1. 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

2. China – 1.3 billion potential customers CK IMPORT EXPORT CO (NZ) LTD Velvet is seen as an adult medicine, food or HFF Chinese priorities 1.Earning money 2.Personal Health 3.Family

3. 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 – 6hr 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

4. The Market –NZ Exports South Korea consumes 62% of all NZ Velvet but imports only 27% of NZ Velvet. 35% is imported into South Korea via China. 68% exported to China/ Hong Kong in 2012 Source: DINZ 2013 Year ending 30 th Sept KG Sales – NZ Velvet Exports$ Sales – NZ Velvet Exports CK IMPORT EXPORT CO (NZ) LTD

5. Farm Price Vs Kg’s Exported. Total Tonnes exported per year Year ending 30 th Sept Average Farm price per Kg CK IMPORT EXPORT CO (NZ) LTD Source: DINZ 2013

6. Farm Price Vs Currency. Average currency January each year Average Farm price per Kg CK IMPORT EXPORT CO (NZ) LTD Year ending 30 th Sept

7. 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) ChinaSouth Korea Estimate only CK IMPORT EXPORT CO (NZ) LTD

11. The Future Healthy Functional Foods (HFF) Was predicted to reach US$12billion 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 Approx. 25 – 30% of HFF velvet sales used in drinks CK IMPORT EXPORT CO (NZ) LTD

12. 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

13. 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 US12billion + 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

14. 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

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

16. 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

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