2013 - 2022 - NZCTA 50 over 50

Booming Trade and Largest Partnership

2013 - 2022

This decade is kindly sponsored by Yili Group

China becomes New Zealand’s largest trading partner in this decade – our number one export market and largest source of imports. Ecommerce opens up new channels for New Zealand businesses in China meanwhile Investment from China into New Zealand grows.

The decade ends with both countries grappling with Covid, despite the pandemic trade in goods continues and actually increases but the tourism and international student sectors are severely impacted.

Trade Overview

Combined two-way trade in goods reached $247.9 billion in this ten-year period (June years)¹. This total represented a 202% increase over the previous ten years. and was achieved despite the global Covid pandemic of 2020-22 that significantly disrupted world trade. A milestone for both countries was that China became New Zealand’s largest overall trading partner – its number one export market and largest source of imports. Both countries enjoyed trade surpluses at different times during the period with the balance slightly in New Zealand’s favour in the last year of the decade.

New Zealand Exports

Exports to China for the 10 year period were valued at $130.6 billion (FOB June year), an increase of 342% over the previous decade. A large increase in 2014 was followed by a 25 percent drop the following year due to a brief slump in dairy supplies but growth continued for the remainder of the period.²

The main export items across the decade were Dairy $44.7 billion; Wood $23.9 billion; Meat and Offal $19.7 billion; Fish and Crustaceans $5.4 billion; Infant Formula $4.3 billion; Organic Chemicals $4.1billio;, Kiwifruit $4 billion; Wool $2.9 billion; Pulp 2.4 billion; and Casein $1.7 billion.³

Dairy’ contribution as the leading export item was 34% of the total, followed by Wood at 14%. Meat and Offal exports jumped from 7th place in the preceding decade to 3rd with 15% while Fish and Crustaceans rose one place to 4th and Infant Formula from 10th to 5th in the rankings. Kiwifruit exports which did not feature in the top ten in the previous 10 year period were placed 7th. Wool, which between 1973 and 1992 had been by far New Zealand’s single largest export and accounted at times for 70 percent of the total export trade, dropped away to only 2%.

Imports from China

Imports from China totalled $116.5 billion over the ten year period, more than doubling from the previous decade value of $52.5 billion. Growth was small but steady through most years up to 2022 when a jump of more than $4 billion or close to 30 percent took the total to a record figure.⁴

The top ten import items over the period were Electronics $ 21.9 billion, Machinery $20.6 billion, Apparel $11.2 billion, Furniture $7.3 billion, Plastics $5.4 billion, Iron & Steel Articles $4.9 billion, Toys, Games and Sporting Goods $3.8 billion, Vehicles $3.6 billion, Textiles $2.3 billion and Footwear $2.1 billion.⁵

These were the same top ten import items from the preceding 10 year period, although there were some changes in the rankings with Plastics rising from 8th to 5th place and Footwear dropping from 6th to 10th. Combined these ten items contributed 72% of China’s imports to New Zealand by value, with electronic imports accounting for more than 18%, Machinery for 17% and Apparel close to 10%.

New Zealand Goods Exports to China and Imports from China 2013-2022

Growth, the Rise of eCommerce and a Pandemic

A stage for spectacular growth was set at the beginning of the decade. New Zealand’s Prime Minister John Key visited China in 2013 and then again in 2014 (twice) and 2016. Xi Jinping visited New Zealand for the first time as President of China in 2014 and it was during this visit that New Zealand and China signed a Comprehensive Strategic Partnership agreement. These high level interchanges were supported by a number of Ministerial led trade missions to China.

The partnership agreement was intended to reflect a view on both sides that the scope and nature of the trading relationship had changed since the original Free Trade Agreement (FTA) was signed in 2008. Negotiations to upgrade the FTA started in late 2016 but because of delays brought on by the Covid pandemic were not completed until 2021. The upgrade came into force on 7th April 2022. It amended the FTA to align it with the latest trade policies, and business practices in areas of e-commerce, government procurement, environment and trade, and competition. It also eliminated further tariffs and reduced compliance measures for exporters.⁶

Increasing investment from China during the decade brought much needed capital, expertise, and new technologies along with job creation, regional development and, in some cases, increased access to markets. Examples of Chinese investments in New Zealand included:

Beijing Capital purchased Waste Management in 2014 for $950 million (although since sold),;Allied Faxi established a $30 million Ice Cream factory in Paeroa in 2016; Fu Wah – built the Park Hyatt hotel in Auckland, investing $300 million, which finally opened in 2022; Yashili (Mengnui) invested in a plant in Pokeno; Yili purchased Oceania Dairy as a startup company in 2013 and Westland Dairy in 2019; Cuilam Industry bought Prime Range Meats of Invercargill in 2017; Super Organic partnered with local Iwi to establish a sheep milk venture in Taupo with a $40 million investment in genetics and processing technology; China Forestry Group entered New Zealand in 2013 and now owns 24 Forests under its subsidiary China Forestry Group NZ; Bright Food Group established a 50/50 joint venture through its subsidiary Shanghai Maling Aquarius with Silver Fern Farms in 2015; Chinese private equity firm Fountain Vest acquired petfood company Ziwi in 2021; Yantai China Petfoods purchased the Natural Pet Treat Company in Auckland; and Shanghai Pengxin established Milk NZ following the purchase of Crafar Farms and acquired Synlait Farms in 2017. Tencent invested in two of New Zealand’s leading Gaming companies – Grinding Gear and RocketWerkz towards the end of the decade. There was increasing Chinese investment in the construction of residential housing and commercial properties in New Zealand.⁷

