Chinese investors want to invest in NZ, not take the country over, says Professor Siah Hwee Ang

By Gareth Vaughan

As China moves into net investor mode, New Zealanders should understand Chinese eyeing investment opportunities here are doing so because they see good opportunities and believe they can perhaps do a better job than locals, rather than wanting to take over the country.

This is what Professor Siah Hwee Ang, the BNZ Chair in Business in Asia at Victoria University, told interest.co.nz in a Double Shot interview.

"They are here not because they want to take over the country. They are here because they really see a good investment opportunity, or they believe that they can do a better job than some of our local players," Ang said. "So they believe there's an opportunity, 'we should go there because we have run out of space in China in terms of growing those kinds of good products,' for example."

"So New Zealand is a good place to do it. Unfortunately if some of our local players are not doing it, the Chinese players will start thinking maybe they should be the one to try to take the initiative. So in some ways it's an opportunity for them in terms of the capitalist way, rather than saying 'I want to come and conquer your country'," added Ang.

Ang, who originally hails from Singapore, said the Chinese see New Zealand as a very good place for farming that's under utilised.

"We know because of soil issues in China, pollution issues, there is so much land space in China that you can't use for farming. So they want to be here because we have the best environment for those kinds of activities, but (in their view) we are not maximising it and they see that as an opportunity," said Ang.

Other than areas such as the dairy industry, food and wine, Ang also expects to see more Chinese investment in tourism in New Zealand.

'NZ not over dependent on China'

In a speech earlier this week Minister of Trade Tim Groser raised, and countered, the question of whether New Zealand's in danger of having too much trade dependence on China. Annual two way trade topped $20 billion in the May year, with annual exports to China up 53% to $11.6 billion and imports from China rising 9% to $8.5 billion. China also overtook Australia as New Zealand's biggest trade partner. In the 12 months to May China took 38.2%, or $5.9 billion, of New Zealand's total $15.5 billion worth of milk powder, butter and cheese exports.

Credit rating agency Fitch, which this week affirmed New Zealand's long-term AA foreign currency credit rating and raised the outlook on it to positive from stable, did note the New Zealand economy's large, growing and connected "twin concentrations" in dairy exports and in exports to China.

"China overtook Australia to become New Zealand's biggest export market in the fourth quarter of 2013. New Zealand is vulnerable to a shock to its terms of trade in the event of a sharp slowdown in China, although such a slowdown is not Fitch's base case," said Fitch.

For his part, Ang doesn't see over dependence on China.

"I don't think if we actually look at the size of New Zealand we are actually overly dependent on China. We think we are relying on China a lot, but if you look at the trade we are doing with China, it's just a small bin in China's portfolio. And bear in mind with a lot of the products, even if we don't trade with China, there will be other countries that will trade the same products from us," said Ang.

"So it's not as if we have an issue about oversupply when there's no demand. There's always going to be a lot more demand than what we can actually produce as a country."

In terms of other Asian countries offering New Zealand good export opportunities, Ang cited the Association of Southeast Asian Nations (ASEAN) and India.

"The countries of ASEAN, there's one big market there, 600 million people. They are very, very tough markets to enter of course, but then bear in mind that whilst we are having good relationships with the Chinese, the Chinese are also starting to build a lot more relationships with ASEAN. And ASEAN is going to have its ASEAN economic community in 2015, (so) there will hopefully be a bit more integration there," Ang said.

"The next one up is probably going to be India, but that might be a few years down the road."

See all Professor Ang's interest.co.nz articles here.