The Red Potential of China: What it means to deal with the powerhouse of the Far East

China is New Zealand’s single largest export market, with the value of goods sold there exceeding $12 billion in 2014 – twice that of our exports to the United States – and we have a $3.1 billion trade surplus, even though just four years ago there was a massive trade deficit.

But let’s put that in a little bit of context: we are just one of 134 countries for which China is the largest export market. Add to that the country’s own renewed focus on producing for its internal market and, as Mike Arand, NZTE’s trade commissioner in Shanghai says, “effectively the whole world is focused on China”. That China is attracting so much competition certainly has something to do with its need to feed 26 % of the world’s population on 6% of its arable land, or its burgeoning middle class growing by 10 million people a year.

“New Zealand is very well positioned with our free trade agreement and relationship with the trade history we have, to deliver into that,” says Pat English, executive director of the New Zealand China Council, an organisation launched by the government to strengthen relationships between the two countries. And the relationship is a strong one, despite the botulism brouhaha last year. “China kept buying New Zealand products throughout. They paid greater attention and we received more scrutiny – but the business kept growing.” Obviously with a market as large as China’s and a trade relationship as strong as we have, the opportunities are huge. Food and beverage exports have doubled between 2011 and 2014, with a big part of that growth in dairy and milk powder.

“We’re also seeing growth in agritech,” says Arand. “That’s really starting to pick up and part of that’s around how China supplies its domestic needs.” Other industries Arand identifies as areas for growth include clean technology, especially where it can assist in cleaning up the environment, and health and nutrition. But the challenges often equal the opportunities. Even apart from the intense competition, the market is vast, highly regulated and complex, and costs are high especially if goods need to be transported outside the coastal hub.

While the fundamentals of exporting may be the same around the world, with due diligence, IP protection, deep pockets and perseverance featuring heavily – Arand says it’s amplified in China. “You’ve got to do the fundamentals, but do it much better in China.” Things take longer in China, says Mark Hargreaves, of the intellectual property law firm AJ Park.

“The rules, particularly around IP licensing and joint ventures, are complex, slow and a fairly bureaucratic process. Be prepared for things to take longer, watch the translation process – make it clear which version is the one you rely on and make sure translations are done really well. “Keep things simple; try to work with people who have worked in that market before.”