China Business: Taking it to the next level

Alex Malley, chief executive of CPA Australia.

Is New Zealand making the most of its favoured relationship with China, asks Alex Malley.

As China becomes the world's largest, and arguably most important regional economy, there are opportunities that exist now for many New Zealand businesses. Yes, there are challenges but also some real and substantial opportunities, and they're on offer for all sectors, not just agriculture.

As a straight-talking Australian, it is easy to acknowledge how well New Zealand is performing both on the sporting field and economically and how positive New Zealand's future outlook is.

A key component of that economic success is the overall good relationship the country has with China, as evidenced by New Zealand being the first developed country to enter into a Free Trade Agreement with this economic powerhouse. Though the FTA has obviously had direct benefits for many exporters, particularly in the agricultural sector, it can also be viewed as an official endorsement of New Zealand by China. It is this fact which puts New Zealand in a very strong position globally.

This bodes well for New Zealand's long-term prosperity as businesses all over the world see New Zealand as a place that not only has business-friendly policies but also comes with a stamp of approval from China.

Obviously New Zealand is not the only country or market to have such a positive relationship with China. Many that come to mind are China's geographic neighbours who are also closely aligned on a political, economic and social level.

As such it is important that New Zealand continues to take steps to address the perpetual challenge of improving the productivity and international competitiveness of business, while at the same time continuing to deepen the relationship with China.

One way to enhance the relationship is for the Government to seek approval from China to become an offshore centre for the China's currency, the renminbi (RMB).

Businesses all over the world see New Zealand as a place that not only has business-friendly policies but comes with a stamp of approval from China.

Alex Malley

Currently, there are 10 jurisdictions outside Mainland China that have been given approval to establish offshore RMB centres including Hong Kong, Singapore, London and Sydney.

The advantages that would flow from New Zealand becoming an offshore RMB centre are many, including the ability to better facilitate trade, allowing businesses to transact with their Chinese customers and suppliers in RMB rather than in US dollars, for example. More importantly, it would reinforce the close relationship between New Zealand and China, which by itself can boost greater trade and investment.

Treaties with China are not enough. More businesses must develop the capability to leverage the opportunities that these agreements create. Fundamental to that is raising the knowledge and understanding of Asia, moreover of China itself. This is at the political and cultural level, as much as it is at the business level.

We need to remember, a child born today may well spend their whole working life with China as the world's largest economic power.

Efforts to improve Asian literacy are absolutely the right course of action. It's about better integrating with the region and giving our children the best chance to secure the high paying jobs of the future.

It is no wonder Kiwis are excelling well beyond the confines of size and geography. With the economic epicentre clearly shifting to our part of the world, and with advances in technology, geography is no longer an issue. New Zealanders are able to continuing drawing on their well-recognised spirit of entrepreneurialism and sense of adventure and seek out and grasp the opportunities that China can offer.

Finally, in the spirit of Trans-Tasman competition, I am happy to report that the Wallabies are looking very good this year!

• Alex Malley is chief executive of CPA Australia.