China has a "seductive" lure for New Zealand businesses but small exporters may be better off targeting other Asian countries, a trade expert says.
John Lim, an adviser for the South-East Asian branch of New Zealand Trade & Enterprise's Beachhead programme, was in the country recently to talk to New Zealand food and beverage companies about doing business in Asia.
The Singapore-based businessman said Asia offered a huge opportunity because of its growing share of the international economy, rising from 18.3 per cent of global GDP in 1990 to a forecast 30 per cent in 2020. A big part of that growth has been in China, which overtook Australia as New Zealand's biggest trading partner last year. New Zealand exports nearly $10 billion per year to the world's most populous nation.
But Lim, who has had business connections with New Zealand dating back more than 30 years, said breaking into the Chinese market was not easy for most companies other than Fonterra.
"China is made up of many provinces and I think it's very difficult for any company to think of China as one market. Unless you've got unlimited capital you can't fund a big expansion into China.
"China is big and alluring and businesses can be seduced by it but if you're a company even in the $15 million to $20m range you may not be able to sustain investing for a few years with no return."
These companies looking to sell their brands in Asia had other options such as Japan, South Korea, Hong Kong and his native Singapore which were more developed and had higher incomes, Lim said.
"I think by and large Singapore is probably the easiest south-east Asian market to get into. It's very cosmopolitan, the people speak English and it's well developed."
Kiwi food and beverage products were well perceived by consumers as being of good quality, safe and environmentally friendly.
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