Business Delegations

Shanghai Expo Debrief and China Market Development

Expo 2010 Shanghai China

China was identified as a key target market for growth by NZTE in 2008. In response to thisNZTE, HBRC, and VHB began working on a project to promote Hawke's Bay at the Shanghai Expo in 2010. Hawke's Bay commandeered the New Zealand Pavilion at the expo for a six-day period. Each day had an industry theme and was led by an organisation with a successful track record of doing business with China.

Outcomes

• Status: The participation of local government, represented by Hastings' Mayor Lawrence Yule, effectively communicated the status of the event.
• Appeal: Participants emphasized the strong appeal of the event. It was perceived as a unique opportunity by guests and consequently uptake of invitations was high.
• Enjoyment: The experience itself was felt to be highly enjoyable by attendees, with strong interest in the VHB regional promotional video and the cultural performances of the kapa haka groups. The catering was also complimented.
• Uniqueness: The Shanghai Expo presented a unique opportunity to entertain and inform Chinese partners in their own country in a distinctly New Zealand way.
• Queuing: As expected at a major global event it was necessary to spend considerable time waiting in queues and dealing with security.
• Climate: The Shanghai weather in August is unforgiving and issues with climate control in the pavilion during some periods caused discomfort.

HBW communicated a strong sense of identity to attendees. The New Zealand Pavilion conveyed a sense of the New Zealand experience whilst the VHB video and Hawke's Bay gift pack enabled guests to identify Hawke's Bay as a distinct and appealing region of New Zealand.

On an individual organisation level, the Hawke's Bay businesses that participated felt the exercise to be worthwhile. It enabled them to offer a unique experience to potential and existing clients, thereby communicating the high value placed upon their relationships with these organisations. Feedback from participants confirmed HBW as meeting the original objectives of the project, and the importance of building on this investment to develop the China market for Hawke's Bay businesses in general.

In terms of developing existing relationships HBW was highly effective. Businesses that invested in the initiative have reported continuing benefits to their China business, including better response times and a general sense that their business relationships have increased in importance from the perspective of their China partners.

Moving Forward

HBW at the expo has provided an insight into how a regional identity can assist local businesses to succeed in China, and how collective effort can produce outcomes that benefit business in the region as a whole. It is now necessary to build on these learnings by mapping out a pathway to China that will encourage the participation of a greater number of organisations. As a first step, it is important local businesses are aware of the resources that exist locally thatcan provide assistance in dealing successfully with China.

China Resource Guide

1. China is a collection of many markets defined by culture, language, geography, demographics, local government, developmental stage and numerous other factors at a micro level. LESSON: Clearly define a target market of a realistic scale. Large differences exist between markets and care must be taken to identify the market or markets that offer the greatest opportunities for your business.
2. Though clear differences exist between China and New Zealand on a number of levels, the similarities are many. Shared values based around national identity, family, friendship and the desire to prosper through business provide common ground on which to form bonds. LESSON: Focus on commonalities as a basis for building and strengthening relationships.
3. Relationships are extremely important and require considerable investment of resources to maintain and grow. The quality of relationships formed with local partners has a major influence on a company's ability to succeed in China. LESSON: Identify firms and individuals that can provide the assistance and networks needed to access the market being targeted. Avoid wasting resources on relationships that do not justify the investment of time and effort required to maintain them.
4. On a business level, basic principles of due diligence apply to China as to any other market. LESSON: Conduct thorough research on all aspects of a prospective partnership or deal and act accordingly.
5. Despite the considerable opportunities presented by China's sizeable and rapidly growing market it is complex and the potential for failure is high. LESSON: Draw on the experience of those who have achieved success and avoid going it alone. Local support is key and advice should be sought at all stages of the process.
6. Government and the Communist Party play key roles in all aspects of Chinese life. Though private enterprise thrives, official connections are essential to business success. LESSON: Look to leverage national and local government involvement to enhance credibility and status.

