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Home / Business

China Business: Top CEOs talk about what's necessary to reach $30b goal

NZ Herald
15 Apr, 2014 04:15 PM4 mins to read

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Fonterra CEO Theo Spierings. Photo / Dean Purcell

Fonterra CEO Theo Spierings. Photo / Dean Purcell

Theo Spierings took his "top 150 people" from Fonterra's global operations to Beijing last week for their annual international forum and "dinner on the Great Wall".

"There are a lot of people in our business who need to have exposure to what we are doing in China," says Spierings. "It is our number one market."

He's confident the Government's two-way trade goals can be achieved. "People are speculating about possibly lower demand (for dairy). I can't see that to be honest.

"I still believe that parents want to feed their children with the right products, so I think demand will stay pretty strong."

China will be 20 per cent of Fonterra's turnover this year with exports of 550,000-600,000 tonnes. "That's a massive step-up."

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Fonterra is also NZ's largest exporter to China so its success is critical to New Zealand meeting the $30 billion target.

Spierings is building alliances to stay in the China game by exploring partnerships with big Chinese dairy and food players who have connections to national Government.

He expects China's new "national champions" will each link up with "co-ops" with access to global milk pools to secure their own long-term supply arrangements. "The development of the local milk pool can't stay up with demand. The gap right now is about 10 billion litres.

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"Over time the gap will be similar to the New Zealand milk pool - that offers big opportunities."

Air New Zealand chief executive Christopher Luxon. Photo / Dean Purcell
Air New Zealand chief executive Christopher Luxon. Photo / Dean Purcell

Air New Zealand's Christopher Luxon says it's all about recognising the shift in power when it comes to leveraging the Chinese opportunity.

"The Chinese opportunity is immense. I think we are very well positioned for it and are moving ourselves out of a mind-set - we can actually be at the centre of this new world rather than at the periphery."

Air NZ's revenue is up almost 70 per cent since 2009 in China. Capacity on the Shanghai route has more than doubled. A fragmented NZ tourism industry has got its act together and is collaborating to do business with China.

The Chinese business is so critical to the airline's future prospects that Luxon is making it clear to high potential leaders they "should go and have a high quality three-year assignment in China" if they want to move up the company ladder at Air New Zealand.

"We try to send a very strong signal to the management team, that world famous in New Zealand won't cut it. What we are looking for is a Pacific Rim mindset, and as a great leader, a future leader of Air NZ, you need to have your head very clearly in the game about what's going on in China."

Case in point Nick Judd, who has just been appointed general manager in China. "We have made it very clear to him, that your career cannot move forward unless you go and get a very good experience and understanding of life and business in China."

Don Braid, managing director of Mainfreight. Photo / Natalie Slade
Don Braid, managing director of Mainfreight. Photo / Natalie Slade

Mainfreight group managing director Don Braid reckons there is nothing wrong with the Government setting goals - like the ambition for two-way trade with China to reach $30 billion by 2020.

"They have done a good job at that over the past few years particularly around overseas trade."

But says Braid "the key is for business to become motivated to achieve those goals not only for themselves but also for New Zealand."

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Now that the reputational concerns over the 'milk fiasco" have been put to bed, Braid believes it is "time for all exporters to view the opportunities and take advantage of them".

Mainfreight initially entered the Chinese market to service its New Zealand and Australia customers. However, it very quickly saw the opportunity for trading around the world from its base in China.

"Certainly the USA/China/USA trade lane has become one of our biggest," says Braid.

"As China looks to free up trade barriers with other countries, Mainfreight would expect those trade lanes to grow for us as well.

"We are there for our global footprint, not just New Zealand."

He believes that if companies get involved in the China market they will all benefit from the business experience of dealing in Asia and working within large markets.

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