Crafar buyer eyes more Kiwi land

JOHN HARTEVELT

The multimillionaire Chinese investor behind a successful bid for the Crafar farms has another purchase already lined up and being considered by the Government.

Jiang Zhaobai, counted among the 400 wealthiest Chinese, was given ministerial approval yesterday for his Shanghai Pengxin global conglomerate to buy the Crafar farms.

The deal is likely to face a judicial review before it is finally signed next week, but Prime Minister John Key said yesterday the bid "well and truly exceeded" legal requirements.

"The Overseas Investment Office quite clearly correctly interpreted the legislation," Mr Key said. "The reasons [to decline] can't be simply because you come from China. The reasons would have to be genuine reasons which show that they're in breach of the New Zealand regulations."

Milk New Zealand, a company set up by Pengxin, will enter a joint venture with Landcorp to run the 16 farms, which are spread through the centre of the North Island. The farms represent more than 10 times the size of the average dairy farm.

The OIO said Mr Jiang had already committed cash in two deposits on the farm sale and promised to sink a further $14m of capital investment into the business. At least $100m was also planned by Milk New Zealand to promote Kiwi dairy products in China and elsewhere in Asia in the next five years.

The OIO was also processing a bid from Mr Jiang as part of a joint venture trying to buy "development land" in New Zealand.

Cedric Allan, spokesman for Milk New Zealand, said Mr Jiang's other planned investment was "nothing to do with farming" and worth much less than the Crafar deal.

"It is a real estate development and I can't possibly imagine it would be controversial in any way," Mr Allan said.

"What it illustrates is the company has a genuine interest in New Zealand ... They have a continuing interest in opportunities in New Zealand and this is one of them. But it's a million miles away from the Crafar farms."

An application for the real estate purchase had been with the OIO for some time, Mr Allan said.

"I don't believe the second one is going to raise any eyebrows. It's just a particular property being purchased with a view to being further developed – it's as simple as that."

Mr Jiang, the 99 per cent shareholder of the company that holds Pengxin, is already registered as a director in two New Zealand companies. He is a co-director with Aucklander and friend Terry Lee, in Nature Pure.

Mr Allan said Mr Jiang liked to holiday in New Zealand but he did not think he owned any property of his own here.

The Crafar purchase was described by the OIO as the start of Pengxin's planned dairy operations in New Zealand.

"It [Pengxin] intends to identify New Zealand dairy processing and development operations which may be appropriate for partnership type arrangements," the OIO recommendation said.

Since all of the legal requirements were met in the bid, a denial would be "likely to send a negative message about New Zealand's attitude towards Chinese investment" and about its commitment to the free trade agreement with China.

Mr Key said overall foreign ownership in New Zealand farmland was about 1 per cent, but the Campaign Against Foreign Control of Aotearoa said the proportion of productive land held by foreigners was as high as 7 per cent.

"The prime minister is stressing quantity when the key factor is the quality of the land being flogged off overseas," the group's secretary, Murray Horton, said.

"Foreign buyers are cherry-picking, not buying the rubbish – that's left for the locals."

THE CRAFAR FARMS DEAL

UPSIDES

Direct and indirect job opportunities created.

Additional $14 million in capital investment in the farms, improving production and therefore export receipts.

A new on-farm training facility for dairy farm workers established.

Protection and enhancement of native flora and fauna.

Further commercial relationships with China created.

New marketing opportunities for New Zealand in China.

DOWNSIDES

Land ownership passes from a 100 per cent New Zealand entity to a 100 per cent Chinese one.

New job creation likely to be modest – probably only five to eight new positions.

No direct injection of new technology.

The extent that new capital will contribute to development is not clear in some instances.

THEY SAY:

FOR

"The Chinese are long-term players. They're not here to try and pick up a quick capital gain by buying something cheap. They come in for the long term." – Milk New Zealand spokesman Cedric Allan

"We should see this for what it can be, which is a positive for some farms that were very badly run ... that didn't meet environmental conditions and were in [receivership]." – Prime Minister John Key

"The acquisition of the land is likely to benefit New Zealand as a whole and in particular the Waikato, Manawatu, Taranaki and Central Plateau regions." – Overseas Investment Office recommendation

AGAINST

"The lily is being gilded by the announcement that Landcorp will manage it on behalf of the Chinese buyers. Everyone knows that there is the world of difference between being the owner and the property manager." – Campaign Against Foreign Control of Aotearoa secretary Murray Horton

"We cannot sell our way to a brighter future, yet this Government seems determined to do exactly that." – Labour leader David Shearer

"Today a great wrong has been done to New Zealanders. Our land is not just a commodity, it is a living, breathing part of our history, our culture, and our people. We just sold a piece of ourselves." – Maori Party co-leader Pita Sharples

"As food prices rise globally, selling off our productive land ... to overseas bidders is economic folly." – Green Party agriculture spokesman Steffan Browning

" Our country is being run for the benefit of foreign companies and the international money industry." – NZ First leader Winston Peters

WHAT IS PENGXIN?

Shanghai Pengxin is a Chinese conglomerate, set up in 1997.

It has interests across more than 40 subsidiaries worldwide in real estate development, mining, infrastructure and agribusiness.

Its total assets are worth more than $2.46 billion.

Pengxin is believed to receive discounted credit from the Chinese Government.

In New Zealand, Pengxin is behind Milk New Zealand Holding Ltd.

Director of the company is the Shanghai-based Jiang Zhaobai, who is listed in the Forbes 400 wealthiest Chinese businesspeople.

- © Fairfax NZ News