China No Longer Just A Commodity Story - Luxon
China remains New Zealand’s biggest market, taking $23 billion of our exports, but it’s no longer a commodity story, says Prime Minister Christopher Luxon.
Li says China's infant formula market is on the decline and a new market, with hundreds of millions of more potential customers, is emerging.
And New Zealand is in the box seat to cash in, she says.
An aging population in China means demand for milk nutritional products is increasing.
She says this creates the potential of New Zealand farmers to build the "Tesla of Milk" in the coming years.
Li says New Zealand dairy farmers seeking better returns from the Chinese market must act now.
To help convey the situation on the ground in China, Li and her partner Simon Page are organising a series of online presentations. Li and Page opened 100 retail stores in their last China venture.
They are keen to tell farmers why milk nutrition in China is the most exciting opportunity for NZ dairy and how farmers can be part of it.
"It is a presentation to farmers, open to all, but specifically for dairy farmers, whether cow, goat or sheep," says Li. "It is about what we see as a new era of growth emerging in the China market and the opportunity that we see for NZ to really capitalise if we act now."
China's birth rate is dropping and the Chinese Government has been pushing breastfeeding.
Li claims breastfeeding rates in China have tripled in recent years. This is also signalling an end to the infant formula boom of the last two decades.
At the same time Chinese aged over 50 are seeking better milk nutritional products to stay healthy and live longer.
Li thinks it is past due to move beyond discussions around "value-added" because it tends to lead us to focus solely on products, and instead start talking more about the types of companies that we need to build in order to compete in China and the world.
"Tesla is often cited as a model for disruption, some might say too often, but I think it is a great company to use in discussions around how to be more competitive because much of what they have done can be applied to almost any industry, including even NZ dairy.
"For instance, they make premium, highly innovative products, but they have also innovated their business model across the entire supply chain as the only direct-to-consumer car manufacturer.
"They represent the ultimate in 'value-chain thinking' and we believe it is that type of thinking that can help NZ dairy win in highly competitive but highly value markets like China."
Li says while there have been government initiatives around fostering productivity and unlocking "added-value", from a commercial standpoint, it doesn't often make sense.
"Instead of more discussion on cooperation across the industry we need more action and we think that now is the time to take action to start building those 'Tesla of Milk' type companies."
