China offers big opportunity for agribusiness - researcher

JON MORGAN
Last updated 05:00 05/11/2012

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New Zealand agriculture companies have a great opportunity to grow their businesses in China, according to a Victoria University researcher.

Jason Young, a lecturer in political science and international relations, has a $345,000 Marsden Fund grant to study New Zealand investment in rural China over the next three years.

He will make case studies of Fonterra's five-farm operation in Hebei province and of a New Zealand demonstration farm that has attracted Maori interest in Guizhou.

"The Chinese are trying to maintain food security so they are not too reliant on outside food sources," he said. "But they realise they have to modernise their farming, so they're welcoming outside interests, particularly from New Zealand, to bring them modern techniques.

"It's a great opportunity for New Zealand agribusiness to become part of what is a rapidly developing sector."

Even though China's agriculture sector was still based on small subsistence farms it was changing quickly.

"New Zealand has this opportunity now with its good relations and with the Free Trade Agreement giving us privileged access to investment in China, but that won't be there forever. Domestic companies are growing and foreign companies are also heavily investing in farming in China."

He wanted to study businesses that set up their own operations in China, rather than those that traded from a distance.

"It will be an interesting case study of how New Zealand agribusinesses operate in developing countries, the challenges, the lessons learnt, what role they play, and how local businesses and government view their role, how they co-operate with them and how they link up.

"It's very much exploratory research into how this practice works, how effective it is and whether or not there are any lessons, or models, for other agribusinesses to learn, so they can go to other emerging markets and develop businesses there." What he hoped to find with the Fonterra study was how the dairy company's use of international best practice interacted with China's land system and how it moderated its operations to be more relevant to Chinese circumstances while at the same time maintaining high food safety standards and introducing new technology and ideas.

Part of the project would also be to understand better the challenges for agricultural development in China. "They've got some major challenges moving from family subsistence farming to a more modern, hi-tech system with good food safety standards that can provide high quality food to an increasingly affluent middle class."

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He wanted to condense the experiences of Kiwi firms in China into a format that would be accessible to others wanting to invest.

- BusinessDay.co.nz

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