FTA upgrade can open new doors
New Zealand’s trade in China has relied heavily on quality primary products — now is the time to export more high-value goods and services, writes
Since China and New Zealand signed our historic Free Trade Agreement nine years ago, technology development has advanced dramatically in both countries.
We’ve seen the rise of Chinese e-commerce giants, including WeChat and Alibaba. WeChat, with more than 800 million active users, started as a free messaging and calling application, and has now moved into online banking, mobile payments and other business services.
With more than 440 million shoppers using its marketplaces in a year, Alibaba has quickly become China’s, and the world’s, biggest online commerce company. Alibaba’s payment system Alipay is revolutionising the global payments market.
New Zealand has innovative companies expanding globally including Xero (accounting), Vista Entertainment Solutions (cinema) and Orion Health (health management).
After the signing of the FTA in 2008, business between China and New Zealand has increased significantly — with the two-way trade reaching more than $20 billion last year. Annual exports to China have quadrupled over the past decade and annual imports have doubled.
China is now New Zealand’s second largest export market — but our exports are still mainly primarybased. Our top goods exports to China last year were milk powder, untreated logs, meat (beef and lamb), seafood and wool. China’s top imports here were clothing, telecommunications devices (such as mobile phones) and data processing machines (such as computers).
The upgrade of the FTA, being led here by the Ministry of Foreign Affairs and Trade, is a golden opportunity for both countries to take account of technological advances and increased business capability. It is also a chance for New Zealand to engage in trade involving more highvalue, technology-based goods and services to China from our advanced industries.
We need to grasp this opportunity. We can see from Ateed’s work that there are sector level opportunities for trade and investment growth with China. We want to hear from Auckland businesses and entrepreneurs about the areas you see potential, and the barriers that exist for you in maximising the opportunities.
Business and financial services exports from Auckland to China have increased from $7 million in 2006 to $85 million in 2013. These exports were more than 2.5 times as much as New Zealand earned from biotech, agri-tech, dairy tech and ICT services sales in China.
We believe there is still plenty of room for additional growth in that sector and many other sectors. World-class research and development is taking place here. We have real expertise and competitive advantages in various industries that are important to China including: agricultural machinery, pharmaceutical manufacturing, medical devices and health IT,
functional and high-value foods (including natural products with bioactives),
commercial services (big data, geotechnical, engineering and architectural consulting ),
advanced materials (composite and polymer manufacturing, nanofibre, robotics),
screen and creative (film production, augmented reality, virtual reality, post production, design, digital media),
banking and financial services (financial technology, payments, block chain).
Many of these advanced industries already trade in innovative technology and knowledge-intensive services. Advanced industries in Auckland have an average growth rate of 5.3 per cent each year, and drive prosperity and job creation in the regional economy. Many also address sustainability and environmental challenges that are topical and can benefit China and New Zealand.
Ateed works as a facilitator for high-value bilateral trade alongside NZTE and other central government agencies, and together with the private sector we have already built key insurance, relationships in China. We have used our China GEMS strategy focused on golf, equine, marine and screen to forge relationships with high-net worth Chinese interested in these sectors. The GEMS focus has stimulated massive growth in high-end luxury tourism from China, and now many of those connections are expanding their interests in New Zealand into investment and trade.
Our Business Attraction and Investment team promotes investment into Auckland, helps Chinese companies get established on the ground, and is helping secure Chinese movie and television productions.
Ateed’s Business Innovation and Skills team helps build export capability and capacity locally in advanced industries, and builds international trade relationships, such as the Tripartite Economic Alliance between Auckland, Guangzhou and Los Angeles.
We have fostered the unique relationship between Maori and Chinese, most notably through trade and investment connections between Fujian and Auckland. According to historians, we were the respective start and end points of the Austronesian migration that populated the Pacific over thousands of years. Today, that relationship connects Maori businesses into not only one of China’s most famous and prosperous trading provinces, but also into the Fujian Chamber of Commerce network throughout China and Asia.
China’s One Belt One Road strategy is encouraging more of its companies to expand overseas. New Zealand can become a test bed and pilot market for their products, and our companies partners in their development.
Historically, multi-national technology companies such as YouTube, Yahoo and Facebook have used Auckland as a test market for new product updates and releases.
The likes of Tencent (WeChat) and Alibaba are now following suit.
We also have many of the major Chinese banks in Auckland. We should take advantage of these relationships and encourage the Chinese banks to work with local technology partners and pilot new financial services between our two countries.
Through a refreshed free trade agreement, New Zealand could seamlessly become part of China’s innovation ecosystem and vice a versa, building on some strong existing university and Crown Research Institute connections.
The new agreement could take economic co-operation to a different level. Intellectual property developed here and licensed appropriately could be deployed on a mass scale in China and beyond.
Collectively we have already worked hard to build an economic road between our two countries on which commodity exports are moving every day.
Our opportunity is to expand that to include services and technology and to enable China and New Zealand to reach new levels of prosperity.
Let’s collectively grasp the opportunity and work with MFAT and their Chinese counterparts to make
Brett O’Riley is Chief Executive of Auckland Tourism, Events and Economic Development