The truth about China

It is difficult to assess at what point it makes economic sense to spend money on employees, offices or even contracts with third parties to represent one’s company in China.

If a company waits until the costs of establishment are clearly covered, it will lose opportunities or may never attain the critical sales mass to justify being in China at all. Businesses must read the sales trend, having assessed the market as exhaustively as possible, and then adjust the risk of the cost of representation.

New Zealand is inhibited by the size of many of its companies. It does not actually have a true small- and medium-sized enterprise (SME) culture.

Instead, it has a small- and micro-sized enterprise culture that is spread
out among small, dispersed urban and industrialised centres and therefore
does not benefit from the kind of agglomeration enjoyed by neighbouring
Australian and Asian trading partners, with businesses in Auckland being
the exception.

Although China can be an expensive country in which to do business, the
market, while large in absolute terms, is actually an interlocking maze of
local economies, and it can lend itself to dealing with small, flexible
enterprises.
 
Knowledge of China has improved in recent years in New Zealand. There
has been increased tourism and a well established tradition of, albeit
somewhat fragmented, academic dialogue and exchange.

The new conservative government in New Zealand has continued, and may even be accelerating, the positive political contact that the country has maintained with China over the last two decades. There has also been a marked increase in companies visiting China.

New Zealand has, nevertheless, still a great deal more work to do to
understand the developing world. It is unacceptable that there is not a
single accredited New Zealand journalist based in China, or Hong Kong.

As a result, with the exception of opinion pieces in a few publications, such as the New Zealand Herald, the New Zealand Listener and Unlimited magazine, general reporting on China in New Zealand publications tends to be judgmental, taking a vaguely pious first-world view toward developing countries.

New Zealand has much ground to cover in understanding the challenges of
engaging with the new economic order that is emerging from this global
financial crisis. This challenge is shared by nearly all developed countries.
The business communities of the United States and Europe are not
necessarily better (and in many cases are less) informed than the business
community in New Zealand.

Given the continuing evolution in communications technology and increased automation and efficiency of international shipping, New Zealand can no longer use the tyranny of distance as an excuse for economic underperformance.

It is also unhelpful to continue the habits of excessive self-criticism and, in the case of the private sector, railing against the government for lack of efficiency. New Zealand is reforming key institutions governing foreign affairs and trade, and at a rate unmatched by its European and American counterparts.

In branding and marketing itself, New Zealand compares well with other
small nations, such as Denmark, Scotland and Wales, that have the huge
advantage of large markets at their borders. With a shared sense of
objectivity and ruthless focus, New Zealand can reposition itself well in this
recovering global economy.

David Mahon is a China commentator and the Managing Director of Mahon China Investment Management Limited.

This commentary is an excerpt from the report ‘China and New Zealand’ published by  Mahon China Investment Management Limited.

Read the full report at www.mahonchina.com [PDF].