Preparing For China

The opportunities arise from rapid economic growth in the world's largest market and the availability of a cheap manufacturing base from which to sell to China and the world. From a manufacturing perspective, China in the long run will be distinguished by its overall business strength and structure, including the huge investments made to ensure China has a modern competitive manufacturing sector.

New Zealand businesses need to be clear about whether they want to sell or manufacture in China. Long-term, China business strategies shouldn't be based on the availability of cheap labour - this is disappearing as China becomes wealthier.

In 2007 China had 106 US dollar billionaires - more than any country other than the USA. There were just 15 in 2006 and none in 2002.

A new generation of consumers is emerging in China - they are young, well educated and familiar with non-Chinese cultures. This 'Y generation' of 240 million, born between 1980 and 1990, is now the highest earning age group in the country and is looking for a new way of life.

They typically live in the major cities on the Eastern seaboard of China and in particular in Beijing, Shanghai, Shenzhen and Guangzhou where GDP per person is now over US$5,000 but corresponds in Purchasing Power Parity terms to four times that amount.

Grant Walsh, a Kiwi businessman with 10 years' experience in China, says if his food business wasn't located in China he wouldn't be able to give the levels of service or meet the volumes demanded by customers. "I think it's really that simple."

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