Strong wool eyes China
China looks set to play a key role in helping the New Zealand wool sector shift away from trading as a commodity supplier.
The report shows that of the $26.3 billion invested in NZ in the past two years the Chinese have invested $1.3b in dairy and milk processing.
While China is still a big investor it falls well behind the US, Canada, Australia and Europe and only just heads off Singapore. In land purchases, again the US (40%) heads the list, then comes Europe (14%) then China (13%).
Yes, China is a big investor in NZ, but it is not the biggest.
Perhaps China’s liking for our high profile, and quite sensitive, dairy industry is the cause of the feathers – especially political – getting ruffled.
Have Kiwis an inherent fear of China? This will suddenly switch to the US if Donald Trump by some amazing streak of stupidity gets elected as president.
We have not reacted to British investment after seeing that country doing itself bewildering self-harm by voting for Brexit.
Look at our neighbours Australia. A wave of Chinese investment in agriculture, housing and public infrastructure assets has also caused concern. Last year Canberra reduced the threshold at which purchases by foreign investors of farmland must be cleared by regulators from A$240m to A$15m.
New Hope is one of dozens of Chinese companies that have invested in Australia’s agricultural sector over the past few years. Chinese companies now own about 1.5m hectares of farmland. While that is less than 0.5% of Australia’s agricultural land, polls show rising public angst over sales of land to Chinese companies. In response, authorities have tightened foreign investment rules and this year blocked the proposed A$370m purchase of Kidman & Co by Shanghai Pengxin Group.
The KPMG report shows overseas investors view NZ agribusiness as a good place for their cash. They are not obliged to put it here, they can easily go elsewhere.
They target the dairy industry in particular, well ahead of forestry and wine and, to a lesser extent, sheep and beef.
If NZ is to produce high value niche products, it needs capital but the pool of capital here is insufficient to advance the cause.
Kiwis should be pleased that others can see opportunities for us to refine our base products and make them the Louis Vuitton’s of the food industry.
NZ still finds it hard to get away from producing commodities, sadly still lording that aspiration – a hangover from the days of the ‘number 8 wire’ mentality. Fred Dagg had it right: “we don’t know how lucky we are mate”. Right Trev?
