Market Information

Here’s a good link for businesses thinking of exporting to China. It includes simple steps to assess if you’re ready for the challenges of China as well as information, case studies and support for those wanting to look at the opportunities China offers. Link

Getting goods and people into Beijing from now until the end of the Olympics is going to get more and more difficult as security tightens. I Had the most strengent security checks on my way into Beijing last week, they almost didn’t let me in because they thought I looked different to my passport picture!

We also we have a shipment that has been “held up” due to the extra security checks so expect delays in getting things in and out of Beijing!

Joe

Photo from: NZ Herald.

BEIJING - Guards with machine guns began patrolling the Beijing airport as the city tightens security for the Olympics, news reports said Saturday.

Also this weekend, police will start checking Beijing subway passengers for guns and explosives, the reports said.

The measures reflect the fears of Chinese leaders, who worry the Olympics might be tarnished by security threats. They also hope to stop activists who want to use the August games to air grievances against the communist government.

At the airport, two-member teams of guards with machine guns began work Thursday and will patrol all three terminals through the end of the Olympics, the Xinhua News Agency and newspapers reported. Chinese police usually are unarmed, while some airport guards carry pistols.

“I think they look cool, and you rarely get to see such big guns,” the China Daily newspaper quoted a female traveler at the airport as saying.

On subways, police with dogs will start checking passengers for guns, knives, explosives and flammable, poisonous or radioactive material on Sunday, Xinhua said.

Story via: NZ Herald    Security tightens in Beijing for the Olympics

Fonterra has already benefited from the newly inked free-trade pact with China.

It has signed a deal worth more than $300 million, The Press newspaper reported this morning.

Fonterra’s Japan-based general manager of trade for Asia, Philip Turner told a Parliamentary select committee - hearing submissions on legislation to give effect to the trade deal - that the contract was to supply “a major multinational customer” with nutritional milk powders.

Mr Turner said the “commercially very valuable” deal came within weeks of the signing of the agreement in early April.

“We’ve been able to conclude a deal recently on the basis of the FTA being signed, which results in a considerable volume of business and processing being done in New Zealand that would otherwise have gone offshore, in this case to Singapore,” Mr Turner said.

Fonterra’s written submission said the deal would generate more than $300m in revenue over four years.

“These value-added dairy products will be manufactured in New Zealand factories, using New Zealand milk, capital, labour and technology,” it said.

“Without the FTA with China, lower-priced product from New Zealand would almost certainly have been processed offshore in Asia.”

Trade Minister Phil Goff welcomed the news.

“Fonterra’s submission to Parliament, and its announcement of this deal only weeks after signature of the FTA, is further evidence of the value of that outcome to New Zealand,” he told The Press.

China is New Zealand’s fourth-largest export market for dairy products, earning $523m last year, up from $144m in 2001.

The phase-out of tariffs on all dairy products under the deal over the next five to 12 years will save Fonterra $56m on current export values.Fonterra inks $300m China deal after FTA

Via: Fonterra inks $300m China deal after FTA

Comprehensive information for New Zealand food and beverage companies doing business in China. Special thanks to Otago University and NZTE

PRINCIPLE FINDINGS FROM THE REPORT

The principle findings of this study, thus far, are as follows:

• New Zealand companies need to make time to investigate and conduct market research before proceeding with any market entry strategy.

• Understand which market segment they wish to target, who their competitors are, the market trends which are evolving and the risks that the market poses.

• New Zealand companies need to enlist the support of the NZ government officials and through them Chinese local and central government officials to ensure that their objectives are in alignment with the policy objectives of the Chinese Government both local and central.

• New Zealand trade and diplomatic officials must be thoroughly conversant with the policy objectives of local government and have effective communication channels between themselves and local government officials. They must also be conversant with Central government policy and be able to readily access information channels to follow the development of central government policy objectives.

• It is vital that New Zealand companies have a contingency strategy in place prior to entry. That is, ensure that exit rules have been at least thought through if not developed.

• Enter the market with a long term perspective and be committed to tackle the hurdles when they present themselves. It is important that New Zealand companies think not five years ahead but fifteen to twenty.

• Ensure a balanced recruitment strategy, ensuring the employment of local indigenous staff, alongside expatriate staff. The employment of local indigenous staff with bilingual skills is an obvious asset.

