As trade opportunities emerge in new Asian markets, how can businesses make strong new trade relationships? | Content Partnership
For the first time ever, India’s headcount has outstripped that of China.
That’s according to the United Nations, which revealed the figure back in April. It’s the first time China wasn't the largest country in the world since around 1950, when the UN first started issuing such data.
But factors like low fertility in China versus younger demographics and decreased infant mortality in India have seen the sub-continent catch up.
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For a small exporting nation on the other side of the ocean like New Zealand, this presents a crossroads.
Trade with China has ballooned over the past decade, with a free trade agreement in 2008, spurring an increase in two-way trade from around $10 billion to $40 billion.
A recent trip to China by Prime Minister Chris Hipkins had the goal of reaffirming a close economic relationship "by supporting businesses renew their connections with Chinese counterparts and helping grow new ones to support New Zealand’s economic recovery".
But while China remains a crucial trade partner, an emerging middle class in India and other countries in the region present fresh opportunities for New Zealand importers and exporters to diversify and make sure their eggs aren’t all in one basket.
Franky Wang is the head of Asia business activation at BNZ. He guides businesses large and small as they get their heads around overseas trade between New Zealand and Asia.
Wang said since New Zealand has a lucrative relationship with China the business sector won’t want to forgo it as they look to other markets in what is described as a China Plus One strategy.
“The question is how do we actually maintain this healthy and successful relationship with China, because we still want the people-to-people links, the trade, the tourism, the airlines and all of that,” he said. “But we have reached a point here of rejuggling and revisiting the Asian road map for this country.”
And it seems the political machinations that would allow the business sector to spread its focus to other markets is already underway.
Indian Foreign Minister Subrahmanyam Jaishankar visited New Zealand last year, the first visit of its kind in more than 20 years. He described the relationship between New Zealand and India as “ready for its next phase”.
Meanwhile trade delegations from countries like Malaysia and the entire ASEAN region are being talked about. Wang said BNZ played a “connector or navigator” role in these relationships, linking the public sector and local Asian diaspora up with overseas markets, as well as helping New Zealand businesses connect with Asia through trade and investment.
“The best way to put it is that New Zealand as a country has a brand value and most people who will come here will be blown away,” Wang said. “There's a lot of doom and gloom at the moment, but I think it's our role to actually paint a picture that is positive."
But it’s not necessarily going to be easy to diversify the country’s singular focus on trade with China.
“The FTA has been extremely successful, but the challenge we now have is that we have become very reliant on China,” Wang said. “It can be all but impossible for some businesses to shift and keep their bottom line at the moment – but this could change over the next 10 years.”
A survey from last year on local perception of Asia and Asian peoples conducted by the Asia New Zealand Foundation found 80 percent of New Zealanders felt developing ties to Asia should be an important priority for the country.
South and Southeast Asia were highlighted as sub-regions that New Zealanders viewed as important to engage with.
Foundation executive director Simon Draper said there had been concerns that the pandemic, geopolitical tensions and economic challenges would cut into New Zealand's enthusiasm for strong trade relationships with Asia.
“In fact, the opposite appears to be true,” he said. “As well as seeing Asia as critical to our future, a significant majority of New Zealanders (65 percent) feel that it is more important for New Zealand to invest energy and resources into building partnerships with Asia than it was five years ago.”
Draper said improving New Zealand’s ‘Asia capabilities’ – knowledge levels, cultural understanding and language skills – would be “critical to achieving progress”.
Wang said these kind of skills could be improved by leveraging the sizeable Asian communities in New Zealand, including business owners who maintain their connections with their overseas points of origin.
BNZ sponsored the first ever EthnicBiz Forum in May, which aims to bring together the local migrant diaspora.
“I’ve met many businesses in the local diaspora who are interested in exporting their products to their home countries,” Wang said. He said big players were education, high-end tourism, food and beverage and technology and gaming sectors.
“The role that we play is as a connector and a navigator – we hope to grow the clients' businesses, and if they grow then we grow and New Zealand grows.”
In a report from the India New Zealand Business Council from April, former council chair Earl Rattray said it had become clear that many see a stronger relationship with India in particular, as vital to New Zealand’s economic future.
“India will soon become the world’s third-largest economy and is unlikely to halt there,” he said.
It’s also a country with a deep pool of educated, skilled and highly mobile English-fluent youth.
The pandemic years provided a bit of a speed bump to India-New Zealand trade, but more broadly it has been trending upwards.
The Government has signalled it might be premature to expect a free trade agreement with India any time soon, with trade barriers around dairy providing one of the biggest hurdles.
However, following her meeting with Jaishankar last year, Foreign Minister Nanaia Mahuta did say that strengthening business ties with India would be a priority.
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