Links:

• NZTE has produced a comprehensive guide to navigating China that includes general information and tips on most aspects of doing business with Chinese firms in a Chinese environment: http://bit.ly/ih4imD
• Various other documents on China can be sourced via the Internet, such as this HSBC report that provides useful comparative data on provinces, cities, towns and villages: http://bit.ly/hAXsTa.
• For current information on China's economy consider subscribing to publications such as the China Economic Quarterly: http://bit.ly/cJNyCy or The Economist: http://econ.st/i8FuIE.

Doing Business with China

Trade with China can be divided into two main categories:

1. Importing:
 
Whether sourcing raw materials, individual components for manufacturing or complete products, Hawke's Bay businesses can benefit from the cost savings offered by China's scale and lower input costs.

Key considerations:

1. Scale: Look to purchase mass produced items rather than specifically tooled components. Adjust designs where possible. Consider opening moulds for large production runs where distinct design will add value.
2. Quality Control: An essential consideration with every shipment. Look to inspect each order prior to shipment and never assume acceptable quality based on previous deliveries.
3. Reputation: Carry out thorough research on new producers or employ trusted agents on the ground in China with established factory networks.

Links:

• Numerous websites exist that provide a gateway between Chinese manufacturers and foreign companies, such as www.alibaba.com.
• Alternatively speak to someone locally who can assist with identifying suitable factories and agents in China. The HB Chamber of Commerce holds a list and providers.

2. Exporting:
 
Ensure you have considered all the issues associated with exporting before investing resources in a China-focused research plan. Resources to help you determine your readiness for export can be found here: http://bit.ly/dLpxXh and here: http://bit.ly/eGEngH

Key considerations:

1. Offer Definition: Know exactly what it is that you wish to export. Think about its key attributes and what it means to those who use it. Know how much it costs and identify the value of each individual input.
2. Research: Begin with desk research. The most useful resource will be the Internet, but include other resources where applicable. Speak to people with relevant experience in-market andwho are working in similar categories. An assessment of the cost/benefit ratio of conducting ad hoc research can then be made.
3. Branding: Adopting a branding perspective helps define the offering and enables comparison with competitors in the same or similar categories. Doing brandwork also helps to understand how the offering will be perceived by its intended consumers and what it will mean to them.
4. Government Assistance: Investigate all avenues for government assistance. NZTE is charged with increasing New Zealand's foreign exchange earnings and as such offers a range of tools to assist local companies achieve export success.
5. NZ-China Free Trade Agreement: Become familiar with the parts of the agreement that arerelevant to your industry and the changes that will occur over time as the agreement develops.

Links:

• NZTE has a comprehensive range of online resources designed to assist New Zealand companies to achieve export success: http://bit.ly/aPTBm6
   
• They also have a regional office in Napier and can explain what assistance is available based on your export plan:
  HB Regional Office
  NZTE
  06 835 6245

The New Zealand-China Free Trade Agreement (NZ-China FTA) was entered into on 1 October 2008 and offers considerable advantages to New Zealand companies exporting to China:http://bit.ly/g9Fw4P. Information on how the FTA will benefit New Zealand businesses moving forward can be found here: http://bit.ly/eFSM1f.

Businesses that are currently manufacturing in or exporting to China can also be a valuable source of advice. Contact the HB Chamber of Commerce

For general advice on export certification and customs requirements contact the Hawke's Bay Chamber of Commerce on 06 876 5938

Summary

The strong growth in trade between New Zealand and China confirms this market's importance to the future growth of the economy. Export Hawke's Bay provides a number of services that can facilitate trade relations between local businesses and Chinese firms.

Ensure that you solicit advice from those with experience dealing with China at an early stage of your planning process. Good advice can help you avoid making costly mistakes and spending time inefficiently. Contact the Chamber for advice and access to a network of locally-based companies and individuals with China experience. We are here to help and encourage the growth of trade between Hawke's Bay and this market.