Asia is not just China: Who else will buy what New Zealand has to sell? & More News Here

Simon Draper is the manager director of the Asia New Zealand Foundation Te Whītau Tūhono.

OPINION: Certain phrases wax and wane in public discourse. One you hear rather a lot as of late is “diversity”. In the New Zealand enterprise context, this tends to describe the will to see New Zealand diversify its exports. It’s an outdated adage: don’t put your eggs in a single basket.

The basket in query is, in fact, China: New Zealand’s high buying and selling accomplice. China was the most important supply of New Zealand’s export progress final yr, pushed largely by dairy, meat, and forestry exports. New Zealand’s reliance on China has elevated to be greater than 30% of our complete exports.

I’m sufficiently old to bear in mind New Zealand’s expertise within the Nineteen Seventies, when Britain joined the European Economic Community and we misplaced most entry to our largest market. The egg basket broke.

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A really actual problem round variety of markets is that whereas the Government negotiates the foundations and frameworks that enable our exporters entry, in the end, governments don’t commerce. Businesses do.

Moreover, firms are normally legally required to maximise the returns to their shareholders. That mentioned, there is additionally a accountability to handle danger, which incorporates these connected to having all of your eggs in a single basket.

So, how to diversify export markets? Economics 101 makes clear it’s a operate of two components: what you possibly can promote (provide) and who will buy (demand).

Let’s begin with provide. New Zealand’s high 5 exports within the yr ended December 2021 had been dairy, meat, wooden, journey, and fruit and nuts. The high 5 export locations had been the People’s Republic of China, Australia, the United States, Japan, and South Korea.

Of course, border settings have had an affect on our companies exports. Our two largest pre-pandemic companies, tourism and worldwide schooling fell by a mixed 51% in 2021. Increased product to China has insulated us from among the affect.

Over the years, New Zealand has talked concerning the need to change its export image – fewer commodity exports, extra value-add. And we’ve seen progress in areas like wine, well being merchandise, boutique meals, and companies like Xero.

But the actual fact is these newer export merchandise nonetheless make up comparatively small quantities of the general image. Realistically, we are able to anticipate dairy, meat and logs to stay the spine of exports.

Then there is demand – what markets need to buy. Our dairy and meat exports are primarily protein: secure, high-quality protein.

Protein is in demand when individuals attain a sure wealth threshold. Safe protein from different nations is demanded if you don’t belief your individual techniques, and when security is a really excessive precedence (as an illustration, child components).

So, who desires protein? Let’s take a cursory look across the globe.

Europe and the US stay fairly closed when it comes to protein exports from New Zealand. As Singapore’s Prime Minister Lee Hsien Loong and our Prime Minister Jacinda Ardern famous throughout her go to to Singapore, home politics within the US means a significant CPTPP is a low risk.

While New Zealand’s new FTA with the UK is a shiny mild for our dairy and meat within the coming years, it is nonetheless unclear what an FTA with the EU would possibly provide. Europe is rich and calls for security, nevertheless it additionally produces its personal meals – and far of that is subsidised.

Latin America has nice potential, however New Zealand additionally has sturdy opponents within the protein stakes in that area.

Africa’s 54 nations have enormous potential; however have a manner to go to attain the middle-class numbers required to demand or afford New Zealand exports. But it’s a possible shiny spot for future many years.

Which leaves Asia. A report from the OECD and the UN Food and Agriculture Organisation final yr famous that stress on agricultural land in Asia would intensify as populations grew. Urbanisation was rising quickly and would contribute to consumption of upper worth and processed meals. Average incomes had been persevering with to develop in China, India, Vietnam, Thailand and Indonesia, and consumption of dairy and meat protein would develop.

Various worldwide financial progress projections have Indonesia, with its 273 million individuals, on monitor to overtake main economies like Germany, Russia and the UK within the years forward. Vietnam and the Philippines are different economies projected to develop quickly.

Unsurprisingly, then, it appears like Asia – with its rising populations and wealth, and limitations round protein provide – will provide actual potential for New Zealand to diversify its exports.

And regardless of the preconception of many, Asia is not just China. China will stay an important supply of demand for our merchandise, however there is a lot potential within the many different nations of Asia. My hope is that ministers and the officers proceed their work on visiting Asia, rising entry and lowering limitations and opening doorways for New Zealand companies.

For companies themselves, it reinforces the necessity to develop data of this numerous area, as a result of rising a buyer base takes time, effort and expertise, and good relationships.

New Zealand has restricted time, useful resource and energy to put into discovering new markets that need what we offer. The numbers point out a reasonably sturdy case that the hassle needs to be put into Asia. Or, as that nice New Zealander Ernest Rutherford as soon as mentioned: “We haven’t got the money, so we’ll have to think.”

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