New and growing investments by New Zealand companies in China included:

An office opening by Fisher & Paykel Healthcare in Guangzhou; establishment of an office in Shanghai by AD Instruments; Methven,(now a subsidiary of GWA Group Limited) invested $10million in tapware manufacturer Invention Sanitary based in Guangdong in 2014; Compac opened an assembly and supply facility in Kunshan in 2014 and in the same year Les Mills regained direct control of its business and established Les Mills China with a head office in Shanghai; Tatua opened its own sales office in Shanghai in 2106; Zespri expanded operations on the ground in China and became the importer of record for their kiwifruit, establishing their own networks and distribution channels. Fonterra sold its farms and exited its stake in Beingmate to refocus on core business and grow value- add business in the market.⁸

Primary Collaboration New Zealand (Shanghai) Co. Ltd, a wholly owned foreign enterprise, was established in Shanghai in 2015 to provide a range of in-market services to a group of New Zealand Exporter members. Its founding members were Pacific Pace (horticulture), Sealord (fisheries), Silver Fern Farms (meat), Synlait Milk (dairy), Villa Maria (Wine) and Kono (seafood). Other exporters to join in later years included Spring Sheep, Taharoa Ironsands, Rockit, Quantec, Grove Avacado Oil, Deer Industry NZ, K9 Petfood and Douglas Pharmaceuticals.⁹

These lists of New Zealand company involvement in China reflected both the diversity of trade links and greater recognition by New Zealand exporters that they needed to better understand and know their Chinese customers and consumers. Understanding of the rapidly changing market and the requirement to be able to act and respond quickly to it was more apparent.

Commodities continued to dominate New Zealand’s exports but there was growth in some higher value items, among them Live Lobster, Cherries, Chilled Beef, Apples, Salmon, Cheese, Health Foods and Supplements, Petfood and Infant Formula.

A notable factor in two-way trade during the decade was the spectacular rise of online shopping in China. Cross-border ecommerce presented a huge opportunity for many exporters, particularly small and medium enterprises, to “access” Chinese consumers directly. Alibaba, (with the Tmall platform) established a presence in NZ in 2016. JD.com, another leading Chinese company, opened up a New Zealand country pavilion on their platform. Chinese entrepreneurs established businesses in New Zealand to provide cross border e-commerce solutions including logistics, marketing, e-payment, and IT architecture services to enterprises in NZ.

Most New Zealand businesses involved in China embraced ecommerce and the digital economy through online channels and a social media presence. By the end of the decade there was growing recognition amongst exporters of the need to tell a story around their products and brand to an increasingly discerning and well-connected consumer base. The growth of social media platforms including WeChat, Weibo, Douyin (Tik Tok), Little Red Book, Kuaisho and Bilii exploded and were increasingly important in the marketing, promotion and sales of products. Livestreaming and KOLs (Key Opinion Leaders) and KOCs (Key Opinion Consumers) as brand ambassadors became increasingly familiar to New Zealand companies.

A useful but comparatively brief channel for New Zealand enterprises to enter the China market developed hand-in-hand with growing numbers of Chinese students and immigrants entering the country. This so-called Daigou trade involved the students and new residents purchasing products to sell online or direct to relatives and friends back in China. It grew into sizeable business. However, the global pandemic, growth in ecommerce and stricter regulations by the Chinese government contributed to its demise as a significant factor in the trading relationship.

The China Business Summit organized by NZ Inc (headed by Fran O’Sullivan) and first held in 2012 had become an annual event from 2018 and an important public forum bringing government, officials, commentators and businesses together to discuss the trading relationship.

Meanwhile the inaugural China International Import Expo (CIIE) was launched in Shanghai November 2018. The world’s largest fair of its kind and held annually it continued to attract significant participation from both countries and individual businesses – including a large New Zealand presence – despite Covid.

The impact of the Covid pandemic over the 2020-2022 period varied across sectors and businesses. It had little negative impact on the value of trade in goods. New Zealand exports increased due to demand from China for health and wellbeing products and from growth in on-line ordering as a result of the prolonged anti-Covid lockdown, and more elderly populations taking up on-line services. Imports from Chinese suppliers of appliances, whiteware and household items also went up as New Zealand consumers spent significantly while in lockdown.

On the less positive side, supply chains came under severe pressure. Transportation and logistics services were disrupted and costs to get goods to market increased. The hotel and restaurant trade and the hospitality sector were decimated. Business executives were unable to travel and there were a series of intermittent regulatory measures taken which disrupted shipments and orders of food exports to China.

