Fran O'Sullivan and Alexander Speirs: Firms have sights on China

Six shareholders are responsible for more than $3 billion worth of exports. Photo / File

Our primary sector is smartening up when it comes to China, with six of our largest producers teaming up to try to take their relationships with our largest trading partner to the next level.

Six founding partners -- Sealord, Silver Fern Farms, Synlait Milk, Villa Maria Estate, Kono NZ and Pacific Pace -- have each committed to a minimum two-year tenure as founding shareholders of Primary Collaboration New Zealand (Shanghai).

Collectively, the six shareholders are responsible for more than $3 billion worth of exports as it is, but see a more lucrative opportunity apparent in China.

Former Trade Commissioner for Hong Kong and Macau, Kevin Parish, will head the venture, and he's confident that PCNZ can be a difference maker in China.

"We're going to be measuring the sort of impact we can make here through sales into the market place," he said.

"We're not a selling organisation, we're a service company here to support both the current distribution networks that are in play, but also identify new pathways for products and relationships which can help us grow the business here in China."

The idea for a combined approach to China was conceived at Stanford University in 2012 during a primary sector boot camp, held for industry and government agency leaders.

When formulating strategy on how to improve export potential, China was earmarked as the main target, but the resources required to navigate the nuances of the market made it a difficult prospect to go alone.

"It's an innovative business model for New Zealand and it certainly appears to be something we need to improve how we operate offshore. We have a major distance challenge when it comes to primary products and this is a great opportunity for our companies to try a different approach," said Parish.

No doubt drawing some inspiration from the Kiwi Landing Pad up the road in San Francisco -- a similar venture with a focus on technology companies -- the building blocks for PCNZ were put in place.

It took the team a further two years to establish the venture and get the appropriate licences and approvals for doing business in China.

Minister for Economic Development Steven Joyce was in Shanghai to officially open the PCNZ offices earlier this month. He was impressed with the collaboration as a way of taking on the realities of the Chinese market.

"Someone was saying to me recently that if you don't have a real method to it, and the support of NZTE or the primary collaboration office, the first two years they will spend trying to work out how to operate, and you really need to shorten that up. This should shorten that up."

"Effectively what they're doing is leveraging off each other to reduce the cost of a direct footprint in China. They'll do that to the point where it makes more sense to do it for themselves," said Joyce.

It will be interesting to track how the makeup of companies inside the PCNZ progress. If they are successful at growing their market share within China -- the resources and capabilities required could quickly grow beyond the capacity of the joint venture.

"I think what will happen is that companies will grow at different rates, and some of them will stay with collaboration offices for a while, and others might be in and out reasonably quickly as they grow their own position," said Joyce.

But Parish says that shouldn't be an issue -- with turnover expected and plenty of outside interest from other companies about coming aboard.

"We've had interest from other companies already and have been in discussion with a couple of them already around the opportunity to come into the venture at some point in the near future."