Although opportunities abound, senior business reporter Simon Hartley talks to Otago Chamber of Commerce president and Craigs Investment Partners broker Peter McIntyre as to what that means for private and stock exchange listed companies.
Reforms announced this month in China - as it moves further towards becoming a market-driven economy - offer different opportunities for private companies and investors in listed companies.
Aside from the moderation of the one-child policy, reforms in the finance sector and the real estate, fiscal and pension systems came out of the China Communist Party's 18th congress a fortnight ago.
A survey just released by business consultant Grant Thornton found 90% of New Zealand businesses consider Asia as having the greatest impact on our economy in the next three years, be that positive or negative, with many concerned about having only limited knowledge of global markets and worried about exchange-rate volatility.
For Dunedin-based Otago Chamber of Commerce president and also Craigs Investment Partners broker Peter McIntyre, the opportunities are a two-sided coin, both sides of which have to be scrutinised carefully.
As chamber president, Mr McIntyre said the Dunedin City Council and the chamber had, over 20 years, built up reciprocal chamber and local government contacts in Shanghai, which were now bearing fruit.
''There has never been a time of more thrust from Chinese investors looking to New Zealand, and for us to be looking at them,'' Mr McIntyre said.
He acknowledges there has been criticism in Dunedin over the time taken for the sister-city relationships to become bedded in and show tangible rewards, but says that is how Chinese businesses gauge trust.
''Yes. It has taken a while, but having those contacts [now] is crucial. Between the council and chamber, we know who to talk to, where to go and match them off,'' Mr McIntyre said.
''Businesses have to never look at China as a whole, not as billions [of potential customers], but identify one suburb or area in Shanghai,'' he said of the sprawling city of reportedly 22 million residents.
On the question of listed company investment in China, Mr McIntyre there were several options, from index and managed funds through to New Zealand- and Australia-domiciled listed companies with trading exposure to China.
''Index trends and market performances are still showing plenty of growth. Even though China's manufacturing index dipped last week, the economy is still working away at accelerated rates,'' he said.
Funds included the iShares FTSE/Xinhua China passive index fund, or JPMorgan Chinese Investment trust, an active manager, through to companies such as Auckland International Airport, Sky City, A2 Corp, Port of Tauranga, large Australian mining companies or, globally, Nestle, Unilever, Reckitt Benckiser or Diageo.
He said although annual dividend growth was not expected from the funds, they offered a greater spread, and therefore reduction in risk, while with listed companies, the stock offered potentially better annual income.
''If investors are looking to hold for the long term, the potential for dividend growth can smooth out the fluctuations,'' Mr McIntyre said.
Grant Thornton New Zealand partner Greg Thompson said while small to medium enterprises in New Zealand formed the backbone of the economy, on the world stage the large majority of those companies were just too small to be able to tackle Asia, be they exporters or importers.
''A step from a market of four million to one of four billion is a gap too wide for most,'' he said.
Mr Mcintyre said the ''scale'' of a business was always of concern, as companies ''could find themselves inundated and unprepared for orders'' that just could not be filled.
Mr Thompson said the scale of the proposition was compounded by a range of other factors, including distance and language, that were also seen as impediments.
He said while New Zealand Trade and Enterprise and the Ministry of Foreign Affairs and Trade provided invaluable resources to businesses, those businesses were ''essentially on their own tackling the giant that is Asia''.
'' Don't forget that the likes of India, China and Japan have been trading with the rest of the world for more than a thousand years and we are the new kids on the block,'' Mr Thompson said.
