NZ seeks greater trade with Vietnam as China dependency causes concern

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Prime Minister Jacinda Ardern speaks about limes, produce and trade while in Vietnam.

ANALYSIS: Ribbons were cut, champagne bottles popped, and local social media influencers courted. Prime Minister Jacinda Ardern’s trade mission to Vietnam, however, has been about more than opening doors for Kiwi businesses. It has also been about China.
The Government has been sending a "strong signal" to businesses for more than a year that New Zealand’s dependency on its largest trading partner poses a risk. The trade mission, which ended in Ho Chi Minh City on Thursday afternoon (NZ time), was just the latest stop in the Government’s journey to diversify the country's trade interests.
And it’s not only New Zealand and other democratic countries that are charting such a path: Vietnam is also seeking to reduce its reliance on its neighbour to the north.

“For a number of years, we've been talking as a nation about the importance of having resilience in our exports,’’ said Ardern said, on Wednesday, days out from an expected face-to-face meeting with China’s leader, Xi Jinping.
“Look at what happened when you saw border closures with Covid. If you had too much reliance on one market, it became really problematic. You remember rock lobsters, 100% into one market [China], and so that kind of disruption for a sector can be devastating.’’
Ardern led the delegation of business leaders around Vietnam’s commercial capital, Ho Chi Minh City, on Wednesday, attending a store opening and the launch of 10 New Zealand brands into the Vietnamese market.

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Prime Minister Jacinda Ardern, Trade Minister Damien O'Connor, and ecostore chief executive Pablo Kraus celebrate when opening a shop for the soap manufacturer inside a Ho Chi Minh City, Vietnam, department store on Wednesday, November 16, 2022.
Ardern and Trade Minister Damien O’Connor cut a ribbon, and O'Connor popped champagne, to mark the opening of a shop of soap manufacturer ecostore’s products inside a department store.
At a splashy event in a convention centre, the Vietnamese press crowded around Ardern as she handed them samples of dried fruit.
At the event, Karl Gradon, the chief executive of Māori-owned dairy company Miraka, said his company was “absolutely” looking to the Vietnam market to hedge the risk posed by the Chinese market.

THOMAS MANCH/STUFF
Prime Minister Jacinda Ardern hands samples of New Zealand products to a Vietnamese press pack at a launch event for New Zealand brands held at a convention centre in Ho Chi Minh City, Vietnam, on Wednesday, November 16, 2022.
"We have two of our main product lines that are almost exclusively aligned to the Taiwan-China market ... we're looking for ways to de-risk our business,” he said. "Long-term we need to think about risk and it’s geopolitical risk that is totally outside of our control.”
The company produces “low-carbon” milk products through the use of geothermal power in Taupō, and has Vietnamese shareholders.
But, like other dairy firms, it first started exporting to the Chinese market. Gradon said Vietnam's growing affluent class was embracing sustainability credentials promoted by New Zealand faster than in China.

THOMAS MANCH/STUFF
Prime Minister Jacinda Ardern is recorded by Vietnamese media at the opening of a shop for ecostore, a soap manufacturer, inside a Ho Chi Minh City, Vietnam, department store on Wednesday, November 16, 2022.
“Our objective is to use places like Vietnam, and their high growth aspirations for dairy consumption to spread our risk,” Gradon said. “It's something we've focused on a lot in the last two years.”
Vietnam is New Zealand’s 15th largest trading partner, with two-way trade totalling $2 billion in 2020, before the pandemic, just under half of which was New Zealand exports. The goal of both New Zealand and Vietnam is to lift two-way trade to $3.2b

SUPPLIED/STUFF
Prime Minister Jacinda Ardern briefly met with Ho Chi Minh City's top-ranking communist party official, Phan Van Mai, who urged her to foster trade between New Zealand and Vietnam, on Wednesday, November 16, 2022.
Compared to trade with China, it’s a drop in the bucket.
Trade with China totalled more than $37.7b last year – $21.4b being New Zealand exports.
China is also Vietnam’s largest trading partner, and it also wants to diversify its trade away from China, as it comes into conflict with China in the South China Sea and the Chinese economy slows.
Prime Minister Pham Minh Chinh in August urged trade officials to “actively search for new partners”, according to the Hanoi Times.

THOMAS MANCH/STUFF
Prime Minister Jacinda Ardern met with Vietnam's most powerful leader, communist party general-secretary Nguyễn Phú Trọng, as she kicked off a trade mission to Vietnam on Monday.
Asia New Zealand Foundation executive director Simon Draper, travelling with the delegation to promote business ties, said Vietnam was like many countries seeking to maximise opportunities elsewhere.
China remained a massive market that paid well, and large businesses had a legal obligation to maximise returns to their shareholders, he said.
But for the smaller businesses on the trade mission, Vietnam provided a “real opportunity”.
"China's a massive market in itself. Vietnam is big, but I sort of get the sense it's more do-able in a way, just because it's not quite as big as, you know, 1.4 billion people,” Draper said.

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The Government had sent a “strong signal” that it saw risk in the Chinese market, and it was for the Government to open doors in overseas market.
“Whilst in New Zealand often business and government are quite separate, in Asia in particular, they're often intertwined,” Draper said.
“Ultimately, it's companies that trade, not governments, and so by coming here and presenting these opportunities, at the end of the day, it's for business to decide if they want to take them up.”

NZ seeks greater trade with Vietnam as China dependency causes concern

ANALYSIS: Ribbons were cut, champagne bottles popped, and local social media influencers courted, but the PM's trade mission to Vietnam has been about more than opening doors.

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