12 Apr 2010

Chinese dairy investment 'will deliver benefits'

6:27 am on 12 April 2010

The Auckland director representing a Chinese company which wants to buy one of the country's largest farm holdings has spoken out for the first time to stop what she calls media misinformation.

In a statement on Friday, May Wang said the investment would deliver huge long-term benefits to New Zealand's economy.

Ms Wang is a principal in Hong Kong-listed Natural Dairy Holdings. A company in which it has a 20% stake and intends to acquire outright, UBNZ Assets Holdings, has applied to the Overseas Investment Office for approval to buy 29 Crafar Family farms currently in receivership.

Ms Wang said the company was raising capital for the venture in Hong Kong because it knows that market and because it's much larger than New Zealand's market.

"This means we can raise, if necessary, up to $1.5 billion for the acquisition of dairy farms in this country," the statement said.

"We have begun with the application to purchase an initial holding that comprises the 29 Crafar farms."

Farms 'will be run by New Zealanders'

If the company gains Overseas Investment Office (OIO) approval it will continue raising capital in Asia to fund more acquisitions.

Ms Wang said fear that foreign ownership of some dairy farms will mean a loss of benefits to the country is misplaced. Any farms purchased will be run by New Zealanders.

Natural Dairy will buy the remaining 80% of the shares of UBNZ, after OIO approval, as the project proceeds, the statement said.

On her business history in New Zealand, Ms Wang said her Dynasty Group of companies collapsed owing money to about seven banks and finance companies.

She said the shortfalls related to property projects that were hit by the credit crunch and property market collapse, and "I do not believe my previous business difficulties should be used against a project that will only bring benefits to this country."

Distribution network

Ms Wang says her company can distribute dairy products to at least 24 major Chinese cities.

She says Natural Dairy's expertise lies in packaging and distribution in China, and it intends using New Zealander's with dairy industry experience to build its life milk and infant formula business here.

Fonterra argues the threat of overseas interests buying up large numbers of New Zealand dairy farms and competing with it for milk supply is a driving factor behind its capital restructuring programme.