• It is important to overcome the language barrier. New Zealand companies need to ensure that effective and timely communication systems are established. Open communication with the Chinese partner is important to the ongoing development of the relationship and integral to smoothing out any problems which may arise.

• Cultural empathy and understanding is important, New Zealand companies must accept and understand the ways of their Chinese partners and embrace the cultural differences with understanding, tolerance and pragmatism.

• New Zealand companies should look at where they can offer assistance and add value to their Chinese partners, opportunities to work more closely with partners enables firms to better understand the nature of business in China. Moreover, it fosters goodwill within the partnerships and plants the seed of trust.

• New Zealand companies need to be highly vigilant in maintaining superior quality Food and Beverage produce standards, in order to protect and enhance the New Zealand brand / image.

• It would appear prudent and advisable for New Zealand Food and Beverage Companies to work together to where possible to facilitate greater synergies and lift the profile of New Zealand in China and the wider Asia markets.

In conclusion, if the optimists are correct, China will move inexorably toward a free market economy during the next decade. Competition will increase and foreign free-market influence will support this process. However because of China’s geographical, political, and economic complexities, China’s transition to a full market economy is yet to be accomplished, for example the establishment of clearly defined property rights. Therefore, we believe that for the foreseeable future there will be a continuous evolution in the institutional arrangements that support a market economy. This suggests that the key success factors identified in this research are likely to remain valid for the foreseeable future.

CLICK HERE FOR FULL REPORT

A $1 million Chinese order for socks, hats and gloves from Norsewear is being cited as an early spin-off of the free trade agreement signed last week.

Norsewear says the order, within 48 hours of the signing of the pact, came out of the blue and was a result of the higher profile New Zealand was enjoying in China. The company’s general manager Sandra Shilling said the company has manufacturing links in China but was not marketing its New Zealand-made garments there at all.

“It’s not something we planned on or predicted,” she said.

“The Chinese have ordered three times the annual numbers we currently produce. The good news is that means more jobs for New Zealanders as all the products will be manufactured locally. Already our contract manufacturers are looking for new staff to help fill the order.”

She said if the Chinese were happy they planned to increase the order.

“Goodness knows how we will cope with that! The export potential is absolutely mind boggling. We are talking in the multimillion-dollar region so it’s all systems go for us right now.”

Via NZ Herald: $1M Norsewear deal an early winner

Winners China will lower tariffs on most imported NZ agriculture and manufactured products to zero (over time), saving our exporters a total of at least $100 million annually.

With Chinese tariffs running at about 10 per cent for milk powder (yoghurts and cheese top 15 per cent); 12-20 per cent on sheep meat and 15-20 per cent for kiwifruit, the upside is considerable. But there will a lengthy phase-in period for dairy as China fears its own fledgling dairy farming industry would be squashed.

Manufacturing exports ranging from machinery through to light industry, whiteware, automotive parts, steel and aluminium products will benefit to varying degrees. But reciprocal liberalisation will ultimately make the local scene more competitive.

Losers Wool: China is NZ’s biggest market for wool products which enter at very low-duty rates (1 per cent under a tariff rate quota system).

But out-of-quota exports face a 38 per cent duty. China strenuously argued going to zero would wipe out the livelihoods of its sheep farmers in frontier regions. A special quota arrangement is expected.

Forestry: China is one of the world’s largest forest product importers. But complications under a provision in China’s WTO accession deal with the US proved a sticking point. Some co-operative element may emerge.

Textiles and apparel manufacturers: Will have to up their game when NZ speeds up remaining tariff reduction in these areas, opening the way to stiffer competition from Chinese imports.

Electronics: A separate agreement will be signed to ensure co-operation on conformance assessment for electrical and electronic equipment. Some retailers are nervous NZ’s safety standards may become compromised.

Movement of people
Working-holiday programme for young professional Kiwis to go to China.

NZ business people will find it easier to get short-term visas; an advance record system will ultimately be promoted to ensure important enterprises and organisations on both sides get timely entry visas.

More exchanges of experts, scholars, students and technicians and intra-corporate transferees.

Chinese traditional medicine experts, acupuncturists, Mandarin teachers and chefs will be allowed into NZ under a constrained quota.

