CK IMPORT EXPORT CO NZ LTD China the

CK IMPORT EXPORT CO (NZ) LTD China the sleeping giant The Market The Future NZ’s role in China’s future OR China’s role in NZ future

CK IMPORT EXPORT CO (NZ) LTD China – 1. 3 billion potential customers Chinese priorities 1. Earning money 2. Personal Health 3. Family Velvet is seen as an adult medicine, food or HFF

CK IMPORT EXPORT CO (NZ) LTD China – where does our velvet go? – South Korea consumes 62% of all NZ Velvet but directly imports only 27% of NZ Velvet. • The remaining 35% is imported via China – 68% of all NZ velvet is exported to China – Exported in via Dalian or Hong Kong • Hong Kong was the gateway to China (smuggling), now Dalian with the free trade agreement. – From Dalian port – 6 hr road trip to Xifeng for processing & distributing throughout China. – In China – 8 key consumption areas for velvet areas. • Mainly East Coast – population.

CK IMPORT EXPORT CO (NZ) LTD The Market –NZ Exports 68% exported to China/ Hong Kong in 2012 $ Sales – NZ Velvet Exports KG Sales – NZ Velvet Exports 250, 000 $35, 000 $30, 000 OTHERS 200, 000 OTHERS VIET NAM $25, 000 USA $20, 000 AUSTRALIA VIET NAM USA 150, 000 AUSTRALIA JAPAN $15, 000 TAIWAN $10, 000 $0 2008 2009 2010 2011 2012 P Year ending 30 th Sept TAIWAN 100, 000 KOREA HONG KONG CHINA $5, 000 JAPAN 50, 000 CHINA 2008 2009 2010 2011 2012 P Year ending 30 th Sept South Korea consumes 62% of all NZ Velvet but imports only 27% of NZ Velvet. 35% is imported into South Korea via China. Source: DINZ 2013

CK IMPORT EXPORT CO (NZ) LTD 2011/12 P 2010/11 2009/10 2008/09 - 2007/08 $20. 00 2006/07 100. 00 2005/06 $40. 00 2004/05 200. 00 2003/04 $60. 00 2002/03 300. 00 2001/02 $80. 00 2000/01 400. 00 1999/00 $100. 00 1998/99 500. 00 1997/98 $120. 00 1996/97 600. 00 1995/96 $140. 00 1994/95 700. 00 $0. 00 Average Farm price per Kg Total Tonnes exported per year Farm Price Vs Kg’s Exported. Production Price Year ending 30 th Sept Source: DINZ 2013

CK IMPORT EXPORT CO (NZ) LTD Farm Price Vs Currency. 0. 90 $140. 00 $120. 00 0. 70 $100. 00 0. 60 0. 50 $80. 00 0. 40 $60. 00 0. 30 Average Farm price per Kg $40. 00 0. 20 $20. 00 0. 10 Currency avg Jan Year ending 30 th Sept 2011/12 P 2010/11 2009/10 2008/09 2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 2000/01 1999/00 1998/99 1997/98 1996/97 - 1995/96 Price 1994/95 Average currency January each year 0. 80 $0. 00

CK IMPORT EXPORT CO (NZ) LTD The Market – how is our velvet used by the consumer • Broken into 3 groups – – – Traditional – raw state put into food Oriental – used by oriental medical doctors Healthy Functional Food (HFF) 100% 80% 60% HFF 40% Oriental Traditional 20% 0% 2005 2013 2020 South Korea Traditional 20% 0% 2005 2013 2020 China Estimate only

CK IMPORT EXPORT CO (NZ) LTD

CK IMPORT EXPORT CO (NZ) LTD

CK IMPORT EXPORT CO (NZ) LTD

CK IMPORT EXPORT CO (NZ) LTD Approx. 25 – 30% of HFF velvet sales used in drinks The Future Healthy Functional Foods (HFF) • Was predicted to reach US$12 billion sales in China by 2010 – Food Manufacture Magazine 2007 • HFF are products ready for consumption purchased over the counter • Examples • capsules, drinks, health bars etc. for busy westernised lifestyles • Alcohol products containing velvet (eg wine or spirits with velvet fermented), tonics. • Ingredient in a finished product – eg chewing gum, probiotic yoghurt

CK IMPORT EXPORT CO (NZ) LTD Barriers to HFF Market • Barriers to HFF Market: – Chinese govt only allows Malu velvet to be used. Need recognition of NZ Red Deer. – Terms of Trade – Need NZ Red Deer recognised as suitable ingredient in HFF – We need to be in this market for Velvet exports to continue. – legal access for NZ velvet in raw state for use in HFF ingredient – NZ branded products sold in China – 2 year process and costly

CK IMPORT EXPORT CO (NZ) LTD What is HFF to the future of NZ exports to China • China is becoming more westernised. • The traditional and oriental market is mature. – The future is healthy functional foods (HFF) • First capsules • Then drinks – tonics & wine • Missing out on a US 12 billion + market – Challenges: • legal access for NZ velvet in raw state for use in HFF ingredient • NZ branded products sold in China – 2 year process and costly

CK IMPORT EXPORT CO (NZ) LTD Influencers to exporting to China: • Central Govt/ The Premier: – Influence consumer behaviour – eg Wine sales decreasing as new premier enforced Chinese govt officials need to reduce alcohol consumption. – Can dictate alter trading terms although it is free terms of trade. • Currency – strength of NZD to USD • Stock Piles of velvet

CK IMPORT EXPORT CO (NZ) LTD What the Chinese like!

CK IMPORT EXPORT CO (NZ) LTD NZ velvet to China • Currently two ways – 1. Via an Exporter • Pros – increased stability – pays GIB – promote NZ velvet • Cons – ? ? – 2. Sold direct to Chinese buyer • Pros – – the farmer gets paid immediately for their velvet for this season • Cons – – Future seasons the value of velvet could decline and Chinese buyers are few and they TALK! Supply and Demand. – Don’t pay GIB that markets and promotes the end product – Consistency in price & demand for the future

CK IMPORT EXPORT CO (NZ) LTD Thank – you Questions at the end of the session Would like to introduce -Pei from Vitaco