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With the signing of the China Free Trade Agreement I'm sure I'm not alone in the soul searching I've been doing in the light of recent events in Tibet and with respect to the Olympic Torch escapades.
Like most of you I am acutely aware of New Zealand's need to increase its commercial opportunities beyond our shores. Last year I attended an excellent presentation by David Skilling which really drove this point home. Specifically, the negative effects of foreign investment in New Zealand that we have failed to counter-balance with sufficient offshore investment and earnings from offshore markets.
The purists would argue that trade with China is unethical given their history and human rights record. I don't necessarily disagree with the emotion behind this belief but given that nearly every cheap consumer product I buy has at least some Chinese content, it would be hypocritical of me to take too indignant a stand at this point. I too hold out some hope that China will moderate its policies and practices in the fullness of time. I pray that China will take a more moderate stance with the people and exiled spiritual leader of Tibet but I wont be holding my breath on that one. That's me as an individual, what about we as a nation?
I do take issue with the way our current government has handled this whole agenda. How can a government which opposes the slaughter of whales effectively look the other way with regard to the abuse of whole countries and cultures by another? How can a government which condemns Fijian demagoguery then go on to support demagoguery or totalitarian rule of another kind? Is this purely economic pragmatism, a situation in which only size matters? Or is our dear leader comfortable with this double standard even if many of the rest of us aren't really sure? Anyway, I rave. My real bone of contention is how are we to ultimately decide what is right for us as a nation if we have no clear vision for this country by which we can measure these very important decisions? Without a clear signpost of where NZ is heading, just about anything is up for grabs.
Getting on to the main point of the article. The current situation is clearly in China's favour with almost unfettered access to NZ for most of their exports. Many NZ businesses have previously suffered and ultimately adjusted to this situation and many have even moved their manufacturing to China to try to rebalance and take advantage of the improving production quality there and the favourable cost of goods.
If you are considering doing business in China, I'd just like to offer a little advice. I'm no China expert but can offer some perspectives I formed when I used to get up that way a bit.
1. China is not one China.
Anyone who has worked in China will tell you that there are many, many different cities and provinces. The entire population of NZ would fit into any one of the smaller cities. So don't think of China as one market. Think in terms of markets plural. Also it is important to understand that coastal China is very different from rural China. The coastal regions are relatively wealthy with rapidly expanding middle classes and very very wealthy entrepreneurs and corporations. Rural China is very poor by our standards and is predominantly still agricultural, resource based and occupied by peasantry.
2. Don't under - estimate the impact of bureaucracy.
China has an ancient history of bureaucracy and so it is absolutely normal that something as simple as getting the stamp you need to clear some important manufacturing equipment through customs may take weeks if you don't go about things the right way. Make sure you know how things are done before you do them. You can never start relationships with key government, local business and local bureaucrats too soon. There may come a day when you will need their help. They help their friends first.
3. Get help.
Local knowledge will be absolutely crucial. Talk to NZ Trade and Enterprise before you go. Make contact with Chinese business people in NZ before you go. You'll be amazed how well connected the average entrepreneur is. The average Chinese entrepreneur quite typically spends at least half his or her time on establishing and maintaining useful or potentially useful business relationships both during and outside work hours. If you need to, contract someone in China as a facilitator. Someone to make introductions for you, open doors, smooth the way for you. If possible talk to someone from another NZ company who has already learned the ropes.
4. Unity is strength.
The Chinese roadside is littered with western entrepreneurs who tried to go it alone. The successful ventures, large and small, did it through cooperation. Partnerships, joint ventures, reciprocal investments, licensing and distributor agreements are the way to go. Most likely you'll need to do this market by market. You may find that a partner who is strong in Beijing has little experience of Shanghai or further south. In China, your relationships will be your single most important business asset during the difficult establishment phase.
5. Go there.
If you plan to do business in China, get on a plane and invest some time in exploration. Don't leap at the first opportunity that apparently comes your way. Go and evaluate potential markets and potential business partners first. Because of the population, the potential sales numbers are staggeringly large and you'll see dollar signs and lots of zeros. But so are the costs and the risks. Finding the right partner will be the most important decision you'll make.
If you'd like to know more or are interested to discuss these further please contact me or Denise on 09 5288808.
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