EU threat to NZ China dairy trade, says Spierings

Fonterra CEO Theo Spierings said the co-op would focus on expanding in China's smaller 'tier three and four cities'. Photo / Jason Oxenham.

Fonterra chief executive Theo Spierings says losing Chinese market share to European dairy competitors is a concern for New Zealand.

Addressing the China Business Summit in Auckland this morning, he outlined the dairy giant's five-year plan in the world's second-biggest economy.

Spierings said Fonterra was aiming to grow its business in China from around $5 billion in 2014 to $10 billion over the next five years.

The company would focus on expanding its footprint in smaller, tier three and four Chinese cities, as well as growing consumer brands sales through e-commerce channels.

"One big change that I expect ... is the growth of tier three and four cities," he said. "It's going to be a different ball game - completely different."

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Asked about Chinese dairy players setting up manufacturing facilities in New Zealand, including the $220 million infant formula plant Yashili opened in Pokeno last week, Spierings said he wasn't too concerned about such competition.

"Should we be concerned about Chinese companies investing in New Zealand because of brand New Zealand and the super premium prices they can achieve in their market? I don't think we should be concerned," he said.

"What I'm more concerned about at this point in time is that you see the Chinese players shifting - in the ingredients business but also in infant nutrition - their faces towards Europe. Europe is gaining share and if Europe gains share New Zealand is losing share."

Earlier, Prime Minister John Key told the summit that the Government was looking to increase fees and other costs facing foreign investors applying for Overseas Investment Office approval.

It would then pour that money into beefing up the office's resources in order to speed up the approval process, which has been copping investor criticism recently.
"The length of time that it's taking to make a decision is far too long," Key said.

He said the Government had very little support for changing the Overseas Investment Act.

"Only Act will support us," Key said. "We are stuck with the Overseas Investment Act, whether we like it or not, in its current form."

China's Ambassador to New Zealand, Wang Lutong, said Chinese investors were looking for a "consistent message" and "fair play" from the Government and local business community.

Even with China's economic growth slowing, Key said China remained a huge opportunity for this country.

"We should ride that wave, because it's a wave of prosperity for New Zealand."

See this Yashili corporate video showing off its new factory: