NZ could be Hong Kong's Silicon Valley

By SIMON COLLINS

New Zealand can become Hong Kong's "Silicon Valley", says Hong Kong trade chief Peter Woo.

Mr Woo, a business leader appointed to chair the Hong Kong Trade Development Council last October, said in Auckland yesterday that Hong Kong, in turn, could be the "marketing manager" for New Zealand companies in the world's fastest growing market, China.

"The story here is really to try and seek strategic partners - partners where you have complementarity of skills and core competencies," he said.

"We have not spent a lot of money on research and development. That is not our forte. We are more marketing oriented.

"So we see partners like New Zealand as Hong Kong's Silicon Valley, because distances are no longer an issue. With the great environment and lifestyle you have, you can be a tremendous location for those talents."

He was speaking after a briefing by Trade NZ chief executive Fran Wilde and chairman David Moloney, which stressed New Zealand's innovative biotechnology and information technology sectors.

Mr Woo addressed a business lunch and dined last night with Prime Minister Helen Clark and local business leaders.

Hong Kong and New Zealand officials are due to meet again next month to negotiate a free trade deal which the Government hopes will raise New Zealand's profile just as China is due to join the World Trade Organisation (WTO), opening the vast Chinese market to the world.

New Zealand's exports to China and Hong Kong combined have already more than quadrupled in the past decade, making the combined market our fourth biggest after Australia, the United States and Japan.

But the potential is still huge. China and Hong Kong still take only 7.7 per cent of New Zealand exports that go beyond Australasia, compared with 9 per cent of Australia's beyond-Australasia exports. And Mr Woo said China's trade was expected to double in five years after it joined the WTO.

"There is going to be a mindset change inside China in terms of how this framework is to be complied with. There's going to be a whole host of things happening."

Apart from trade, China is probably already New Zealand's biggest source of immigrants - 8012 people from China and 861 from Hong Kong arrived here in the year to June. Only Britain (14,566) and Australia (10,997) were bigger sources, but most "immigrants" from those countries were probably returning New Zealanders.

China is also by far our biggest source of full fee-paying students - 5463 of them last year, or 26 per cent of all full fee-paying overseas students. This was almost double the next biggest source country, Japan, with 2838 students.

China, which is still notching up economic growth of 8.1 per cent a year, is a major engine of growth in a world where Mr Woo expects the outlook elsewhere to remain "difficult".

"I'm not bullish about it. For Hong Kong, we hope to hold our trade to about level - minus 1, zero or plus 1 per cent. Many countries are negative," he said.

He believes the world has a "structural" excess capacity, with a long-term trend for the world prices of most goods to decline.

"Therefore the question is, how do you survive? The reality is you have to be agile, you have to be quick," he said.

"You have to make sure your product cycles are short. You have to come out with new ideas all the time. You can no longer survive as a commodity."

He said Hong Kong traders, who handled 40 per cent of China's foreign trade, could help to "scale up" New Zealand's small businesses to match the enormous demand from China.

"The first-mover advantage into China is very important, and Hong Kong is the place that has made relationships in China for 20 years," he said.

"Those 20 years of experience mean Hong Kong not only knows how to do business in China; what is more important is that they also know what not to do in China.

"So I would say that Hong Kong is the best place you can find to be your China risk managers."

He said the Hong Kong Trade Development Council could introduce exporters to Hong Kong partners. The council has 48 offices around the world, including 11 in China, and has a database of 100,000 Hong Kong companies and 500,000 other companies globally.

links


TDC trade