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Why China Might Be Your Next Business Opportunity

11 April 2018 / Published in Business
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It’s a great big world out there. As technology continues to make it easier to connect, opportunities abound for kiwi businesses who want to take their offerings global. There is one place though that many still shy away from due to its intimidating size and challenges. But for those brave enough, China can offer great rewards worth the risk. Here’s a few reasons why you should consider China if you’re looking to expand internationally.

1. Consumption Growth

China’s growth may have slowed in recent years, following its high in 2007, but the quality of growth has improved as the country transitions from an investment growth model to a consumption growth model. Further, China’s burgeoning middle class means demand has increased along with incomes. Consumption now accounts for roughly 60% of China’s GDP growth.

2. Increase in disposable incomes

As incomes continue to grow in China, we are likely to see consumption patterns change. For example, as people get richer their spending patterns change, and they have more money to spend on consumer items. Trends suggest that fitness, health and nutrition are the current winners of this additional expenditure.

3. Opportunities here and there

China presents a cluttered consumer market and it is important that kiwi businesses stand out from the crowd. Offering something different or tailoring to a specific niche is essential. Over the past year, the value of New Zealand wine exports to China lifted nearly 50%, despite accounting for less than 5% of the value of all of our wine exports. Our wine is a unique product, something different, and the demand for it has grown in China as its population has grown wealthier.

Concurrently, according to the China National Bureau of Statistics, a person’s spending on housing tends to increase as their income lifts. If incomes are expected to keep growing, then housing demand could well grow alongside it. This could be one element of why 50% of our forestry exports now go to China.

This isn’t all we’re sending their way. Since successfully concluding Free Trade Agreement negotiations in 2008, China has grown to account for 20% of New Zealand’s exports by value. That’s the largest share of any single market. In 2017 alone, NZ’s trade surplus with China was $3.6 billion. Of course, we’re not just sending things over. They’re coming over here too, with 400,000 Chinese tourists visiting NZ in 2017 (11% of all tourist arrivals). And on top of the high number of visitors, Chinese tourists are the second highest spenders per day, second only to Americans. This presents an opportunity for business owners to introduce their products in a local environment.

There’s real potential here for exporters. China is a vast economy where both incomes and consumption are continuing to grow, and, as its population continues to show more and more love for kiwi products, there are opportunities to be had. If you’ve ever considered selling into an overseas market, or expanding on your existing ones, now might be the time to tackle China.

This document does not have regard to the financial situation or needs of any reader. As individual circumstances differ, you should seek appropriate professional advice.

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