Behind the bamboo curtain — Exporter Magazine
China is not one big market that can be taken down in a single gulp. Kiwi exporters trying to crack the Chinese market need to work hard at building relationships over many years.
By Yoke Har Lee
When Keith Mawson gets to China on the trip he won from the ANZ Bank, he will be keeping a close eye on how the Chinese eat their fish. The managing director of Taranakibased Egmont Seafoods has never been to China but is keen to export spare catch to the growing Chinese market.Mawson has surplus leather jacket and spiny dog fish which he would like to sell or convert into something he can export to China. There are also other types of seafood the company can supply. Mawson has quite a few questions. He hopes the trip to China will shed some light on the Chinese palate and how he can approach the Chinese market.Egmont Seafood already exports 50% of its locally caught produce to Thailand, Australia, the US and Spain. The emerging Chinese market is a new geography the company hopes to expand to.
ANZ, a sponsor of the New Zealand Pavilion at the Shanghai World Expo, took a first group of 27 Kiwi exporters to three cities in China – Beijing, Shanghai, Tianjin – in May. The trip included workshops and tailored seminars on topics including legal and regulatory requirements, banking and finance in China, supply chain and logistics, understanding the China opportunity and the Chinese consumer market. It also included discussions with New Zealand businesses that are successfully operating there, site visits and networking opportunities.
A second trip in September is to further the bank’s ambition of providing New Zealand exporters with a conduit for doing business in China, specifically, and Asia at large.Graham Turley, ANZ Bank commercial managing director, says the bank has a clear strategy for Asia. Besides China, it is on the ground in 13 other Asian countries. “We have significant investments in China. We can help facilitate introduction to the market so exporters can grow their business in Asia. On these trips, we are bringing people and showing them first-hand the opportunities China offers. We are very focused on helping exporters grow their business in China.”
NEED TO DIVERSIFY
There is urgency for New Zealand exporters to get a foothold China as global manufacturers turn to the vast country to diversify away from the sagging US and European markets.“Lots of Kiwi companies are also realising there are growing opportunities in China, that it is a sustainable, growing market which has a high component of highly affluent consumers,” Turley says.Holding the hand of its customers, ANZ Bank hopes to show first-hand how others have accessed the market, and provide some pointers for those seeking to do the same.“The first thing that strikes people isthe size of the market. They see there is real market sustainability, the market is growing fast. People often think of China as one big market. You really need to break it down,” Turley says.The pace of change sweeping China is another reality Kiwi exporters need to get a grip on.Richard Garland, executive director of NZ Pharmaceuticals, sees China as a market for new value-added products for his company. The company has been selling to China for years through a narrow agent channel.
CHANGE, NOT WEST
China’s process of change has been astonishing, he says. “It has been staggering over the last 10 years, as it has been over the last 25 years. There is a boom in the Chinese economy. The question is how do you get to it.”Doing business in China remains as tough as it’s ever been. “You buy on LCs (letters of credit), but when they buy it is on bank draft – so they are always pressing for better commercial terms. Then there is the issue that what you receive may not be what you thought you bought. You need to be careful you don’t fall into a nasty trap.”
Garland advises that to avoid having your China adventure end in tears, you should work with others with some knowledge.
“Everyone has this idea that the Chinese are changing their way of doing business. That does not mean the western way of doing business. The Americans don’t seem to get it that theirs is not the only system [of business] in existence and the Chinese are not moving towards the western way of doing business.”
Steve Fullerton, chief financial officer at material systems and automation solution company BCS, is still trying to get to grips with the sheer scale of China, especially Shanghai, and the level of wealth and development there.“There are about 20 million people urbanising per year. In terms of the demand to meet the needs of the population – there will be a strong lean on automation.”
BCS is working through a Chinese partner to tap into opportunities to supply automation solutions across the country. For Fullerton, the ANZ trip is “about building relationships, also about meeting like-minded people”.
The magnitude of change sweeping China still astounds Peter Francis, regional manager, Asia-Pacific and the Middle East, for Gallagher Security Management Systems.An old China hand, having bicycled around Beijing in the 1980s and returning there many times over the years, Francis says any Kiwi company seeking to do business in the country needs to build solid networks and maintain regular customer contact.Gallagher, for instance, has over 60 key customers in China served by agents and distributors. “It is all about research. You have to find out how relationships work, understand your competitors, how they work, and figure out where you can add value.”
Francis, who was on the first ANZ trip, says it was well organised and professionally run. “The data provided to us was relevant and resourceful, which went to further support new exporting ventures, business direction and further consolidate short-and medium-term planning.” [END]
