An Asian business expert is calling for New Zealand to look beyond exporting, and focus more on investing in China.
As the debate around Chinese investment in New Zealand rages on, the BNZ Chair in Business in Asia at Victoria University says New Zealanders need to up the ante when investing in China themselves.
Professor Siah Hwee Ang says we’re lagging behind our competitors and need to broaden our approach.
He recognises exporting is the status quo entry point into the Chinese market, but says our exporters should be doing more.
“We need to have the mentality that exporting is not the only solution, or not the only way to engage”, he says.
“Sometimes investment is probably the better way because it’s more committed, because you have to be there to understand your clients.”
One of the biggest mistakes Ang sees exporters make is not connecting closely enough to their market.
He considers exporting to be an inherently “distant approach” towards engaging with another market, as there’s a disconnect between getting the product overseas and distributing it.
He says exporters need to make a greater effort to be involved in the market itself – having a presence there, knowing the language, etc.
“If you ever use a distributor, always try to understand what they do; always try to be engaged with part
of what they do, as opposed to saying ‘look I just pass the product to you, you handle the clients’.”
Ang credits the government for setting up various free trade agreements to help promote and facilitate more foreign investment, but says it needs to be doing more.
He finds businesses aren’t always up to speed with the kinds of agreements New Zealand has with other countries, so says the government should work harder to inform them of exactly what policies and agreements are in place to help them.
He also advises exporters not to rush into China. He says it’s a big market, so if you have a good product, there will always be buyers.
Where exporters like Fonterra risk damaging the NZ brand
Ang says New Zealand exporters needs to tread cautiously when using a single desk – having a monopoly marketer of a product with multiple suppliers.
He says a single desk approach, as has been used by Zespri and Fonterra, is good as it gives a number of small organisations the critical mass often necessary to enter and be distributed in another market.
However this once again isolates the producer from their clients and the market their products are being distributed in.
In Fonterra’s case, Ang says farmers bear the risk for Fonterra’s actions, and can’t do anything about it.