China Business Report
Is New Zealand effectively leveraging its growing investment ties?
Chinese Premier Li Keqiang’s official visit to New Zealand comes at a time when China is poised to overtake the United States as the second-largest source of foreign direct investment in New Zealand.
This is not the upshot of a more inward-looking approach from out of the United States. Donald Trump wasn’t yet president when most of the major Chinese investments outlined in a table on page six of this report were made.
As China’s Ambassador to New Zealand, Wang Lutong, says within this report, the flourishing development of economic and trade cooperation between China and New Zealand has truly realised complementary advantages and win-win results. Bilateral trade has increased to over NZ$20 billion in 2016 from NZ$7 million at the beginning of the establishment of diplomatic relations. At present, the trade volume is growing steadily towards the NZ$30b target set by the leaders of the two countries for 2020. Bilateral trade has gained a double-digit growth rate per annum with increasing numbers of Chinese companies investing in New Zealand especially after the implementation of the China-New Zealand FTA in 2008.
The ambassador rightly notes the investment from China has played a positive role in New Zealand responding successfully to the 2008 international financial crisis, helping it become the “star of economic growth” among OECD countries.
China has become New Zealand’s largest trading partner, the largest export market and the largest source of imports. Bilateral trade has developed from single trading into economic co-operation in various fields at multiple levels, taking various forms. The future development potential for bilateral trade and economic co-operation is significant, with bright prospects.
The rapid pace of Chinese investment in New Zealand should surely be viewed as a vote of confidence in the New Zealand economy, with investors embracing key sectors like agribusiness and food, tourism and infrastructure. But New Zealand should also look at whether this country is effectively leveraging our growing Chinese investment ties to national advantage.
Unlike in Australia, opposition to Chinese investment in New Zealand has been relatively muted, particularly when it comes to buying New Zealand businesses. But as in Australia, acrimony has at times erupted over the level of Chinese investment in residential property and over farmland sales.
China now holds the largest foreign investment footprint in most of New Zealand’s primary food related sectors, including dairy, infant formula, meat, horticulture, health supplements and honey. Premier Li is expected to meet leading Chinese investors in New Zealand at today’s gala luncheon in Auckland and in prior meetings, particularly with the Haier Group, which owns New Zealand whiteware manufacturer Fisher and Paykel Appliances.
There will be many Chinese business people at the luncheon. China is also our largest foreign investor in new tourism infrastructure with major investors including the Fu Wah Group, Shanghai Pengxin, Shanghai Cred, the New Development Group and Handan Shangjia Real Estate Development. It is the largest foreign investor in the dairy and meat sectors and there is growing interest in infrastructure assets.
The Chinese Chamber of Commerce of Commerce, under David Lei Wang’s chairmanship, is working with its members to embrace and practice good corporate citizenship in New Zealand.
Investment will inevitably be canvassed during negotiations towards the upgrade of the FTA between China and New Zealand.
With commentators like Brian Gaynor lamenting the lack of quality listed stocks in New Zealand, the time is ripe for foreign investors (including Chinese) to be incentivised to ensure acquired companies are listed or stay listed on the NZX. Rifa — which is making a partial takeover of Airwork Holdings — is showing the way.
A spokesperson for Airwork said: “Rifa had every opportunity to make a bid for 100 per cent of Airwork at the time of making its partial offer. Moreover, Rifa has said it wants Airwork to remain publicly listed in New Zealand. Its stated intention is to develop Airwork’s leading aviation maintenance repair and overhaul capability and reputation to expand its existing certification in emerging markets, including Asia and Latin America; and growing Airwork’s helicopter leasing presence through a potential dispatch of existing helicopters and acquisition of new ones.”