High value, profitable non-commodity growth will be essential to achieving New Zealand’s economic goals. As with our goods trade, we have scope to do better in our traditional service exports to China – education and tourism – and to develop other areas, such as design, architecture, consulting, IT, environment and food safety services.
The Government has set a goal of doubling the economic value of export education services to $5 billion by 2025. China is the largest source of foreign students in New Zealand with 21,000 enrolments in 2010. Around 90 percent are in the tertiary sector and it is estimated Chinese students add approximately $600 million to the New Zealand economy annually.
With improved targeted promotion by the new Crown entity, Education New Zealand, and greater cooperative promotional spend among institutions, the Government hopes to increase the market share of Chinese students from 22 percent to 30 percent of international students within five years, without compromising the diversity and capacity of learning institutions.
China expects New Zealand to provide state-backed quality assured international education services for Chinese students. This is crucial if the value of the New Zealand education brand in China is to be protected and enhanced.
China is also the main market for offshore delivery of New Zealand education services. Our competitors are establishing campuses in China.…companies trying to succeed in China need to remember that a number of Chinese cities are larger than many European countries.” McKinsey 2011 Annual Chinese Consumer report
Two thousand Chinese students are enrolled in China-based New Zealand programmes. There is potential to more than double this number and to grow associated earnings from consultancy and training services.
Chinese students have the second highest transition rates to work and residence in New Zealand, and therefore make an important contribution to our labour force, helping to lift productivity rates. New Zealand must invest in thorough assessment and verification of applications to study and live in New Zealand, while avoiding the establishment of unnecessary barriers to bona fide Chinese students and migrants.
This will enhance the attractiveness of New Zealand qualifications for Chinese students in a competitive market.
China is our fastest growing and fourth largest international visitor market. Chinese have traditionally holidayed in New Zealand as part of a tour group under China’s Approved Destination Status (ADS) system. However, there has been an increase in the number of independent and semi-independent holidaymakers. The focus is on ensuring the quality of tour group travel and motivating independent or small-group Chinese travellers to visit New Zealand.
Air New Zealand has direct flights from Shanghai and Beijing but there are capacity constraints through other Asian hubs, especially during the peak summer period.
Direct flights from Guangzhou by China Southern Airlines started in April 2011 and in November 2011 it moved to daily flights, bringing greater stability to air connections. On current growth projections, a new air services agreement will be needed within the next year to allow further expansion of services. Aviation talks will take place this year.
New Zealand welcomed 141,000 Chinese visitors in the year to November 2011. In the 2010 calendar year, Chinese visitors made an economic contribution of $362 million. The goal is to grow this figure by 60 percent.
China is maturing as a market for New Zealand ideas and skills, as well as goods. The following areas all have significant potential to grow: design and architecture; water management; film and television company production; green engineering; entertainment, including advertising; IT and educational resources.
Improved statistics on services trade would capture a more accurate picture of the growth in these areas and help identify possible areas for increased service liberalisation under the FTA.