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Understanding our asian customers.

Executive Summary

In the last decade New Zealand (NZ) agricultural exports to Asia have increased 71% to NZ$6 billion, and China is now the largest of these Asian markets. This growth is set to continue as the Asian economies continue to outpace those of the US or Europe. An increasing proportion of Asia’s large population will develop internationally competitive purchasing power, and consumers will be more able to afford the safe, high quality and innovative foods that NZ agriculture is capable of producing. In order to sustain the highest possible returns, NZ agriculture must understand how to delight these customers so they continue to demand NZ products.

This report details two Asian markets; China and India which were chosen as large, diverse and complex markets with growing economic influence.  Importantly they are commonly considered by New Zealanders as representing emerging future market opportunities. Japan was visited as part of the study but is a mature Asian market with which NZ has long-standing trade relationships. As such it has not been detailed in this report. Through analysis and review of relevant literature, market reports, in-market interviews, visits to relevant successful NZ agribusinesses, and a small-scale consumer survey, this report outlines key market advantages, challenges and high level solutions for engaging in China and India to create sustainable and profitable future markets for NZ agriculture.

China is described as NZ agricultures number one market for the next century due to its on-going economic strength, population dynamics and Government policy direction. The NZ China Free Trade Agreement (FTA) and NZ’s reputation for high standards of food safety represent key market advantages for NZ agriculture in China. However, the market challenges in understanding and engaging with Chinese customers include language and cultural barriers, low purchasing power parity (PPP), the existence of many complex, dynamic and diverse submarkets, rapidly changing demographics and consumer preferences, competition, NZ’s lack of capital and scale, and Chinese Government processes.

This report proposes four key solutions to the challenges identified for China:

  • Get closer to the customer with product support strategies and understand NZ’s value proposition
  • Build relationships, commit and take a long term view on China
  • Consider a ‘One World’ or international approach to extend the value chain
  • Get clear on strategy and focus attentions on this key market

India represents a significant potential market for NZ agriculture worthy of development and investment; however it is currently a much smaller market than China. Market advantages identified for NZ agriculture include consumer preference for dairy products and sheep meat, an impending NZ India FTA, and an existing ‘brand NZ’ presence through international cricket. Market challenges outlined include significant agricultural tariffs, low PPP, diverse culture and taste preferences, low beef consumption, lack of significant cold chain and modern retail infrastructure, bureaucracy and consumer demographics. For India, the four key solutions suggested are:

  • Encourage the signing of a NZ India bilateral FTA
  • Understand the consumer and adapt products to suit their preferences
  • Extend the value chain with a ‘One World Approach’
  • Develop a clear strategy and take a long term view.

Understanding Our Asian Customers – David Campbell

Farmer adaption to change with the threat of regulation.

Executive summary

Over the past decade, water quality has become increasingly important to the New Zealand public.  The effect of 150 years of clearing land, developing and intensifying agriculture is taking its toll on the environment.

Agriculture and tourism are among NZ’s largest export earners bringing in $22.3 billion (Statistics New Zealand, 2011) and $22.4 billion NZD respectively in 2008 (Statistics New Zealand, 2011).

New Zealand has built a reputation on the uniqueness and pristine nature of the country. This ‘clean and green’ reputation has been estimated to be worth $80 million dollars per annum to the agriculture and tourism industries. To strengthen New Zealand’s ‘clean and green’ brand may not lead directly to obtaining additional markets but it will help to maintain New Zealand’s current markets that.

Not only is water quality important to attract tourists and for export markets, but it is important to local communities. Rivers and lakes provide not only a source of food and recreation for many New Zealanders, but are a source of national pride. However, increasing nutrient loadings has led to a steady decline in the quality of these waterways and has resulted in an increase in the occurrence of algal blooms and decreased water clarity.

In response to this, the NZ government has made a clear statement that actions need to be taken to address water quality issues. This has been incorporated into the 2011 National Policy Statement on freshwater. As a result, this will require Regional councils to develop a plan to address declining water quality in their regional policy statements. It is therefore inevitable; change is coming!

Farmer Adaption to Change with the Threat of Regulation – Nicola Waugh