The impact of Covid on New Zealand’s services trade with China was considerable. Tourist numbers that had been growing steadily up until the end of 2019 dropped significantly in the years following Covid. In value terms tourism from China fell by over 90% from $1.6 billion in 2019 to $119 million in 2022 (June years).¹⁰ Despite this fall, however, tourism from China when taken over the full ten year period is estimated to have totalled $9 billion, making it New Zealand’s 4th largest export for the decade.¹¹

While students from China already in New Zealand continued to stay and pay fees in the years following Covid reaching the country, the sector experienced a 44% decline falling from $1.3 billion in 1999 to $720 million in 2022 (June year).¹² But, when taken over the whole ten year period, in value terms, International students from China were a major contributor to New Zealand’s overall trade – estimated at $8.9 billion – and making it the country’s 5th largest export for the decade.¹³

Summary of the Decade

The new 10-year period started brightly. High level visits cemented the relationship; trade volumes grew steadily (albeit with a blip in 2015); agreements were reached for further cooperation in a number of commercial fields; growing demand for quality products which New Zealand could supply was evident among a rising middle class in China; Chinese investments in New Zealand were growing; and both the tourism and education sectors were booming with numbers of tourists and students from China increasing year by year.

It ended not so positively. Tourists and new student enrolments had all but disappeared from New Zealand because of pandemic related restrictions. These same restrictions forced trade-related missions and visits to be either postponed or abandoned. There were few fresh investments from China. While the upgrade to the FTA had been signed off and official bilateral talks continued, Covid in 2020 imposed three-years of lesser than desirable contact between the trading sectors of the two countries.

International geo-political matters also intruded on the relationship. They provoked comment on New Zealand’s high dependence on the China market and a need for diversification of its export trade. Traders pointed out that China’s ongoing willingness during the pandemic to accept New Zealand’s products had been of much value to the course of the economy while local business was suppressed by health restrictions. Recognition existed among many companies of a need for diversification but China remained a crucial part of their existing and future businesses.

Recollections and Impressions of the fifth ten years

More thoughts on this decade are included in “Reflections on the Commercial Relationship 1973-2022” section – a collation of memories and experiences from various contributors who led or were involved in the trading relationship between New Zealand China over the last 50 years.

Click here

And to showcase New Zealand food & beverage offering to China...

…here are copies of the lunch menus served for the visit of Chinese President Xi Jinping on 21st November 2014 and Chinese Premier Li Keqiang on 28th March 2017

Click here to download the menu served at the event for President Xi Jinping

Click here to download the menu served at the event for Premier Li Keqiang

Featured Organisations

Read more on some of the organisations who were involved in the New Zealand- China business relationship during this decade below.

Notes:

1 Data collated from Statistics New Zealand available at

https://infoshare.stats.govt.nz/ViewTable.aspx?pxID=7bf54085-44d2-4d2b-b2dd-974dc0e6b2b4 and https://infoshare.stats.govt.nz/ViewTable.aspx?pxID=2c877c7f-645d-474a-80a7-b48b2432586e

2 Statistics New Zealand available at https://infoshare.stats.govt.nz/ViewTable.aspx?pxID=7bf54085-44d2-4d2b-b2dd-974dc0e6b2b4

3 Statistics New Zealand available at https://infoshare.stats.govt.nz/TradeVariables.aspx?DataType=TIM and then retrieved from Exports, China, People’s Republic of and the individual HS Code headings table

4 Statistics New Zealand available at https://infoshare.stats.govt.nz/ViewTable.aspx?pxID=2c877c7f-645d-474a-80a7-b48b2432586e

5 Statistics New Zealand available at https://infoshare.stats.govt.nz/TradeVariables.aspx?DataType=TIM and then retrieved from Imports, China, People’s Republic of and the individual HS Code headings table

6 Retrieved from Ministry of Foreign Affairs and Trade : FTA upgrade available at https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-in-force/nz-china-free-trade-agreement/fta-upgrade/

7 Information retrieved from Understanding Chinese Investment in New Zealand, New Zealand China Council 2018 available at https://nzchinacouncil.org.nz/wp-content/uploads/2019/08/Understanding-Chinese-Investment-in-NZ.pdf, information supplied by companies in NZCTA China Business Award entries and NZCTA discussions/meeting notes.

8 Ibid

9 From Primary Collaboration New Zealand (Shanghai) Co., Ltd available at http://www.pcnz.com.cn/

10 Retrieved from Resuming Normal Service : Assessing future prospects for New Zealand – China services trade, Stephanie Honey : Honey Consulting Ltd, Commissioned by New Zealand China Council 2022, page 3, available at https://nzchinacouncil.org.nz/wp-content/uploads/2022/11/China-Services-Trade-Report.pdf

11 Data collated from Statistics New Zealand available at https://statisticsnz.shinyapps.io/trade_dashboard/

12 Retrieved from Resuming Normal Service : Assessing future prospects for New Zealand – China services trade, Stephanie Honey : Honey Consulting Ltd, Commissioned by New Zealand China Council 2022, page 3, available at https://nzchinacouncil.org.nz/wp-content/uploads/2022/11/China-Services-Trade-Report.pdf

13 Data collated from Statistics New Zealand available at https://statisticsnz.shinyapps.io/trade_dashboard/