Chinese visitors to The Rees Hotel
in Queenstown can have Chicken Congee for breakfast, watch their
favorite dramas from back home on TV, then speak to reception in
Mandarin to book a jet-boat ride on Lake Wakatipu.
At the Alpine Resort Wanaka an hour away, owner Simone
Hildebrand moved to Hong Kong in July to better service the
mainland, boosting the proportion of Chinese customers to about
10 percent from 2 percent. The efforts underscore the growing
importance of China to the New Zealand economy and businesses
from tourism to commodities.
Prime Minister John Key flies to China today with a
business mission to further cement ties with a market that
overtook Australia as New Zealand’s biggest export destination
in January and February. Tourists from the Asian giant are the
second-biggest spenders in the country, which together with
growing demand for Kiwi products from milk powder to logs have
helped sustain growth as a strong currency hurts manufacturers.
“China is providing an important offset,” said Annette Beacher, head of Asia-Pacific research for TD Securities Inc. in
Singapore. “The size of China means that all you need is the
increasing wealth and urbanization in China and New Zealand will
be a direct beneficiary.”
China is New Zealand’s largest market for milk powder, logs
and wool, making it a key customer for an economy in which about
60 percent of exports are commodities. When fears of a slowdown
in China emerged last year, there was a slump in confidence in
New Zealand that saw economic growth slow to 0.2 percent in the
second and third quarters of 2012.
China Boost
China’s economy revived, as did demand for New Zealand
exports. Shipments to China rose 49 percent to NZ$787 million
($662 million) in February from a year earlier, a March 26
government report showed, overtaking for a second month those to
Australia, which has been the biggest since mid-1987. The value
of milk powder exports surged 80 percent.
“China is increasingly important to us,” said Craig Ebert, senior economist at Bank of New Zealand Ltd. in
Wellington. “Commodities are their game. That’s another reason
we’re hooked in to them.”
Fonterra Cooperative Group Ltd. (FCG), which accounts for about a
third of the global trade in dairy products and collects milk
from 10,500 New Zealand farmers, expects dairy demand in China
will double by 2020. The Auckland-based company is developing
five farms in Hebei province as part of a strategy to provide
high quality fresh milk there, and it plans to offer infant
formulas under its own Anmum brand in selected Chinese cities
from mid-year.
Rapid Growth
“China is going very well,” Chief Executive Officer Theo Spierings said on a March 27 conference call. “It is growing
from a small base. The footprint has to grow faster.”
Key will meet with Chinese President Xi Jinping during his
visit to mark the fifth anniversary of a free trade agreement
between the two nations.
“New Zealand’s post-FTA trade and investment growth with
China has helped to lessen the impact from the recent global
financial crisis,” Key said March 25. His delegation, which
will include other government ministers and representatives of
companies such as kiwifruit exporter Zespri, visits Guangzhou,
Shanghai and Beijing over eight days.
Australian Prime Minister Julia Gillard also begins a five-
day visit to China today that will promote trade, investment and
education, and will meet with President Xi at the Bo’ao Forum
and Premier Li Keqiang in Beijing.
Japan Surge
Elsewhere in Asia, Japanese shares jumped to a 4 1/2-
year high, the yen dropped and bond yields fell to a record low
as the central bank expanded stimulus. The Bank of Japan (8301) will
double the monetary base by the end of 2014 through buying
government bonds, joining the Federal Reserve in taking
unprecedented stimulus to boost their economies.
Later today, a report may show factory orders in Germany
rose in February after an unexpected fall a month earlier, an
economists’ survey shows. Euro-zone retail sales probably fell
in February, economists predicted.
In the U.S., non-farm payrolls probably increased 190,000
in March, according to the median of 87 economists in a
Bloomberg survey. The U.S. trade deficit was probably little
changed in February, Commerce Department figures are projected
to show.
New Zealand’s economy grew 3 percent in the fourth quarter
of 2012 from a year earlier, buoyed by a global recovery.
Policymakers are looking for exports to sustain economic growth
as the government curbs spending to eliminate its budget deficit
and the currency’s 9.2 percent gain in the past two years forces
manufacturers to close plants and fire workers.
Wine Shipments
“The downside risks around global growth have receded,”
Reserve Bank of New Zealand Governor Graeme Wheeler said in a
March 14 monetary policy statement. Prices for New Zealand
exports are rising, in part reflecting the improving global
conditions, he said.
China’s gross domestic product expanded 7.9 percent in the
final three months of last year after a 7.4 percent gain in the
previous quarter. By contrast, Australia’s economy outside
mining and related infrastructure investment has been patchy,
curbing demand for New Zealand goods.
In February, New Zealand shipments to Australia of wine,
electrical machinery, refrigerators and other mechanical
appliances led a 9.2 percent decline in exports from a year
earlier. Crude oil and aluminum sales also fell.
New Zealand’s wine industry is tapping increasing wealth
and an emerging middle class to boost sales in China, which have
increased about tenfold in the past four years, according to
Charlotte Read, Asia and Middle East Market Manager for Villa
Maria Estate Ltd., which last year celebrated 50 years making
wine at its original site south of Auckland.
‘Exciting’ Market
“The opportunity lies with the young, educated, middle
class who surf the Net and will increasingly travel and embrace
a more western lifestyle,” Read said in an interview from
Shanghai where she is based. “The pace with which this market
can change is very exciting. It could double or be three times
the size in the next five or 10 years.”
Villa Maria, which produces a range of wines including
sauvignon blanc, pinot noir and merlot, has had a presence in
China since 2000 when it began supplying Shanghai’s M on the
Bund Restaurant. It will supply wine to a dinner for invited
business guests hosted by Key at the Fairmont Peace Hotel in
Shanghai next week.
Chinese visitors became New Zealand’s second-biggest
spenders from abroad in the year ended Sept. 30, according to
government figures, behind Australians.
Mandarin Speaker
Chinese spending rose 42 percent to NZ$651 million in the
year ended Dec. 31, 2012 — the only one of New Zealand’s top
four visitor markets to show an increase in spending. The
Chinese are also second-ranked in terms of average spend per
person, lagging behind Japanese visitors.
New Zealand’s hotels are making the most of the boom.
“When one of our groups arrive, we always have a Mandarin
speaker at the desk,” General Manager Mark Rose said in an
interview from The Rees Hotel, which boasts floor-to-ceiling
windows offering views of the mountain ranges that featured in
the Lord of the Rings movies. “They get information in
Mandarin. It makes life easier for us and makes them more
comfortable.”
To lure more Chinese visitors to the Alpine Resort Wanaka,
an apartment-style hotel with views of the Southern Alps about
an hour’s drive from Queenstown, Hildebrand has hired two
marketing managers with local language skills in Hong Kong.
The nation needs to attract more independent travelers
rather than those on bus tours, because they are the visitors
who are prepared to spend on jet-boat rides, bungee jumping or
sky diving, she said in an interview.
“Chinese people are becoming more adventurous,” she said.
“They try and do what they can’t do at home. You can’t jump out
of a plane easily in China.”
To contact the reporter on this story:
Tracy Withers in Wellington at
twithers@bloomberg.net
To contact the editor responsible for this story:
Stephanie Phang at
sphang@bloomberg.net
Kiwis Say "Ni Hao" as China Ties Trump Australia Sales: Economy
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