What Chinese wall?

MICHELE ONG
Last updated 05:00 15/02/2014
Icoco/Incafe coffee full
ROBERT CHARLES

Icoco/Incafe coffee factory, on Hurlstone Drive. Managing director Joop Verbeek, left, and business mentor Justin Chen.

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With China playing an increasingly dominant role in the world's economy, Michele Ong talks to Taranaki businesses about their experiences with the Asian powerhouse.

New Plymouth's Peru Cafe may be the smallest kid on the Cody Place industrial block but it is busy grinding coffee beans for the world's fastest growing economy - China.

Last year, China knocked Australia off its perch of 24 years as New Zealand's top export destination, with $48.1 billion worth of goods shipped there.

In the same year, exports leaving Port Taranaki for China totalled $115 million.

Our cultures are very different, as are the languages. But Taranaki business believe the Chinese are very easy to deal with. Deals can be made over a few drinks. Or even a coffee or two.

Like the one served up at Peru Cafe. When the Daily News arrived for a chat, the Bell Block roastery was alive with the smell of fresh coffee and the cacophony of whirring machinery.

The jug was immediately popped on, coffee cups propped on the table, and a fruit cake served by its managing director, Joop Verbeek , before he settled around the an oblong table with business partner Justin Chen.

Chen is one of the directors of South Taranaki business JCNZ Focus, a trading company established in 2011 to facilitate business between New Zealand and China.

The company works in partnership with the South Taranaki District Council to help run its sister-city office in Harbin, which is provided rent free by the Harbin City Government.

STDC says this is to ensure the running of the sister-city office will not cost ratepayers a single cent.

Chen is also the vice-president of the Guangzhou Chef Association and the combination of his knowledge of both China and New Zealand make him an ideal business partner.

When dealing with the Chinese, relationships are "very, very important", otherwise doing business can be difficult, Chen said.

However, trading with them is a lot easier once the foundation has been laid.

Verbeek said China is a young coffee drinking nation and the company made its first trial shipment of 400kg of coffee last year.

"The country is still educating itself on coffee," Verbeek said.

"On one hand, we try to access the high-quality oriented customers and on the other hand, we try to educate the public on coffee drinking."

Peru Cafe plans on exporting 100,000kg of coffee to South East Asia and Australia this year, with a small fraction going to China.

Verbeek said it was about slowly developing the Chinese market in a "controlled manner".

"We are developing more market penetration in some smaller surrounding countries with a more advanced coffee culture so we can take the lessons learned to China," he said.

The Asian countries were "exciting prospects" for high-end coffee providers.

"They use relatively little milk and are more focused on the true taste of coffee," he said.

Chen said China's coffee culture was mostly dominated by the younger generation, their taste for the brew cultivated during their student years spent overseas.

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The younger, highly educated generation are very health conscious and hold New Zealand's quality food and beverages in high esteem, Chen said.

Dairy, meats, manuka honey and seafoods such as the green-lipped mussel were highly sought-after by Chinese diners.

Quality is hard to reproduce and that was how electronics company Precision Microcircuits ended up supplying China with ceramic thickfilm heaters, used as power regulators in kitchen stoves.

Housed inside a double-storey beige tiled building, nuzzled on the slopes of the Egmont National Park, with Mt Taranaki in the backdrop, the company generates a large percentage of its revenue from exports to China.

Managing director Rob Carruthers said they had supplied to China for over a decade and attributed Taranaki's "clean air environment" as an important part in their manufacturing process.

About two million thickfilm heaters are supplied to China every year.

"We are lucky we have a quality dependent product," Carruthers said. "We cannot beat them on price but we can beat them with quality."

Business deals were negotiated over endless trips to restaurants and rounds of beers.

"The Chinese really appreciate the face-to-face contact and it's all about relationship for them."

Not being able to speak the language can be a challenge, "but China's pretty cool, English is taught is most schools now".

"When you walk down the street, you stand out.

"You get kids coming up to you and say 'hello', 'hello', they just want to practise their English with you."

A trip to China is planned for next month to further build on the business relationship already in place.

He also said he did not see many barriers in trading with China apart from the language differences.

"Some of the good relationships we had with the people over there are probably better than the business relationships we had in New Zealand," Carruthers said.

"It's just more important to the Chinese to have a good relationship and trust and honour is important."

Carruthers said the company was very proud of its continuing business in China.

Opunake businessman Steve Corkill, of Corkill Systems, has been importing from China since 1987 and is so at ease trading with them, he does not think about the differences that exist between the two countries.

In the last three years, Corkill has also been exporting automation equipment components to go in a kitset container for assembly on site on dairy farms in China.

"We've been doing this in small numbers, maybe three sets per year," Corkill said.

Doing business with China has been getting easier over the years, he said.

"Internal travel is much improved, more people speak English, credit terms are less cumbersome," he said.

Corkill also said the Chinese were now "more open" to smaller numbers. "The Chinese people find it hard to comprehend that the entire New Zealand population is less than their average city population, therefore our order sizes are very small."

He particularly enjoys working in Fujian and Zhejian provinces as its residents were "very friendly, social and accepting of foreigners".

"I find the Chinese culture more similar to New Zealand than that of other Asian countries," he said.

Corkill also said the Free Trade Agreement signed with China in 2008 gave New Zealand "a lot of respect" or "face".

In a country where relationships, or guanxi, are highly priced, fostering sister-city ties on local government levels are important.

Taranaki Chinese Association president Betty Leung said the idea behind the sister-city relationship was to both promote the local economy as well as help businesses break into the Chinese market.

The local governments played a central role in facilitating an ongoing guanxi with China, she said.

Maintaining the relationship can seem like a waste of money if people don't understand the mechanism behind it.

"But you see those who got into the Chinese market, they realise how hard it is to get into it," she said.

"How many meals they have with officials and how many bottles of wine they drink together."

Leung said "many, many contracts" were signed at dinner tables.

"If you go straight into the office and ask to sign a contract, that's not going to happen."

South Taranaki mayor Ross Dunlop said sister-city relationships were held in high regard by the Chinese and they had helped project New Zealand in a positive light.

Dunlop said South Taranaki's ties with Harbin had resulted in a higher profile for the district in northern China.

"Just last year, a Chinese television crew from Harbin State TV came here and did a feature on South Taranaki, which reached an audience of over 10 million people," Dunlop said.

South Taranaki sets aside $5000 a year to maintain its Chinese ties.

"I believe it's definitely worth pursuing," Dunlop said.

"China's the world's second largest economy, has the world's largest population with a steadily rising standard of living and is now New Zealand's largest export market. It would be foolish to ignore this."

New Plymouth mayor Andrew Judd said the council would carry on its sisterly-ties with Kunming, despite his earlier pledge as a then- mayoral hopeful, of ending the relationship.

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FREE TRADE FACT

The Free Trade Agreement was signed between New Zealand and China on April 7, 2008. The FTA was a treaty between New Zealand and China that liberalises and facilitates trade in goods and services, improves the business environment and promotes co-operation between the two countries in a broad range of economic areas.

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- Taranaki Daily News

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