Trading with China: Time to accentuate the positive

What should we make of recent developments on the China-New Zealand trade front? Tracey Epps reviews the situation and highlights the factors that play to New Zealand’s strengths.

A Chinese proverb says: “When purposes agree the most hostile grow friendly; when they disagree near relatives become enemies”.[1]  If recent media reports are anything to go by, New Zealand and China may now be undergoing a divergence in purpose. 

Since the decision to turn down Spark’s proposed use of Huawei equipment in its new 5G network, the headlines have been dramatic – “New Cold War: China-NZ relationship rapidly deteriorating”[2]; “China, New Zealand links sink to new low: PM Jacinda Ardern’s visit put on hold, tourism project postponed”[3]; “Huawei or the highway? The bill comes due for New Zealand’s relationship with China”[4], and “Sanford reports China export issues amid search for signs of ‘payback’”.[5]

Amid all this noise, New Zealand exporters could be forgiven for second-guessing their strategies for expansion into China and contemplating other markets instead.  After all, is it worth investing in a brand strategy targeted at China if your goods are going to be held up at the border, or made subject in China to a media campaign warning Chinese consumers off New Zealand products?

Certainly New Zealand’s relationship with China is not straightforward.  There have been recent incidents (such as the turning back of an Air New Zealand flight en route to Shanghai and the postponement of the launch of the 2019 China-New Zealand Year of Tourism in Wellington) that could be interpreted as a signal of something deeper. 

But while it is important for export businesses to be aware of the political currents swirling between New Zealand and China, they should recognise that there will always be some ebb and flow in our relations with a country as large and complex as China and remember the enormous potential of the Chinese market – not just on the eastern seaboard, but in other regions too.  

That potential exists not just because of the huge size of the Chinese market (which is still growing, despite some slowdown of late) but also because of shared purposes.  China has an influential and changing demographic which wants the types of products and services that New Zealand can provide to live the kinds of lives they want to live.

China’s ‘Generation Z’ (born between 1998 and 2016) accounts for 15 percent of all household spending, the highest proportion of any country.[6]  A recent survey into Gen-Z’s spending habits found that, while price and quality are important, they place a higher value on factors such as style, sustainability, uniqueness and (in the case of food) curation.  And they attach high importance to a brand’s ethics.