Venu Menon
Wellington, May 25,2024
New Zealand faces a growing need to adapt in order to protect its edge over competitors in the rapidly changing landscape of the Chinese market.
This was the message that came out of the New Zealand-China Business Summit held in Auckland earlier this week, as well as a report prepared by the New Zealand Consulate-General in Shanghai, China, in March.
The Auckland summit was themed ‘Navigating today’s China,’ and reflected the fast changing scenery of the China market.
China remains New Zealand’s largest export market, accounting for nearly 22% of goods and services exports in 2023. Two-way trade stood at $40.31 billion in 2022.
With a growing middle class of over 500 million people, China relies on New Zealand to supply primarily dairy, meat and wood products.
Chinese tourism to New Zealand is picking up, helped by air connectivity returning to 58 regular flights a week between New Zealand and China. The education sector is also steadily recovering, with over 21,000 Chinese students enrolled to study in New Zealand in the first eight months of 2023.
Minister for Trade Todd McClay’s visit to China in April left him “with a clear view that New Zealand is maintaining its reputation as a world-leading producer of safe, healthy, nutritious, natural and sustainable food products.”
But beyond that, the minister noted “a heightened focus by Chinese consumers on, for example, health and wellbeing, and a greater emphasis on e-commerce platforms.”
McClay advised New Zealand firms that they “need to hustle to respond to these consumer trends and remain nimble and agile to stay ahead of competition.”
This aligns with the report prepared by the New Zealand Consulate-General in Shanghai which notes that “perceived personal health benefits tend to be bigger drivers of consumer behaviour than environmental concerns.”
In other words, Chinese consumers typically buy products that are good for them and not what is good for the environment.
The report notes New Zealand has “a natural advantage but others are burnishing their green credentials and telling their green stories effectively.”
Chinese consumers are prioritising healthy lifestyles and this could have positive results for ecotourism in New Zealand, with its emphasis on fitness and outdoor activities.
Consumer preference in China is also shifting to durable products, recognising that longer product shelf life reduces waste.
New Zealand businesses operating in China must contend with the impact that national policies have on companies’ behaviour.
For instance, China’s national policies are driving rapid expansion of renewable energy and electric vehicles, the report notes. The Chinese government is also clamping down on “waste and excess packaging.”
There are signs that younger Chinese consumers are picking up cues from the government and “are caring more about sustainability in that they are concerned about their own health and welfare, with an embedded expectation within this that higher environmental standards are being met.”
Surveys show Chinese consumers need to see a link between “environmental credentials and a health benefit.” Brands command a higher price for their products if they are able to establish this link.
For example, according to the report, some dairy brands promote the quality and benefits of grass-fed cows in China because “customers perceive that to be a near-organic product and therefore healthier and more premium.”
Chinese consumers also trust labelling that reflects government and industry certification.
New Zealand exporters with organic certification labelling on their products have an edge over their competitors among Chinese consumers as the certification is officially recognised in China.
New Zealand businesses also need to take onboard that the younger Chinese consumers they are targeting “tend to be more discerning in what they buy and more forensic on a product’s provenance, labelling and packaging.”
On balance, New Zealand’s environmental credentials are an advantage as long as there is a clear link between sustainability and better health outcomes in the products that are marketed in China.
Venu Menon is an Indian Newslink reporter based in Wellington
