New Zealand service exporters must embrace digital China: Report

New Zealand service exporters need to embrace China’s booming digital economy and deliver more services in-market to grow the trade relationship in the coming years, according to a new report from the New Zealand China Council.

”Normal Service Resumed? Assessing future prospects for New Zealand-China services trade” shows our services trade with China made up almost a fifth of total exports in 2019 at $3.4 billion but dropped by 68 percent to $1.1 billion by June 2022 as the pandemic impacted the flow of visitors, students and business travellers.

It also shows that tourism in particular has faced severe challenges, while other sectors such as international education have fared better by pivoting to online delivery models or by providing more services on the ground in China.

Council Chair John McKinnon says the period ahead is uncertain for services exporters, and while a rebound in tourism and international education is expected it is likely to be uneven for different sectors.

“Covid restrictions on personal, business and education-related travel continue, and their relaxation will remain key to enabling future business and trade relationships.”

The report also points to the expected slowdown in China’s economy, and a growing preference among consumers for China’s domestic services as additional challenges.

“This means exporters will need to adopt new and innovative approaches to delivery.  Even a slowing Chinese economy offers new opportunities for agile and innovative providers,” McKinnon says.

The report highlights New Zealand sectors as diverse as air transport, fitness centres, software as a service and film post-production that have adapted to pandemic disruption.  Case studies throughout the report offer useful insights for New Zealand companies considering the China market.

McKinnon adds that the intangible benefits of service exports go well beyond export revenue.  The personal links created when Chinese visitors and students travel to New Zealand can result in lifelong business, investment, academic and research connections.

Report author Stephanie Honey cautions that China’s digital services landscape is highly regulated and complex, not only for technology exporters but for any business looking to export services digitally.

“China’s digital economy is booming, but New Zealand digital services exporters face a range of regulatory barriers in the market.”

“Advocacy from service sectors and the government for continuing flexibility to operate digitally in China will be essential for New Zealand exporters to make the most of future opportunities,” Honey says.

The full report can be accessed here.

For media enquiries, please contact info@nzchinacouncil.org.nz or 09 379 4641.