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GREAT HAUL OF CHINA

After a decade of hanging out with heavy-hitter Asian businesses, Hawke’s Bay’s Ngati Kahungunu Iwi Incorporated (NKII), its asset holding company and partners are about to reap benefi ts that will help lift our region’s economy.

Keith Newman29 May 2017

FEBRUARY WAS A BIG MONTH for Ngati Kahungunu; just ahead of hosting 50,000 people at the Matatini kapa haka competitions, it released 1,000 Chinese lanterns into the harbour to welcome some of the superstars of that economy.

The Taniwha Dragon Economic Summit raised the profi le of Maori export capability, helped cement inter-tribal relationships and recast the iwi group as having nailed a culture-based formula for brokering Asian trade deals.

It aimed to hit $100 million in business deals over two days, but ticked o $138 million, allegedly opening a fl oodgate of export opportunity and cementing partnerships to expand the region’s production capacity, including a $20 million contract with Tainui for extra fi shing quota.

Buoyed by that success, and anticipating regionwide Treaty of Waitangi settlements reaching over $370 million within two years, Ngati Kahungunu is beefi ng up its business strategy.

Having learned from the billion dollar- plus enterprises of other large iwi, it’s now reclaiming its fishing assets, getting into the kiwifruit business, brokering investment in horticultural, agriculture and processing facilities, and pooling resources to meet growing Asian demand.

After a post-Summit visit to China, Japan and Hong King, NKII says demand is now greater than the region can meet, so it’s establishing a ‘hot desk’ to negotiate with suppliers around the country.

Time to step up

Maori business has mostly remained in the background in Hawke’s Bay, but Kahungunu Asset Holding Company (KAHC) director, Taine Randell, says the Summit a rmed “this is the right time” to step up as a major influencer and economic force.

“We’ve done things on a shoestring, but now we’re working on where our strengths are in relationships and food producing. We need more capacity and to ramp up the people doing the mahi (work)…We’re ready now, we’re expanding our operations to be more capable.”

Pōwhiri to welcome delegates at Waipatu Marae

Summit organiser and NKII chairman, Ngahiwi Tomoana, admits some deals were held o until the event, others were accelerated and new relationships “have been coming out of thin air ever since”.

Through the maturing if its high-trust Asian relationships, he believes, “New Zealand business will never be the same again if we hit a few more gongs at the right tone.”

Randell says Tomoana’s decade of leadership, networking and connections has opened the doors. “I don’t think anyone else could have done it. It’s really difficult to get people like Shanghai Fisheries, Pengxin Group and Lei Garden.”

Various iwi were invited to put deals on the table, engaging in an open book exercise. “Here we are, here’s what we do and what we’d like to do … If something didn’t work for Kahungunu we recommended our cousins from up the road”.

Tomoana says he’s never seen so much enthusiasm for “Maori to Maori, iwi to iwi” working together to create scale to present propositions to overseas investors.

Under discussion are joint arrangements ranging from farms and forests to fi sh, hotels, health care and retirement facilities, “a massive” 10-year horticulture partnership on Maori land in Wairoa to boost local capacity.

Negotiations are underway with Ngati Hineuru “just up the [Napier-Taupo] road”… with Wairoa-based Ngati Pahauwera, northern iwi Ngapuhi and Ngati Kahu, plus a number of smaller Maori investors.

Implicit in the strategy was “tackling high tariffs” that might impede the export- focused Maori economy, including kiwifruit, dairy, sheep and cattle, lamb production, fishing and forestry.

“The products flow once relationships grow; that’s anything Hawke’s Bay can supply whether that’s through our ‘can do’ attitude, their IP or infrastructural and other investments,” says Tomoana.

Pacific relationships

The February Summit also furthered the idea of a Hawaiiki or Pacific trading brand with island nations working more closely together.

A starting point is an invitation from the Cook Islands for Kahungunu to send a research and development ship to scope out the potential for new fi sheries.

The Australian Government has also inquired about support for “a Taniwha- Platypus economic summit” with Aboriginal groups.

Tomoana and KAHC chairman Rangi Manuel left for Summit follow-up meetings in Asia at the end of March to explore other options for the iwi and Hawke’s Bay suppliers.

The week they left, Tomoana, already on the New Zealand China Council, was invited to join the NZ Trade Advisory Board and Prime Minister Bill English launched Trade Agenda 2030 targeting free trade agreements for 90% of our exports by 2030.

Implicit in the strategy was “tackling high tari s” that might impede the export-focused Maori economy, including kiwifruit, dairy, sheep and cattle, lamb production, fi shing and forestry.

The PM had earlier commended Tomoana and NKII for “showing the way” with their culturally-engaging approach, undertaking to include this as part of its imminent free trade refresh with China and other countries.

Tomoana says the PM and his team work at a high level of “meet, greet and eat” and he and his team provide the same at ground level to ensure comfort and confi dence about long-term relationships. “I think we’re at the stage now where we can wine, dine and sign.”

