Natural Health Products New Zealand Summit 2018

China market outlook: Healthy prospects for New Zealand supplement firms

By Gary Scattergood contact

- Last updated on GMT

Kiwi supplements exports to China have soared in recent years. ©iStock
Kiwi supplements exports to China have soared in recent years. ©iStock
New Zealand supplement firms, which have enjoyed soaring sales in China in recent years, will continue to have a bright export future — although there are some concerns over the longer-term outlook for the world's second-largest economy.

That was the view of leading economic analyst Mark Lister, who was speaking at the Natural Health Products New Zealand summit in Nelson.

Like the industry in Australia, Kiwi firms have been enjoying considerable success in China in recent years, in part due to growing health awareness, rising incomes, and the nation's 'clean and green' reputation.

Lister told delegates that the outlook remained positive, but cautioned them not to read too much into official data.

"I tend not to look at the official growth statistics, because I suspect they sometimes make them up," ​he said.

"However, I do pay close attention to data around rail freight, electricity production and bank loans, all of which suggest the economy is still doing well.

"China is a big market for many of the companies I follow, such as Comvita, and I'm sure it is for many of you here today, too. The good news is that the types of products you sell are unlikely to be hit by any tariffs. In a sense, we are a little bit under the radar.

"I think natural health products and items such as A2 milk will be fine and have a bright future."

China's official projected growth rate for 2018 is 6.5%, down from 6.7% in 2015.

Lister forecasted that growth would continue to stutter, warning there could be some more significant drops in the coming years.

Debt dilemma

He said levels of corporate debt in the country were a cause for some concern, and that it would be interesting to see how president Xi Jinping's economic strategy develops following the recent removal of presidential term limits.

"We need to see if President Xi will seek to reform the economy to get corporate debt levels down,"​ he added. "If he does, they will have to sacrifice some short-term growth."

In terms of the domestic market, Lister said business confidence "fell of a cliff"​ following last year's election. which saw Labour and NZ First form a new government,

"I think was a bit of a knee-jerk reaction because businesses never like uncertainty," ​he said. "We have seen this start to pick up over the last couple of months.

"Overall, the outlook for domestic economy looks good. Unemployment and interest rates remain low, but our Achilles' heel is our personal debt burden. The main concern has to be: what happens if the stars aren't aligned, and unemployment and interest rates go up? Then we will find it very difficult to manage."

New Zealand's exports to China were just under $12bn in 2017, an increase of over 22% on 2016's level.

Natural Products New Zealand's corporate affairs director Alison Quesnal said supplement exports to China remained strong.

"The reputation of products made in New Zealand is very strong, and companies here have been very successful in tapping into the growing opportunities in China. This has been going on for several years now and it shows no signs of slowing."

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