Why New Zealand exporters need not fear China's focus on growing domestic food security

In recent years China's shifted to focus on growing its domestic food production, creating competition for New Zealand exporters in one of its largest markets.

Primary Collaboration New Zealand is an incubator company helping New Zealand businesses navigate China - and includes ANZCO, Silver Fern Farms, Synlait and Rockit.

Chief executive David Boyle said in recent years there had been increased local efforts by China to gain control of food supply chains - it started in 2017 and has intensified under US President Donald Trump's second term.

"America's strong drive towards its own nationalistic policies has meant that China has read the signs and said 'we have to become more self-sufficient'," he said.

"So in that light, they've made a very strong push into beefing up their own food supply chains in terms of grains, rice, dairy which has impacted us, beef and lamb. They have a very strong poultry and pork domestic supply."

He said these areas had been bolstered aggressively over the past 5 to 10 years.

Felicity Roxburgh, executive director of the NZ International Business Forum, said any change in policy by such key market partners is watched closely by both government and exporters.

"It's important to look at this kind of shifting focus on improving domestic food production in China as part of the kind of broader environment that we're working with at the moment internationally. And there is a kind of global shift, including in some of our largest trading partners, towards more of a security and resilience approach."

She said China had been our largest trading partner for many years and is a big importer of dairy, meat, kiwifruit, and other horticulture products.

"China is an important market for us."

She said China had the scale to grow some of those products quite well themselves but there were limitations.

"Just the scale of the population, some of the domestic constraints around land use and water mean that imports will remain important.

"What it means for us is that we just have to keep investing in our strong premium products, our specialised products, where we can kind of genuinely differentiate ourselves and just play to that important consumer trend."

Exports to China hit 10-year highs

Results from the most recent New Zealand business roundtable's survey about sentiment in China found about 60 percent found domestic competition was their biggest challenge - despite this though sentiment was growing, with the outlook improved from last year.

David Boyle said while competition has intensified and made business harder, there's still appetite for high quality New Zealand produce and last year's total exports - worth $21 billion - were the highest they'd been in 10 years.

He said exporters have become more targeted about how and who to sell - and it was important to be on the ground to understand consumers and changing trends.

"It's a huge, huge market and so we have to pinpoint exactly where we're going to sell."

Amidst increased competition in the Chinese beef market - with New Zealand only the fourth biggest of the international importers accounting for about 6 percent of total beef import volumes - Boyle said New Zealand exporters had built much stronger, fresh and chilled supply of beef and lamb into China over the past 18 months.

By comparison though, New Zealand is the largest exporter of apples into China.

"There's a very large domestic growth of apples and large supplies of Envy, but our premium apples have found really good markets at the top end of the retail and high-end offline retail and also online too. We're targeting that high premium area of sales for our fruit and it's been very successful."

Localising content

David Boyle said there was still a very healthy appetite for high quality New Zealand produce.

"What the international importers have been doing is they've been localising their content. What our brands have done is affiliate with Chinese characteristics, Chinese language, Chinese packaging, and therefore they've been able to prosper."

He cited Rockit's recent brand partnership with Wang Yibo - one of China's most influential celebrities - as an example.