Newly formed Primary Collaboration New Zealand Limited has established a China services company (ServeCo) as a wholly foreign owned enterprise (WFOE) in Shanghai to provide ‘in-market’ services in the People’s Republic of China. The collaboration stems from the inaugural New Zealand Primary Sector Bootcamp movement held by industry CEOs and government agency leaders at Stanford University in 2012.
Member companies will initially include Sealord, Silver Fern Farms, Synlait Milk, Villa Maria Estate, Kono and Pacific Pace. Pacific Pace is itself a collaboration between Hawke’s Bay horticulture businesses Mr Apple, CrasbornGroup and J M Bostock Group.
ServeCo will provide services such as central Shanghai office facilities, administration and support staff and food preparation for members’ in-market representatives. The concept will enable members to provide a higher level of contact and locally-based liaison with their respective importers, wholesalers and customers. Further, ServeCo will grow relationships with Chinese authorities and New Zealand government agencies in China.
Primary Collaboration NZ Chairman Andy Borland is Managing Director of Christchurch-based Scales Corporation, which owns Mr Apple. He says ServeCo provides tangible benefits for members.
“China is probably New Zealand’s most important market now and in the future. However, many primary sector exporters have limited insight into the market beyond the point of sale which is often their China-based importer or distributor.
“We discussed this at length at the Primary Sector Bootcamp – how we could improve our understanding of the vast Chinese market. Creating an in-market presence to improve and facilitate our respective business interests there seemed like a no-brainer,” Borland says.
“Market knowledge is a valuable commodity and ServeCo has been set up to improve in this area, and understand how it relates to the value chain and customers. We also want to lower the cost and risk of entry to China. It is the members who decide what services best suit their needs.”
Borland says ServeCo represents a good opportunity for New Zealand Primary Sector businesses with an eye on exports to China to be part of a bigger group and enjoy economies of scale while sharing valuable market insights.
The wholly foreign owned enterprise structure enables ServeCo to operate in a leaner and more efficient manner avoiding what can be a complex and costly transaction associated with establishing a stand-alone business there, Borland says.
Core services may change over time and be supplemented by additional services determined by the collective needs of the members.
New Zealand Trade and Enterprise (NZTE) has supported the venture by providing resources and co-investment. In effect matching costs associated with the members’ formation funding. CEO Peter Chrisp, says that NZTE is looking for opportunities to build coalitions of companies to go-to-market together. “In a small country like NZ it makes sense to “collaborate to compete”.
Borland says NZTE has been very supportive.
“They are buoyed by the fact leading New Zealand primary sector exporters are willing to collaborate to grow exports into the vast and growing market that China represents.
“As members and strategies evolve over time, so will the services. However, the key focus as market knowledge grows will be identifying where all members can profitably grow their business in China,” Borland says.