China’s Game-Changing Market: View from the Top Table
Cathy Quinn (Moderator), Chair, Minter Ellison Rudd Watts
The Chief Executives from Air New Zealand and Fonterra shared insights about:
- The current opportunities in China;
- Potential challenges when operating in China; and
- Game Changers in the Chinese market
Christopher Luxon was optimistic about the China opportunity despite concerns over China’s slowing economic growth. “We obsess too much on the macro-economic indicators in New Zealand,” Luxon said.
Luxon highlighted three market forces that are shaping China:
- Economic growth, and the rural-urban dynamic; and
- Social development
Air New Zealand is pursuing a marketing strategy to target the high-value end of the China market, specifically families and couples. The airline is using social media and celebrities to get the message out that New Zealand is a romantic destination.
However, Luxon raised concerns that our hotel infrastructure is insufficient for the growing Chinese tourism market in New Zealand, “there are significant opportunities New Zealand should be making the most of.”
Theo Spierings was also optimistic about the Chinese economy and highlighted opportunities from growth in the tier-three and four cities. “It’s going to be a different ball game, completely different,” he said. Spierings outlined five factors disrupting China today:
- Technology / e-commerce
- Ageing population
- Greater global connections
- Adjusted Government plan
“Success requires being your own disruptor, adapt to the changing times, disrupt the market, and spur innovation” said Spierings. He could not have encapsulated this message better when Spierings said, “In winds of change, you build walls or windmills – as a Dutch man, I know what I’m building”
Spierings spoke about Fonterra’s plan over the next five years, including an ambition to become a $10 billion business and a number one dairy player. Fonterra aims to achieve their goals by:
- Boost their online presence,
- Forming strong successful partnerships, and
- Establishing multi-hub assets connected to China in order to meet demand.
Rival New Zealand companies selling discounted infant formula in China, effectively competing amongst ourselves on pricing, isn’t doing the premium New Zealand brand any favours said Spierings.
Potential issues flagged during the session:
- The growth of Europe’s share in the China market – the ingredients business and infant nutrition players are increasingly turning towards Europe.
- The opening of foreign-owned manufacturing facilities in New Zealand, attempting to leverage brand New Zealand. Spierings said he wasn’t too concerned about this sort of competition.
Questions for our readers:
- Do you share the confidence of Luxon and Spierings?
- Does there need to be a concerted effort to invest in new tourism infrastructure in NZ to service the Chinese market – if so, who should lead this?
- Do you think the premium brand strategy is right for New Zealand?
- Are you concerned by Chinese owned dairy manufacturing in New Zealand?