New Zealand's trade relationship with China is a victim of its own success and more work needs to be done, Trade Minister Tim Groser says.

His comments come after a number of recent trade hitches including a meat blockade, revelations of black-market sales of New Zealand infant formula and the discovery of minute traces of the fertiliser dicyandiamide (DCD) in New Zealand milk powder products.

The trade of smuggled infant formula, revealed by the Weekend Herald yesterday, involves New Zealand supermarkets legally selling the formula to exporters who ship it to Hong Kong.

From there, the formula is smuggled into mainland China and sold online with the supermarket receipts to verify its origins.


Mr Groser told TVNZ's Q+A programme today that the trade relationship with China - New Zealand's biggest as of April - was "genuinely in outstanding form".

But he added that New Zealanders were also "victims of our own success".

"When you have exports triple in five years, you've got to ask yourselves, 'Are we running fast enough to keep up with these developments?' I think the answer is no. We've got some more work to do here."

He said more slip-ups, like the certification hitch that halted meat exports to China, were likely.

"A mistake was made. There will be more mistakes ... The more you trade, the more likely it is that things will go wrong in terms of the detail.

"But it doesn't cut across the general point about the overall relationship. It just means we need to invest more in what I call the infrastructure of this relationship."

Mr Groser said the DCD saga, in which residual traces of the chemical were found in milk powder products, was a perception issue rather than a food safety issue.

"And that is very difficult to contain. So we've sorted the problem, but I think now ministers have got a taskforce looking at all the risks across the whole supply chain."

He said the perception issue extended to false labelling and the "grey trade" of New Zealand infant formula being smuggled into China through Hong Kong.

"We can't obviously police this within China, but we can and will work more closely with the Chinese authorities ... There are things we can do, things we can't do. And the things that we can do, we're going to do them better."

Mr Groser said there were a range of supply chain issues which the Government was looking in to.

He said New Zealand Trade and Enterprise and the Ministry of Foreign Affairs and Trade were both quite well-resourced, with about 130 officials living and working in China.

"But I'm asking other agencies to reflect carefully on their own long-term strategies."

Mr Groser agreed there were not enough Mandarin speakers in Government agencies, saying he was "almost extremist" on the issue of language training.

"I believe if you can't speak somebody's language, you can't really communicate with them properly. So I really believe in New Zealanders who are exposed to the front line, whether they're in different agencies, whether they're in different companies, taking that skill."