Wellington
If New Zealand companies are to succeed in China, the government’s going to have to take a muchgreater hands-on role in supporting ventures making their first foray into the Middle Kingdom.
“One of the best ways for the government to engage with China would be to act as a catalyst tobring the smaller and medium-sized companies together by making funds available around corestrategies,” says David Mahon, managing director of
“New Zealand is one of the few developed OECD nations that does not assist its companiesfinancially to expand into key international markets,” Mahon, who is also chairman of the Chinaadvisory board for NZ Trade & Enterprise’s Beachheads programme, says.
The NZ government’s trade and investment related initiatives aren’t closely enough aligned,and companies tend to remain aloof regarding strategic advice that is available.
“A disciplined programme of loan guarantees for New Zealand companies that are looking toexpand their business in China or are already there and looking to consolidate their business wouldmake a difference,” he says.
Mahon worries that a greentech company such as LanzaTech, (using proprietary bacteria to convertsmoke stack gas streams to ethanol and other useful products), which is rapidly partnering andgrowing in China, needs early-stage capital but would not qualify for normal loan guarantees.
“Historically, such companies have had to find investors offshore, and some become onlynominally New Zealand-owned,” he says. “New Zealand is disproportionately innovative in scienceand technology, but loses the value to more farsighted and less risk-adverse investors in othercountries.”
Mahon suggests that NZ could establish an early-stage joint venture funds with a group ofAustralian and Chinese institutions. At intermediate stages of each investment’s development,shares could be placed privately in a wider domestic New Zealand investor market.
“Ongoing failure on the part of the government to build investment capability in New Zealandwill only result in ownership of good assets becoming increasingly foreign and leave companieswithout the means to establish themselves in Asian markets,” he says.
More than at any time in its modern history, the NZ economy needs a dynamic public-privatepartnership, and the country only has a short period of time left to revolutionise the manner inwhich it develops international trade and establishes commercial platforms in Asian economies hesays.