China-NZ trade set to grow as FTA eases barriers

WELLINGTON -- New Zealand businesses are set to take advantage of the country's free trade agreement with China as tariffs are gradually eased, according to the new head of the New Zealand government's trade strategy in China.

The government was also stepping up its focus on China as the two countries marked the 40th anniversary of diplomatic ties this year, said Matthew Dalzell, who leads the New Zealand Inc initiative in China.

"We are also into our fifth year of implementation of the Free Trade Agreement. This is quite important because now the tariff reductions are 90 percent done those step-down reductions have nearly all arrived at the point we wanted at zero," said Dalzell.

"So New Zealand companies have a real advantage that they are taking up. It's not just that the tariffs are no longer an impediment, the FTA has been promoted all around New Zealand, in all manner of sectors, and that awareness is really important," he told Xinhua in an e-mail interview.

"It means some companies who were assessing opportunities to expand their volumes and margins are doing just that, and some companies who had not thought trade with China would be profitable are now seeing the opportunities."

New Zealand Trade and Enterprise, the country's trade promotion agency, forecasts that over the next two decades the FTA will lift New Zealand exports to China by between 20 percent and 39 percent, or 260 million and 400 million NZ dollars ($317. 91 million), a year over and above what would be the case without an agreement.

Dalzell said the New Zealand Inc strategy, launched by Prime Minister John Key in February with the aim of doubling exports by 2015, had government agencies working to the same goals.

A fluent Mandarin speaker, Dalzell, who has also taken up the post of Consul-General in Shanghai, said the two countries had a very strong relationship at political levels, with frequent visits by key and other ministers building understanding and goodwill.

Thirty-five New Zealand businesses already had bases in Shanghai, indicating the enormous potential of the Yangtze River Delta area and the fact that challenges could be overcome.

"Competition is tough, and some sectors will get saturated, so companies need to keep reflecting on their niche and specific advantages, and if it's not price point or volume then it might be value or social cachet."

Companies could consider moving further up the delta if Shanghai was too crowded, said Dalzell, who was keen to take business delegations to cities like Hangzhou, Nanjing and Hefei.

"Clean, healthy and safe food," tourism and education were three sectors of opportunity for New Zealand, said Dalzell.

"Having spent time at both Beijing Normal University and Fudan University, I'm very impressed with the quality of teaching and the caliber of the students. But the demand for places in China's top universities is very high, and many employers these days are looking for international qualifications in addition to great Chinese qualifications, so New Zealand should be considered a good option not just for a first degree, but for a second degree or a graduate program," he said.

Two-way investment was also an important dynamic in the trade relationship.

"It seems to me that there are excellent opportunities for New Zealand investors to support new phases of business growth and development in China, in everything from agritech, to clean energy, to aviation services, film and television, urban and industrial design, you name it; and likewise for China's investment interests to find good returns in New Zealand infrastructure and other sectors," he said.

"In the past, it was well known that our goods trades interests were highly complementary. Into the medium term, I see our investment interests also having that same complementary character, but increasing driving our trading relationship as well."

Apart from his education experience in China, Dalzell served in the New Zealand embassy in Beijing in the 1990s, when he worked on the Approved Destination Status arrangement, which helped drive the growth in Chinese visitor numbers to New Zealand.

"It's wonderful to come back to China after a break of nearly 10 years and see the huge advances that have been made all over the country."