted he had successfully managed the Zhongguancun industrial park, known as China's Silicon Valley, between 1993-2003.

China bloods its rising political talent by testing them with challenging roles; a successful term as a provincial governor or as a provincial party boss - is seen as critical to ascension to the top ranks of the Politiburo.

Two other front-runners in the "next generation" are Zhou Qiang, who is president of the Supreme People's Court of China, and Hu Chunhua, the party boss of Guangdong province.

The Governor's business delegation included the chairman or presidents from major Heilongjiang companies engaged in the meat, dairy, grain and scale farming sectors including: Grand Farm, Tianshunyuan, Feihe Dairy, Wondersun and Beingmate.

Heilongjiang has a population of 37 million and covers a land area almost twice the size of New Zealand. An NZTE briefing note says it's part of the "golden belt" for dairy farming but with very cold winters. It ranks second in China for milk production (10 million tonnes per year) with seven of China's top 10 dairy companies having operations there. It has 1.97 million dairy cattle (NZ has 5 million), 2.63 million beef cattle (NZ has 5 million), 7.28 million sheep (NZ has 28 million).

It is also a region where there is considerable farm expansion occurring. In 2014 alone, owing in part to generous Government subsidies, there were 137 new dairy farms built with an average size of 1200 cattle. There are 64 milk processing plants and 45 beef and lamb abattoirs and it is home to some significant companies with operations and distribution across the country.

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As the north tends to eat more lamb than the south, Heilongjiang is already a very important destination for NZ's beef and lamb exports.

Among the delegation Feihe Dairy said it is interested in setting up or acquiring a dry-mixing process based dairy plant in New Zealand. Beingmate - located in the province's "town of cows" is already in a global partnership with Fonterra while Grand Farm Group is in a partnership with the Alliance Group which it describes as the largest sheep export enterprise in the world.

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