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Pengxin may help with other exporters - spokesman

Friday 15th April 2011

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The Shanghai Pengxin International Group Ltd, which says it is investing $200 million in setting up a New Zealand dairy business, may be interested in other investments here, as well as helping local organisations export various products to Asia, according to a spokesman.

"Having a strong friend in China, now the world's second largest economy, could have many advantages for New Zealand," said Cedric Allan, the company's spokesman in New Zealand.

Headed by Shanghai property tycoon Jiang Zhaobai, the Pengxin Group had established the MOY Global Innovate Enterprise Centre to help American companies break into the Chinese market, by providing contacts, local knowledge, access to capital, and a Shanghai base.

This resource could also be accessed by New Zealand businesses wanting to do business in China, he said.

The group this week lodged an application with the Overseas Investment Office (OIO) to buy out of receivership 16 farms owned by four financially-troubled Crafar family companies, and has said buying the farms and related assets and upgrading production will cost it $200m over two years.

It wants to lift milk production by more than 10% by the end of the third year.

It had taken advice from leading farm and environmental consultants, and would retain the sharemilkers and staff currently running the Crafar farms for receivers. They would be advised by professional farm consultants, and work under the direction of a New Zealand general manager at its Milk New Zealand Farming Ltd subsidiary.

Existing herds would be bought from the receiver at independent valuation, and each property upgraded with herd improvements, fertiliser, re-grassing new management techniques and other initiatives.

There would also be better control of run-off and native bush, wetlands and sensitive areas would be fenced off, and areas of importance to local iwi would be respected.

The company would offer scholarships for young New Zealand farmers and the opportunity of exchange visits to China.

Milk would continue to initially go to Fonterra, but the company wanted to develop its own branded infant formula, ice cream, and cheese, and would work in partnership with North Island dairy processing plants to develop and manufacture these products, rather than establishing its own manufacturing operation.

"The intention is to invest more than $100 million in marketing this range of products over the first five years, and to make best use of Pengxin's business contacts and local knowledge in China," Allan said.

New Zealand could gain significant overseas investment, spending on the properties could boost regional economies, more milk would be available for export and eventually new value-added products from New Zealand could be sent to Asia.

The Reserve Bank said earlier this month that it expected prices for New Zealand's agricultural exports to remain at elevated levels.

"Demand is underpinned by urbanisation and wealth growth in developing countries, especially China," the bank said. New Zealand's exports to China, its second-biggest market, rose 39% in the year ended February 28 to $5.21 billion.



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