Claire Trevett: Why Key needs to spread the milk message in China

Prime Minister John Key meets with Chinese Premier President Xi Jinping at the Boao Forum in China in April last year.

Much of the recent focus on sending milk to China has been on Justice Minister Judith Collins, accused of a conflict of interest for drinking and praising a cup of milk while visiting her close friends' Oravida factory in Shanghai.

Collins was not alone in drinking milk at China at the time. A month earlier, in the immediate aftermath of Fonterra's botulism scare, Trade Minister Tim Groser and Primary Industries Minister Nathan Guy announced a strategy to rebuild New Zealand's reputation for food safety.

A key prong was high-level ministerial visits to affected markets. Ministers spread out across Asia, effectively taking on the role similar to a monarch's official taster. Every photo of a minister drinking milk was a deposit in the bank of reassurance for consumers with concerns about the products.

English, who spent 12 years in Shanghai working for Trade and Enterprise until a few years ago, points to the Chinese concept of Guanxi. It relates to the importance of relationships and loosely translated means 'you are who you know'. It is critical in China both socially and in business. The fact of a meeting with a senior figure is more important than what is said.

Claire Trevett

Key will play his part in that this week when he arrives in Beijing to try to put to rest any lingering doubts.

He initially decided to visit in the direct aftermath of the botulism scare, before it was known that it had been false. Although trade in milk has increased since then, Patrick English of the China Council is not alone in believing the visit is still necessary.

Mr English, who spent 12 years in Shanghai working for Trade and Enterprise until a few years ago, points to the Chinese concept of Guanxi.

It relates to the importance of relationships and loosely translated means 'you are who you know'.

It is critical in China both socially and in business. The fact of a meeting with a senior figure is more important than what is said.

The importance of guanxi is one of the reasons eyebrows were raised among China-savvy business people about Ms Collins' claims a dinner with Oravida head Stone Shi and a senior border official was purely friendly and not business.

Mr English says guanxi is the reason why Prime Minister John Key's visit to China to meet its leaders is also critical to put to bed the string of scares relating to New Zealand milk.

He said the initial news of the botulism scare was widely absorbed by Chinese mothers who were fiercely protective of their children under the One Child policy that affects many urban parents. However, the subsequent news that it had been a false scare and of measures New Zealand was taking to address the issues the botulism scare raised had not been so widely spread.

Mr English said Key's visit and his interviews with China media will help get that message out there, even though demand appears undented.

Labour MP Phil Goff, who was trade minister when the FTA with China was signed, also thinks the visit is important.

"It does take some work to reassure China we've learned the lessons of the botched handling of things. There is repair work to do. We can't take our most important market for granted and John Key has got to respond to a 'please explain' note from the Chinese."

He said the worse aspect was delay in informing China of a problem, especially in the DCD case which China found out from media reports.

"That is not a 'no surprises' policy and it would have damaged their confidence in the New Zealand government to be upfront and honest about any problem we confronted."

Mr Goff's colleague Damien O'Connor was sceptical about the timing of the decision by the Ministry of Primary Industries to lay charges against Fonterra in the week before the Prime Minister's visit.

There is another related concept in Chinese business - loss of face. It is a concept known as 'mian zi' and the trip by Key and Fonterra Chair John Wilson to Beijing is partly driven by this as well. It is, through necessity, a face saving exercise because there is a lot at stake.

Claire Trevett

He claimed it was simply a 'face saving' exercise and would allow the PM to avoid wider issues of under-resourcing by New Zealand trade, MPI and foreign affairs officials in China.

Mr Goff echoed that concern about under-resourcing, but said the Fonterra charges will be useful for Key because it shows New Zealand does not simply pay lip service to food safety, but is willing to prosecute over it.

There is another related concept in Chinese business - loss of face.

It is a concept known as 'mian zi ' and the trip by Key and Fonterra Chair John Wilson to Beijing is partly driven by this as well. It is, through necessity, a face saving exercise because there is a lot at stake.

Nora Yao, the director of the Confucius Institute, says New Zealand's apparent belief it has lost face does not necessarily bear out in reality.

She said Fonterra had done some harm but there was still trust in New Zealand milk - and the best place to see that was at the departure gates.

"The visit also speaks to New Zealand's wider relationship with China. It is Key's fourth meeting with the leaders in the past year - a higher figure than any other world leader."

"So many Chinese tourists come to New Zealand to purchase milk powder. You will see that if you check their luggage. Milk powder is one of the top things they purchase from NZ."

The visit also speaks to New Zealand's wider relationship with China. It is Key's fourth meeting with the leaders in the past year - a higher figure than any other world leader. More than 10 ministers also visited China last year. There are some concerns New Zealand is so worried that insulting China could impact on its trade that it is taking a softly-softly approach on foreign policy issues rather than risk offending China, which often sides with Russia on Security Council issues.

Mr Goff said the opposite should be true, although he would not advocate megaphone diplomacy. "If you build a strong relationship then you can speak frankly with countries whether they be old friends, or new friends. However, I think National has shown compehensively across the board an unwillingess to talk frankly to its friends on a range of issues. I don't think it's just China. It's Australia and the United States as well."

Last year, Australia publicly criticised China for its air defence zone which included disputed territory in the East China Sea. By comparison, the New Zealand government maintained a steadfast silence.

Suddenly Australia's free trade talks with China, ongoing since 2005, were yet again put on ice, although there are now signs of a warming in the lead up to Prime Minister Tony Abbott's visit to China for the Bao Forum. Meiji has a price.

Mea Culpa the scares

September 2008: Sanlu, a Chinese company part-owned by Fonterra, admits using melamine in its milk powder after babies began falling ill.

January 2013: Residue of the fertiliser DCD is detected in Fonterra milk. Fonterra and Government officials do not go public for about four months. They claim it is not a food safety issue.

August 2013: Fonterra whey protein concentrate tests positive for a bacteria that causes botulism, and its products are recalled in several countries. Further testing reveals it was a false positive.

February 2014: After an inquiry, the Ministry of Primary Industries charges Fonterra for breaching food safety laws in its handling of the whey batch in question, and failure to 'escalate' the initial findings early.