No invasion of unskilled Chinese workers into NZ. Trade Minister Phil Goff strenuously opposed a push for Chinese labourers to work on NZ construction sites; Chinese workers must be paid NZ rates while here.

Trade liberalisation services

Winners
Tourism and education ex-China are major money-spinners for NZ. An agreement to facilitate two-way tourism traffic is expected. Education earnings fell away after the collapse of English language schools and the appreciation of the NZ dollar. Look for more NZ educational institutions running schools in China in co-operation with Chinese authorities in areas like biotech, management and telecommunications. NZ students may also be encouraged to study in China.

Forestry: China is one of the world’s largest forest product importers. But complications under a provision in China’s WTO accession deal with the US proved a sticking point. Some co-operative element may emerge.

Textiles and apparel manufacturers: Will have to up their game when NZ speeds up remaining tariff reduction in these areas, opening the way to stiffer competition from Chinese imports.

Electronics: A separate agreement will be signed to ensure co-operation on conformance assessment for electrical and electronic equipment. Some retailers are nervous NZ’s safety standards may become compromised.

via: So what’s in it for us   

NZ Herald

NEW Zealand’s annual trade deficit narrowed to the smallest in almost three years as soaring prices for dairy products buoyed export earnings. The shortfall shrank to NZ$4.41 billion (US$3.5 billion) in the 12 months ended on February 29 from NZ$4.8 billion in the year through January, Statistics New Zealand said in Wellington yesterday. It was the narrowest gap since the 12 months ended in April 2005 and was less than the median estimate of NZ$4.54 billion in a Bloomberg News survey of 10 analysts. Reserve Bank Governor Alan Bollard is looking to exports, which make up 30 percent of the NZ$104 billion economy, to buoy growth as he keeps interest rates at a record high to curb domestic demand. Growth may miss the central bank’s forecasts as drought and falling world prices curb dairy exports, which make up a fifth of all overseas shipments. World dairy prices soared to a record in November amid surging demand from China. Prices have fallen 6.6 percent in the past three months, and drought has hit milk production, according to Fonterra Cooperative Group Ltd.

Via:   Dairy exports lower NZ trade gap

via Shanghai Daily: Business by Tracy Withers on 3/28/08

Property prices in major Chinese cities remained high, but rose at a slower pace in February, according to the National Development and Reform Commission. The average housing price in China’s 70 large and medium-sized cities climbed10.9% in February
Source:  Housing prices rise 10.9% in major Chinese cities in Feb.

via China Business on 3/18/08

A COURT in the southern Guangdong Province has fined a five-star hotel after holding it responsible for leasing space to a seller of knockoff Louis Vuitton products. The Intermediate People’s Court in Dongguan City ordered the hotel to pay 100,000 yuan (US$14,124), in combined compensation with the shop manager, to the French luxury goods producer. The court also ordered the shop and the hotel to stop selling the products and destroy any remaining counterfeit items. The court documents didn’t name the hotel but said it collected a monthly rental of 20,000 yuan from the shop. The documents said the salespeople in the shop wore hotel uniforms. “There were no signboards or any notices in the shop for customers to be able to identify that its management was independent from the hotel,” the court ruled. Louis Vuitton demanded compensation of 500,000 yuan from the hotel and a public apology. But the court said the hotel hadn’t caused widespread market harm to the brand. The French firm has also won a suit against a Chinese handbag producer for copying its trademark design, sources within the No. 1 Intermediate People’s Court in Beijing said. The court heard the handbag company obtained a Chinese patent in October 2003 for a bag design, but Louis Vuitton said it was too similar to its trademark design. It took the Chinese company to court in April The court said it had no jurisdiction over the validity of the patent, but could order the firm to stop using the design because it was being disputed.

Source: Bag maker sues fakers

via Shanghai Daily: National by on 3/19/08

China food safety agreement
Following a number of cases of contamination involving Chinese products imported from China, the United States and China have now signed an agreement designed to improve the safety of food exports.

Essentially, the document covers registration, certification and verification. It requires Chinese food and ingredient producers to register with local authorities, who are themselves required to share data with the Department of Health and Human Service (HHS), and it also requires the authorities to notify their counterparts of events affecting the food chain. It is also understood that the Chinese authorities are to develop an electronic tracking system to follow products from production to export.

Source:  www.functionalingredientsmag.com