Taine Randell with Summit delegates at Craggy Range.

As Trade Minister Todd McClay said at Taniwha Dragon, the New Zealand-China FTA is one of the country’s most successful; the two-way target between 2008 and 2015 was $10 billion and “we did $20 billion…our target for 2030 is $30 billion”.

Sir Don McKinnon, an original broker of New Zealand-China economic relationships, cited the need to take risks, build on similarities and get beyond transactional relationships to support China’s ‘one belt, one road’ strategy.

He said there were sustainable benefi ts from the $42 billion Maori economy and with wise use of settlement money, further investments could be made in agriculture, food production and developing skills.

One valued partner expanding its Hawke’s Bay connection is Lei Garden, with its high- end restaurant chain throughout Asia, and a long-term vision of strategic cooperation with New Zealand.

Randell says Tomoana’s decade of leadership, networking and connections has opened the doors. “I don’t think anyone else could have done it. It’s really di cult to get people like Shanghai Fisheries, Pengxin Group and Lei Garden.”

As part of its Farmorrow (farm of tomorrow) trials, it is prioritising taste and ways to raise food safety standards, including overcoming the challenges of GM, poor handling, additives and sub-standard practices.

Lei Garden, through a minimum $25 million investment, has asked Kahungunu to establish a farm, abattoir and processing plant so it can add value to pork, deer and beef meat for the ‘heat and eat’ market in Hong Kong and elsewhere. It’ll bring in scientists and food experts, but train and use local workers.

“They want to procure wine, fruit, organics, vegetables and everything we and others can supply. They are wanting Hawke’s Bay to become part of their niche branding,” says Tomoana.

Rod McKenzie, Lei Garden New Zealand general manager, says New Zealand has the ideal combination of the right regulatory environment, natural resources and a willingness to help achieve its goals of global food safety.

The connection with Ngati Kahungunu, the only iwi the company is dealing with, has strengthened since the early trade missions and through the second visit to Hawke’s Bay of founder and chairman Chan Shu Kit.

McKenzie says Kahungunu “have taken time to understand our requirements and been working with us on possible solutions … Lei Garden is still considering many di erent approaches to New Zealand and assessing the regulatory environment for what we plan to do here.”

Taine Randell says Lei Garden “need to go beyond buy and sell, ‘kill a sheep and put it in a sack’ or dealing with the next trader that comes along.”

That could include produce from the Kahungunu-owned 3,680 hectare Tautane Station in Herbertville and other big farms and farming trusts, including those in Wairoa, to provide scale.

Some owners will need to move beyond the farm gate with capital and connections so they’re more involved in processing and selling, says Randell.

Opening up China

Ngahiwi Tomoana has been a regular on Chinese trade delegations, often with former PM John Key, and Maori A airs Minister Pita Sharples and a Maori cultural party.

“We, as Maori, told them we came from here about 5,000 years ago, now we’re coming back to reintroduce ourselves…do you want a relationship?”

Tomoana says it’s taken a few trips of extending the hand of invitation but now “they’re asking Ngati Kahungunu to be their agents in talking to different sectors.”

Randell recalls the moment they hit the sweet spot. “Ngahiwi and Pita had been to Shandong Province often … this time the governor kicked it o and his people sang Tutira Mai Nga Iwi to us … our kapa haka group responded with one of their songs.”

It was clear the two cultures were confi dent each was in it for the long haul. “We want security of market and they want security of supply and scale.”

Part of the challenge at home has been dispelling the myth that Chinese investment means majority shares in businesses, owning the land and employing their own people.

Tomoana says, Taniwha Dragon allayed a lot of anxieties about our xenophobia. “The Chinese have been viewed as pariahs in the investment world in New Zealand. These heavy hitters now see there’s a sector that is encouraging them to do deals.”

An understanding was reached about cultural values. “We don’t sell land, we don’t sell water or fi sh but they can lease land for 50-100 years and own plant or infrastructure, so its generational.”

Tomoana says some deals with the Chinese that involve majority ownership, selling land and the use of Chinese labour are selling New Zealand short. What’s needed is better coordination, communication and strategies to avoid wasting energy and effort.

He’s witnessed our top city councils and tourism groups tripping over each other in the foyer of an airline company as they tried to do deals on the same day; fi shing companies undercutting each other in the waiting room and arguments resulting in cancelation of deals already done.

“This is New Zealand cannibalising itself. I know we like our independence but we need to work more collectively,” says Tomoana.

Kahungunu is in the top five iwi building relationships in Asia. “We always trade information before we head out just in case there are opportunities for others.”

Deeper into fishing

Essentially Ngati Kahungunu, through its asset holding company, is in the fishing business. It started out in 2007 with $27 million in fi shing assets and grew that to $120 million, paying the iwi an annual dividend.

