Auckland’s Business Ecosystems – the Indian and Chinese experience

The contributions of Auckland’s Chinese and Indian business ecosystems – as the two largest Asian communities in Auckland – was the subject of an Asia New Zealand Foundation panel discussion held online on 4 June. It was led by Felicity Roxburgh, the Foundation’s director business.
The motorway leading into Auckland with the Skytower in the background

The number of people who live in Auckland and identify as Asian is close to half a million with Chinese and Indians making up over two thirds of this number

Nearly a third of Auckland’s population identifies with an Asian ethnicity – and Auckland contributes 40 percent of New Zealand’s GDP. Those two statistics alone demonstrate that Asian businesses make an important contribution to New Zealand’s national economy – not to forget Auckland’s vibrancy and business dynamism.

The webinar drew on research that the Asia New Zealand Foundation commissioned from Findex (formally Crowe Horwath), which was represented by Kenneth Leong.

Asia New Zealand Foundation trustee Danny Chan said the Foundation started the research after senior government officials commented that they did not know enough about Auckland’s Asian business communities.

“In the post-COVID world, and during our economic recovery, trade with Asia is going to be an important part of our recovery.

“We believe there is a missed opportunity for both government and business to engage better with Asia business networks which are already operating here in New Zealand, especially in Auckland.”

Presenting the research findings, Kenneth Leong explained that it drew on more than 30 interviews with Chinese and Indian-origin businesspeople in Auckland, as well as his own experiences over 20 years as an “insider”.

Leong is the Chairman of the ASEAN Business Council and a director of businesses that include MEO (high-filtration and breathable anti-pollution face masks) and Euroasia, which provides cross-cultural and language training services.

Leong emphasised the great diversity among both Auckland’s Chinese and Indian business communities, with their members hailing from a range of locations.

The research also identified some broad themes. For instance, first-generation Indian and Chinese immigrants tend to start their own businesses out of necessity.

New Zealand employers often prefer workers with “local experience”, meaning those migrants who did not wish to start their own businesses might find themselves accepting jobs below their level and pay below their skillset. Other challenges include a lack of networks, and social, language and cultural barriers.

First-generation migrants often favour simpler business models, such as franchises, which require a lower capital base and have lower supply-chain risks. Some cleaning franchises have 80-90 percent of their franchise owners identifying as Indian or Chinese, Leong said.

Second-generation Chinese and Indian businesspeople are more likely to start more complex businesses or work professions.

Within the Chinese business ecosystem, there was a preference for working within individuals within the community. There was also extensive use of Chinese language platforms such as the Chinese New Zealand Herald, Skykiwi and WeChat.

While Indian businesses often also rely on a trusted “inner circle” when marking large business decisions, they were more likely to use “mainstream channels” for typical business decisions such as recruitment.

Both business ecosystems were likely to engage in business practices that were found to work in their country of origin. Compared to the average New Zealand business, there was often a higher price sensitivity; a greater tendency for bargaining and negotiating; more frequent market testing; and a lower likelihood of consulting outside of the inner circle.

Asked how businesspeople of Chinese origin were coping with the impact of COVID-19, Leong noted that they were among the first in New Zealand to be hit by the impacts of the virus.

“On the one hand, much like everyone else, Chinese businesses within the hospitality, retail and tourism sectors are badly affected. They started noticing a decline in January as customers were wary of what was then known as the Wuhan virus.”

However, others were thriving as they leveraged their networks offshore and their knowledge to adapt. As examples, he pointed to businesses that were focusing on health supplements, hand sanitiser, honey, deliveries. His own face mask business, MEO, had “boomed”.

Watch the full webinar

Sameer Handa, chairman of the India New Zealand Business Council, noted that New Zealand’s Indian diaspora had played a critical role as “warriors” in the country’s response to COVID-19.

“A lot of Indian people have been working in supermarkets, service stations, the small dairies... a lot of nurses and doctors, they have been playing a big role during lockdown.”

He noted that India was internationally regarded for its IT and that this would be increasingly relevant as he believes the trend towards remote working will continue.

As an example of contributions Indian New Zealand businesses had already made to “mainstream” business, he pointed to a trip the INZBC had led to India a few years ago, which had helped The Warehouse gain the knowledge it needed to later set up a buying office in Mumbai.

Panelist Brett O’Riley, chief executive of the Employers and Manufacturers Association (EMA), spoke of the way Chinese and Indian business ecosystems benefited New Zealand.

“What we see across our 8000 members is that New Zealand’s future is really determined by how we are going to engage with the Asia-Pacific, and I’ll particularly use the Asia part.”

Businesses could now tap into networks and ecosystems in Asian markets without even having to leave New Zealand. “We have much richer ecosystems right here in Auckland, and the ability for NZ businesses and entrepreneurs to tap into those ecosystems,” he said.

He said Asian migrants, whether first generation, second or beyond, had created fantastic opportunities for New Zealand as a whole to engage with Asia. “I’m not sure it’s an opportunity we have capitalised on.”

Fellow panelist Caroline Bilkey, director of the Auckland office of the Ministry of Foreign Affairs and Trade, said international trade would be a crucial enabler of New Zealand’s recovery from COVID-19. “What we have heard today about these diaspora communities, with the borders closed, they are in a really good position now to share their knowledge about markets, share their connections and assist in growing trade as we all work together to come out of this economic crisis.”

New Zealand government agencies have a range of services to offer to New Zealand businesses, including market intelligence from the region, she said.

The panellists also discussed barriers to better engagement between Asian businesses and the “mainstream” business community and spoke about how breaking such barriers would benefit all.

Kenneth Leong said there was no “magic bullet or a single endeavour to bring everyone together”. Multiple platforms for engagement were needed. He expected there would be more “cross-pollination” between communities over time.

“This misconception that ‘the Indians just want to do business with the Indians, the Chinese just want to engage with the Chinese’, it’s just not true. These communities want to engage with mainstream and are looking for opportunities to engage.”