New Zealand: down under but not down and out
Print Edition
New Zealand, at first glance, seems a peculiar country. The people call themselves Kiwis, after a flightless and now endangered indigenous bird. The nation’s dollar is globally referred to as the kiwi, and even the Chinese gooseberries that the nation now calls its own are called kiwifruit.
It might be easy to dismiss such a quirky nation of less than 5 million people, which sits far off the beaten track in the Southern Ocean, but that would be wrong.
When I spent six weeks there recently as part of a work exchange program based in the capital Wellington, the relationship between New Zealand and China, its largest trading partner, became quite apparent.
With China’s economy slowing and global commodity prices dropping, the country is trying to shift from investment-led growth to one driven by consumption.
“New Zealand has been a beneficiary of China’s spectacular growth over the past decade, particularly for our dairy, meat, forestry and tourism sectors,” the New Zealand Institute of Economic Research said in its latest quarterly publication. “But slowing Chinese demand could reverse some of these gains.”
New Zealand, as a small volume player in world trade, has always relied on selling the image of high-quality products.
“A lot of Kiwi companies are struggling in China primarily because they are very small,” said Mike Arand, China business adviser at New Zealand Trade and Enterprise. “At first, it was great. You sell one or two containers and suddenly the next order from China is for 20 containers.”
In reality, exporters have found themselves trying to pursue quantity without compromising quality.
To promote its value-added reputation, New Zealand has been eager to portray itself as a boutique exporter. The “Made in New Zealand” label now accounts for half of the country’s exports to China, satisfying a niche market of middle-class Chinese wary about domestic food products. Despite a scandal of bacteria-contaminated products recalled by its largest dairy producer Fonterra in 2013, New Zealand still portrays itself as the “land of purity” to Chinese consumer. Besides milk powder, the country exports lactoferrin, an sophisticated extract used in baby formula.
To differentiate itself from rival Chile in cherry exports, New Zealand ships two tons of handpicked, high-quality berries to China by plane every day, said Patrick English, executive director of the New Zealand China Council.
In the highly competitive wine industry, where New Zealand’s output accounts for only 1 percent of global volume, New Zealand stresses the boutique excellence of its Marlborough region sauvignon blanc, which tends to appeal to a younger group with discerning palate.
Apart from Canadian ice wine, the average price of New Zealand wine sold in China is the highest of any foreign brand, Arand said.
The general perception of New Zealand is one of a land of dairy cattle and sheep. That makes it hard for the nation’s emerging technology industry to break into world ranks.
Much of New Zealand’s technology prowess is related to farming. A Kiwi company that makes electrical fencing has expanded now into security system for buildings, schools, hospitals and airports in China after making initial inroads with its farm fences.
Indeed, New Zealand’s exports are diversifying into sectors such as cinema ticket-booking systems, digitalized patient record management for hospitals, environmental waste disposal and even Jetpack, an experimental aircraft.
Kiwis may appear at first glance to be Type Bs, casual and laid back. But they are, in fact, more like Type As — ambitious and organized.
As inhabitants of a small country, the residents are highly motivated to come up with different ways of doing things, efficiently and cost-effectively. Per capita, the country has the most yachts, airplanes and pilots in the world. There are Kiwi farmers now using remote-control helicopters to herd sheep. “New Zealand is a like an underdog,” said English. “We want to move up. And the kiwi, at the bottom of the food chain, is symbolic.”
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