Randell says they’ve taken their time, learning from others including South Island iwi Ngai Tahu, Waikato’s Tainui and Auckland’s Ngati Whatua, who are now fi rst port of call when local authorities want to talk about investment.

Employment for locals is a priority of NKII, along with expanding its executive team; consultants are currently maximising its assets so everything’s water tight for what’s ahead.

To that end, Kahungunu has purchased the 34 metre, Danish deep-water trawler Kewa (guardian of whales; formerly the Glom ord) now being fitted out in Nelson ahead of the May-June hoki season.

That $3.5 million investment will put Kahungunu back in charge of its own assets, creating about 30 jobs. “It’s a big step for us coming outside of the Sealord-type shadow, so we really have to make this work,” says Randell.

“We’ve been very passive, leasing our quota o to the highest bidder and now we’re taking much greater control over our destiny.”

Bigger companies like “the Talleys, Sandfords and Sealords have taken advantage of the lack of knowledge and played iwi o for the worse.”

The new “head, gut and freeze” vessel is capable of the same tonnage as all of Hawke’s Bay Seafood’s 18 inshore boats and could max out Kahungunu’s quota.

The $20 million deal with Tainui expands its access to crayfish, deep water and inshore fi sh from 2018. Significant quota support from other iwi will be needed to meet the burgeoning Asian demand as Kahungunu takes the next ambitious step.

Within a year Shanghai Fisheries has agreed to supply a second similarly-sized vessel for Kahungunu to manage and run.

The offer of a much larger vessel was declined. “That’s where you start squashing fi sh in the nets and spoiling them. We want to raise the quality of what’s taken from our waters,” says Tomoana.

Anyone with Kahungunu quota must use new design mesh nets because they allow “50% more juveniles to escape”.

Clockwise from top left : Ngahiwi Tomoana addresses the Summit; Meng Foon delegates; Lei Gardens group

Companies in China and Japan have now confi rmed contracts for as much fi sh as the iwi and its partners can supply.

Shanghai Fisheries will increase its take, and new partner Hanson Group of Guangzho wants 10 containers a year – potentially valued at $10- $20 million – for its restaurants in Shanghai and the west, says Tomoana.

Hanson is also interested in Kahungunu mussel farms. “If we can’t hook them up for that they might like to invest in other Maori enterprises in mussel and salmon farming.”

Tomoana and Rangi Manuel also met with 20-year Japanese partner Nissui, who just agreed on an additional 500 tonne of new hoki.

The latest Japanese customer, Koiyo, heard about the Summit through social media, inquiring about “a huge quantum of fish, fruit and meat”. They’ve just confirmed 500 tonne of hoki a year “and that’s just the start,” says Tomoana.

Iwi and kiwifruit

One of the deals announced at the Summit will see Kahungunu getting into the kiwifruit business. Tauranga kiwifruit kings, Ngai Tukairangi Trust, purchased five Fernhill kiwifruit orchards (66 hectares) for $40.2 million, the largest sale of its kind, with a supplementary $12 million securing a connection with Kahungunu.

The latest Japanese customer, Koiyo, heard about the Summit through social media, inquiring about “a huge quantum of fi sh, fruit and meat”. They’ve just confi rmed 500 tonne of hoki a year.

The iwi will fi nd the land for additional Sungold kiwifruit orchards, packhouses and infrastructure “so we can work together,” says Randell.

Ngai Tukaurangi, the largest Maori shareholder in kiwifruit marketer Zespri, which has China as its largest market, will mentor Kahungunu to gain a footprint in the industry with potential for 300 jobs.

Following the serious blow from the PSA virus a few years ago, the kiwifruit industry is on a major recovery path, with Zespri expecting sales to rise from $1.9 billion last year to around $2.3 billion in 2016-17.

Rather than agree on a single corporate management structure, the six local Treaty of Waitangi claimants had decided to go their own way, but Ngahiwi Tomoana believes the tide is turning.

“From being dependent, everyone wants to be independent, but when reality sets in you realise you need to be co-dependent or inter-dependent and that’s the phase we’re entering into now.”

One of the opportunities “right in our face” is the Napier Port. “If we could pool our resources to get a slice of that, it would be a huge step forward for Maori and Hawke’s Bay. We’re looking at that very seriously.”

The cooperative approach could result in this “most strategic regional asset” providing Ngati Kahungunu and its constituent hapu (family groups), investors and partners greater “traction to return benefi t to our people” through the whole value chain.

Meanwhile, the tried and proven formula of developing trusted relationships in Asia through Maori cultural elements, alongside New Zealand’s famous “we can do anything approach” is proving a winner, promising signifi cant value not only to Maori and iwi but suppliers across the Bay and beyond.

Rather than feeling like a poor cousin in the Hawke’s Bay business community, the Taniwha Dragon Economic Summit was a game changer, providing evidence that Maori can not only contribute but take the lead.

Keith Newman29 May 2017

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