20 Jan 2016

Exporters not fazed by China slowdown

5:59 am on 20 January 2016

New Zealand companies are not panicking about China's slowing economy, saying Chinese consumers' appetite for what they're offering remains undiminished.

Zespri Kiwifruit is loaded onto the Atlantic Erica at the Port of Tauranga.

Zespri kiwifruit is loaded onto a ship at the Port of Tauranga. Photo: Supplied

China's economy grew by 6.9 percent in 2015 - its slowest rate of growth in 25 years.

With its soft property market, weak exports and overcapacity in its factories, some fear that China's economy, the world's second largest, is rapidly deteriorating.

While China's economy might be slowing, Chinese demand for New Zealand kiwifruit is not.

Zespri chief operating officer Simon Limmer said China remained its fastest growing market.

He said Zespri put 50 percent more fruit into China last season, and it was aiming to do the same again.

"We're watching the potential downturn in the economy quite closely, but I think it's really hard to generalise when you're talking about such a massive and complex economy as China," Mr Limmer said.

"And, really, we're looking in the area that we compete in, still really strong demand for good, high-quality, healthy food products and products that can be trusted."

Keith Woodford is an honorary professor of agrifood systems at Lincoln University and an expert on the dairy industry.

He said it was important people distinguished between the Chinese economy and consumer spending there.

"The numbers that I'm seeing are that [Chinese] consumer spending has still gone up by a little more than 11 percent last year," Dr Woodford said.

"So, as long as you're in the right products that Chinese consumers want, you're OK.

"If you're in the old economy, which is based around some of the commodities, the iron and the steel and these types of things. it's not quite so good."

Infant milk formula cans

A canning facility for infant milk formula, which is one of the New Zealand dairy industry's exports to China. Photo: SUPPLIED

Dr Woodford said, given the New Zealand dairy industry's huge focus on whole milk powder exports, falling oil prices were as much of a problem as Chinese demand.

"The rest of the world has gone quiet on whole milk powder as well, and some of that is actually directly related to the lower oil price - because a lot of the countries that were buying our whole milk powder are actually countries that depend on oil to find the money to pay for it."

New Zealand China Trade Association chairman Martin Thomson said China was rebalancing its economy with a greater focus on consumer consumption.

Mr Thomson said this would be good news for New Zealand exporters in the long run.

"I mean, I think in the current environment there is still strong demand for the bulk of products that New Zealand supplies... There's a lot of very positive stories with products in high demand in China and driving growth in a lot of other sectors."

What about tourism?

There has also been no let up in the number of Chinese tourists visiting New Zealand.

Tourism Industry Association chief executive Chris Roberts said Chinese visitor numbers were growing 35 percent annually.

"Huge increase in visitors from China - we've seen double digit growth for a number of years but it's really picked up pace in the last year or so - so a real boom time for visitors from China.

"We are well over 300,000 visitors a year now from China. It's clearly our second biggest market behind Australia. It's raced past the USA and the UK in the last year or two."

Mr Roberts said New Zealand was one of the most desirable destinations for Chinese travellers and he did not believe the country's slowing economy would stop them coming.

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