The China-New Zealand Free Trade Agreement: Strategic implications for the New Zealand wine industry's market entry into China

Abstract

Driven by trade liberalisation, globalisation has been regarded as a predominant feature of world economy in the past fifty years. It has increased the interdependencies amongst world market and the diffusion of new ideas, technology, products and lifestyles through international market. No country or company can isolate itself from the integrated world economy and market that is emerging around us.

As a result of the adoption of the economic reform and open policy, THE economy of China has grown quickly over the past two decades. China consequently was the largest absorber of foreign direct investment in several past years and was the third biggest country of international trade in year 2005. Potential in the market has been targeted by almost all countries and companies in the world. Capturing shares of Chinese market is regarded by entrepreneurs as a vital for further development, even survive.

The ongoing negotiation of the Free Trade Agreement between New Zealand and China will provide New Zealand entrepreneurs with enhanced opportunities to enter this tremendous market, in this case, the New Zealand wine industry. However, whether New Zealand companies will successfully be there depend to large extent on what and how much they know about the market, including business environment and consumers’ behaviours. By relatively intensive research, this paper provides essential knowledge of Chinese wine market and suggestions for the New Zealand wine industry on how to enter the market.

This research concludes that the New Zealand wine industry needs to enter Chinese market as early as possible. Suggestions on distributional channel selecting, pricing, packaging and labelling, consumer approaching, as well as initiating promotional activities are discussed and outlined. With regards with characters the New Zealand wine industry, joint ventures and non-production involved wholly owned subsidiaries are suggested as most suitable entry modes for New Zealand wine entrepreneurs to enter Chinese market.