Professor Siah Hwee Ang on what's motivating the Chinese to invest in NZ, and why NZ is behind the ball when it comes to investing in China

An Asian business expert is calling for New Zealand to look beyond exporting, and focus more on investing in China.

As the debate around Chinese investment in New Zealand rages on, the BNZ Chair in Business in Asia at Victoria University says New Zealanders need to up the ante when investing in China themselves.

Professor Siah Hwee Ang says we’re lagging behind our competitors and need to broaden our approach.

He recognises exporting is the status quo entry point into the Chinese market, but says our exporters should be doing more.

“We need to have the mentality that exporting is not the only solution, or not the only way to engage”, he says.

“Sometimes investment is probably the better way because it’s more committed, because you have to be there to understand your clients.”

One of the biggest mistakes Ang sees exporters make is not connecting closely enough to their market.

He considers exporting to be an inherently “distant approach” towards engaging with another market, as there’s a disconnect between getting the product overseas and distributing it.

He says exporters need to make a greater effort to be involved in the market itself – having a presence there, knowing the language, etc.

“If you ever use a distributor, always try to understand what they do; always try to be engaged with part of what they do, as opposed to saying ‘look I just pass the product to you, you handle the clients’.”

Ang credits the government for setting up various free trade agreements to help promote and facilitate more foreign investment, but says it needs to be doing more.

He finds businesses aren’t always up to speed with the kinds of agreements New Zealand has with other countries, so says the government should work harder to inform them of exactly what policies and agreements are in place to help them.

He also advises exporters not to rush into China. He says it’s a big market, so if you have a good product, there will always be buyers.

Where exporters like Fonterra risk damaging the NZ brand

Ang says New Zealand exporters needs to tread cautiously when using a single desk – having a monopoly marketer of a product with multiple suppliers.

He says a single desk approach, as has been used by Zespri and Fonterra, is good as it gives a number of small organisations the critical mass often necessary to enter and be distributed in another market.

However this once again isolates the producer from their clients and the market their products are being distributed in.

In Fonterra’s case, Ang says farmers bear the risk for Fonterra’s actions, and can’t do anything about it.

“Both parties should be on the same ship, and in terms of structure, they both have to share the cost and consequences.”

More generally, Ang says it’s vital single desks have good governance structures to make sure they represent New Zealand well.

“We can’t afford that single desk to fail, or not do well, because it’ll just come back and bite the New Zealand brand.”

(Fonterra, of course, became embroiled in a melamine scandal in China with Sanlu in 2008).

Property investment through a Chinese lens; ‘There’s nothing stopping them’

On the flip side of the coin, Ang acknowledges New Zealand isn’t short of Chinese investment.

He explains land is scarce in China, with a lot of it being owned by the government, so people are looking for alternative ways to invest their savings.

He says Chinese people have opted to buy property abroad, rather than invest in the stock market, as it seems like a safer option with a greater guaranteed return.

The Chinese are investing in the likes of the US, Canada and Australia, and New Zealand is just one of these attractive options.

“When they find it difficult to get residency in the UK or Canada, they start to look for an alternative, and that’s where New Zealand comes into play”, Ang says.

“When you have one of them here, 10 of them will come; when you have 10 of them here, 100 will come, and then the price [of property] will keep going up, and it’ll almost never come down.

“They come in bunches… and it’s almost impossible to argue they’ll stop coming unless there’s some restriction in terms of how many Chinese can buy in this country, otherwise there’s no stopping them.”

Despite this, Ang says New Zealand isn’t the easiest place to invest in.

It’s about bottom lines not race

Responding to the fallout from the Labour Party estimating the number of Chinese people buying Auckland houses based on a list of buyers with Chinese-sounding surnames, Ang says we need to stop having a race debate, and realise every property sale is simply a business transaction.

“Any property purchased is considered a business transaction, and if you think of it that way, it’s very normal for Chinese to buy land or property here, because a lot of them are very rich and they can afford that”.

He notes the more we single out the Chinese, the more racially-fuelled the business issue becomes.

Furthermore he says, “At the end of the day, any buyer can only buy if there’s a seller, so sometimes you have to think of the supply end of things as well. If there’s no supply, then there won’t be a demand.”