China's long-running food-safety scares and milk powder contamination problems have increased demand for reliable overseas supplies, creating sound investment opportunities for New Zealand's agriculture-centric economy.
Bill English, New Zealand's deputy prime minister and minister of finance, said fears among Chinese parents over the quality of local dairy products had grown in recent years following a slew of food-safety scandals. The resulting demand for safe raw milk and baby powder created a "two-way" investment opportunities for New Zealand and Chinese investors, he said.
"As a small country, we rely on foreign direct investment to help us achieve economies of scale and for access to the rapidly rising middle class in China," English said, urging New Zealand dairy firms to establish distribution and sale channels in Asia with local partners.
China's milk imports from New Zealand have grown more than fivefold in the past two years as rising incomes propelled demand for quality and safe products from overseas.
Lack of confidence in local dairy products is a big social challenge for the Chinese authorities. Earlier this month, the Netherlands joined Hong Kong, Australia and Germany in seeking to limit infant formula purchases after some Dutch supermarkets found Chinese customers buying large quantities of formula, raising concerns about supplies for local children.
At an event hosted by Credit Suisse, English said China's fast-rising middle-class consumers were seeking a better living standard for their families and provided big potential for New Zealand to boost economic growth through various exports to the country. China is already the biggest buyer of New Zealand's exports. Besides dairy products, English said there were also rising sales of lamb, beef and honey to China from New Zealand.