New Zealand’s Crafar farms … still uncertainty over their future. Image: TV3

Some Chinese companies going global say they are still suffering “Cold War mindsets”. Others have not done enough homework on the host countries’ political and social system and they are learning hard lessons, as a China Daily business reporter finds.

Pacific Scoop:
Report – By Song Jingli

When both Chinese and New Zealand media reported that the Shanghai Pengxin Group had cleared the final legal obstacles in buying 16 Crafar family-owned farms in August, they may have been jumping the gun.

Debates on this issue have almost ended and some New Zealanders consider it a “success” for a Chinese company in the land ownership struggle.

But it may be a surprise for many to know that things are far from certain yet.

And the uncertainty highlights difficult lessons that some Chinese companies seeking to go global and buying land abroad.

A mystery funder has decided to support Māori trusts to challenge Pengxin’s bid for a third time, this time in the Supreme Court, China’s Xinhua News Agency reported earlier this month.

“Any farm-buying bid concerning Māori reserve land is not likely to succeed as that is a very sensitive issue,” said Zheng Zhihai, former Economic and Commercial Counsellor of the Chinese Embassy in New Zealand.

Business journalist Bernard Hickey, who reported on the Crafar farms’ animal welfare issues in 2009, said he did not know if Pengxin would win in court.

Raised attention
But he is not surprised that Pengxin bid raised a lot of attention in New Zealand.

“New Zealanders are sensitive about land ownership, particularly given it was such a large chunk of dairy land,” Hickey told Pacific Scoop.

Hickey said he was not surprised that the bid was challenged by Māori trusts, either.

“In many ways, Māori interests are the only ones with close connections to the land and who aren’t wedded to the idea that everything can and should be sold,” said Hickey.

For the Chinese former diplomat who worked in New Zealand for three and a half years, and for the New Zealand business reporter and even for many ordinary Kiwis, it is obvious that foreign companies hoping to invest in New Zealand had better avoid buying land.

However, Bayleys Real Estate, which was appointed to sell the Crafar farms, headed to China to market them in 2010, according to stuff.co.nz.

An email and a phone call asking managing director Mike Bayley whether the agency would go to China to market land sales later if Pengxin failed, drew no response.

An unnamed source knowledgeable of the matter, said that the agency did not care whether the farms would finally go to a Chinese owner or to a Māori iwi owner.

Putting up price
“Ushering in a foreign potential buyer will finally put up the price,” the source said.

Pengxin was too hasty in bidding for the farms as the company did not know the history and culture of the New Zealand, especially the history concerning Māori people, the source said.

Pengxin said it never imagined this would be so long a way to go, according to the source.

But questions to Pengxin got no reply.

Companies needed to do a lot of preparation work before going global, but many act in a hurry, said the source.

As for the final result of the Long March for Pengxin, the source predicted that the company might win the case as business acumen in operating farms was not a necessity for the investor as the farms would be managed by the state-owned Landcorp.

Hardie Peni, executive chairman of Tiroa Te Hape Trust, told Xinhua the appeal to the Supreme Court would be based on the same argument put to the Court of Appeal – that Shanghai Pengxin, which wants to buy the farms through Hong Kong-registered subsidiary Milk New Zealand Holdings, lacked the relevant expertise and management experience to run New Zealand dairy farms.

Beijing-based Zhongkun Investment Group, a private real estate developer said its plan to lease a piece of Iceland was still being discussed by the Icelandic government by September 17.

In fact, Zhongkun’s initial plan was to buy the 300 sq km of land, 0.3 per cent of Iceland territory for tourism development.

Its land-purchase plan became known worldwide after a Financial Times report questioned its intent on August 2, 2011.

The US$200 million plan was rejected by Icelandic Internal Affairs Ministry on November 26, 2011, although 60 of the Icelandic people voted for the purchase in a poll by a local publication, according to chinadaily.com.cn.

Huang Nubo, president of ZhongKun, was first known to the Icelandic people as a poet, who sponsored poem exchange activities between China and Iceland and then as a billionaire who wanted to buy land in the wilderness of the country.

Huang later changed to a new plan of leasing the land, but his plan is still being discussed.

Huang told many reporters he was confident over his purchase plan as he was invited by the president and a majority of people supported the plan.

But he said he never imagined partisan quarrels would hinder his investment in Iceland, according to sina.com.cn, one of China’s online news portals.

He advised other Chinese companies to know the politics of the destination country before going overseas.

Song Jingli is a China Daily.com.cn journalist on an exchange programme with AUT University and is attached to the Pacific Media Centre.