Exporters missing out on boom in China

New Zealand has seen strong growth in exports of wood and dairy produce to China, which were worth close to $3 billion in 2010. Photo / Alan Gibson

Exporters are not doing enough to take advantage of the booming Chinese marketplace, says BNZ chief economist Tony Alexander.

Kiwi businesses were probably taking less than 10 per cent of the total opportunity presented by China, where the middle class was expected to swell from 300 million people to 800 million during the next 15 or so years, Alexander said.

Speaking from Hong Kong, after a visit to Guangzhou on the Chinese mainland, Alexander said New Zealand exporters tended to be unwilling to leave this country and immerse themselves in overseas markets.

"They prefer to sort of sit back [in New Zealand] and hope things are going to come their way," he said.

"The willingness to take a number of trips and spend time overseas in general seems relatively low.

"One of the key things about China is that one does need to spend time on the ground building up relationships and finding a reliable [business] partner."

Alexander said New Zealand had seen strong growth in its exports of primary products - such as wood and dairy - to China, but exports of non-primary goods to the world's second largest economy had grown only 9 per cent during the past three years.

In the 2010 calendar year, according to Statistics NZ figures, New Zealand's $4.8 billion in exports to China included close to $3 billion in dairy produce and wood.

"That just speaks of not too much advantage being taken of the market available," Alexander said. "The sky's the limit and my aim is to make people aware of that in a reasonable way."

Alexander said food exporters, for example, needed to go to China and have a look through supermarkets to see where their products could slot in.

"The message that comes through pretty clearly from people over here is that [exporters] need to get on a plane and start sussing things out rather than relying on either New Zealand Trade and Enterprise or some other body to do that leg-work for them."

ExportNZ executive director Catherine Beard said the costs associated with travelling to new markets could be expensive for companies of small to medium size.

Nobody was ignorant of the opportunities available in China, Beard said, but it was sensible for firms to take a "prudent" approach when assessing whether they were ready to tackle that market.

"The reality is that if you go into a difficult market like that [China] and you're not prepared then you're just going to lose a lot of money," she said.

Alexander said the chance of Chinese growth slowing as a result of Europe's economic problems did not pose a great risk to New Zealand firms exporting to China.

"If I said the [Chinese] economy is going to grow at 7 per cent rather than 9 per cent [exporters] are not really going to notice that outside of commodity prices facing a bit of downward pressure."

Alexander said he would begin a monthly publication next month devoted to the economic relationship.