Why is China important to New Zealand
In 2007, China's GDP was US $3.25 trillion. The Chinese economy is forecast to grow at 9.9% this year. The extra dollars generated by the economic growth alone is more than the entire annual GDP of Singapore and New Zealand… COMBINED!
“Not another China article” you may say, but this is such an important topic that I think it does no harm to remind ourselves of the many implications of China's rise for New Zealand (and the rest of the world)
Perhaps part of the motivation behind not wanting to read more about China is our fear that the Chinese is about to take over the world. That we do not have to worry about, because they already have!
Since 2005, I have noticed that on average the size of China's economy climbs up a rung every year. First, Italy was beaten when China became the world's 6th largest economy, then it was France and UK that got dwarfed. This year, China's economy is set to overtake that of Germany's for the first time.
I believe ordinary New Zealanders will increasingly be impacted in at least one of the following ways:
1) Your suppliers will be Chinese
For many of you this is already the case. China is the cheapest, most efficient place in the world to make just about anything. When I take visitors to local souvenir shops, I generally find New Zealand souvenirs that are made in China outnumber those made in New Zealand 10 to 1. As factories making mass-produced goods in New Zealand become less competitive by the day, more businesses will start buying from China.
2) Your clients will be Chinese
As the Chinese acquire more wealth, they will start to demand the goods and services that we sell. The global food crisis could turn out to be a blessing in disguise. New Zealand can once again be proud to be dependent on agriculture. Our dairy products and quality foods will demand a premium in China. Our professionals will also be busy; helping build China's physical and corporate infrastructure.
Andrew Grant, Head of Greater China for McKinsey, has this to say in an interview published this month:
I am hard pressed to think of any New Zealand business that shouldn’t have China on the agenda – on their board agenda, on their management agenda, on their growth agenda.
3) Your neighbours will be Chinese
I believe New Zealand will see an influx of Chinese migrants in the next 5-10 years, much like how we saw an influx of Koreans and Hong Kongers in the mid-90s. As China becomes more developed, income levels will rise. But so will stress levels. Many Chinese professionals will be tempted by the clean air, laid back lifestyle and relative safety of New Zealand. Short of New Zealand imposing a quota on the number of Chinese migrants, I foresee Chinese migrants arriving in droves. Many such migrants will be alumni of local universities and schools, having studied here during the language school boom years of early 2000s. The presence of Chinese migrants here will attract more, and word of mouth will ensure a steep growth trajectory in migrant numbers; much like how it happened in the mid-90s with other Asian migrants.
As most Chinese migrants will prefer living in Auckland, Wellington or Christchurch, these cities will become far more cosmopolitan than they already are – sooner than you think.
4) Your colleagues will be Chinese
This is a direct result of (3). As New Zealanders become more used to having Chinese neighbours, we will also get more used to having Chinese colleagues. We're standing at the cusp of change. Traditionally, businesses have been very hesitant to recruit Asian staff. As companies have literally run out of Kiwis to employ in the last few years, they have had to take on staff they wouldn't normally employ. Much to the surprise of these “early adopters”, the Chinese staff have generated a return on investment beyond their expectations, thus clearing the way for them to employ more Asians.
5) Your boss will be Chinese!
OK, for my staff at Euroasia, this is already the case!
As the rest of the world begins to suffer from what looks like a prolonged recession and a severe credit crunch, the Chinese with their war chests will go out bargain hunting. Some businesses will inevitably end up in Chinese hands. Despite being communists, the Chinese are shrewd capitalists at heart. They are also exceptional operators, with ove
r 5000 years of trading history behind them. I have seen many New Zealanders greatly underestimate Chinese capabilities; based on limited encounters with Chinese students and recent graduates who speak broken English.
Make no mistake, these uncouth foreigners could one day be paying your wages.
How then do we prepare ourselves for the new reality?
I would say that wouldn't I? 🙂
No Chinese person expects you to be fluent in Chinese. But the fact that you've made an effort goes a long way. It also seems a little unfair that we expect other people to devote a lot of time, money and energy to learning English so that they can communicate with us if we’re not prepared to make any effort at all.
Additionally, when you travel in a country without a knowledge of the language, in some ways you only scratch the surface; only when you know the language do you realise how much you would otherwise be missing. This is more the case in China than almost anywhere else.
2) Understand Chinese culture
There's no better way to understand the culture than to learn the language. They are so intimately intertwined that I doubt you can fully understand a culture if you can't speak the language.
There are also plenty of books on Chinese culture and doing business in China. Chinese people are not easily impressed by you saying that you've read the 20-page English translation of Sun Tzu's Art of War. It's a different story if you've read it in the original language.
3) Make some Chinese friends
This is easier said than done. But hey, it's easier now than it was 10 years ago. We no longer have to go to China. China has come to us. You would be surprised how much you can learn from Chinese students if you pause and listen to what they have to say. This, of course, requires a lot of patience and cultural understanding.
Considering the fact that you could soon end up with a neighbour from Beijing, a colleague who packs chicken feet for lunch, clients who demand progress reports in Chinese, and a Mandarin-speaking boss, it could be well worth the effort.
4) Carpe Diem!
I close with a very apt quote from Andrew Grant's interview quoted earlier (emphasis mine):
This period of unbelievable growth, we’re not going to get that purchasing clomid again. This is not something that I think people have the option to wait around for. I don’t know how much the story is being told, but in China the FTA, not just in the substance of what is written there and all of the clauses, but what it has done in terms of the way China thinks about New Zealand, it really is a very special window of opportunity that every Chinese business is interested in engaging in with New Zealanders and New Zealand. I hope New Zealanders realise how precious that is and the imperative and urgency to really seize the moment.