Chinese SOE makes Long-term Investment in New Zealand Forestry Sector
China Forestry Group New Zealand Company Limited (China Forestry Group NZ) has agreed to acquire part of the NZ Superannuation Fund’s North Island forestry assets, following a competitive tender and Overseas Investment Office approval.
China Forestry Group NZ is a wholly owned subsidiary of China Forest Group Corporation, a Chinese State Owned Enterprise owned and controlled by the People’s Republic of China. China Forest Group Corporation’s is a major Chinese forestry company with business interests covering a range of timber related businesses including the ownership of forest plantations, wood processing, facilities and timber product manufacturing and related sale and distribution to the Chinese Construction sector. Each year China Forest Group Corporation imports over US$311 million of forestry products worldwide.
China Forest Group has been doing business with New Zealand for over six years and is one of this country’s largest buyers of export timber averaging 75,000m3 of logs per month for its Chinese processing, manufacturing and distribution operations. Apart from importing logs from this country, the company has no other current interests in New Zealand.
Graeme Wong, Director of China Forestry Group NZ and spokesperson for the buyer said, “The parent company China Forest Group has made this investment on order to secure part of its overall demand for New Zealand logs from its own forests. This is a long-term investment and the forests acquired will be re-planted following harvest to maintain continuity of supply.”
China Forestry Group NZ will own the forest assets acquired and have appointed two New Zealanders as directors; professional company director Graeme Wong and Mark Chennells, who has been involved in the investment industry in New Zealand and China for over 25 years.
This is the first step in CNFP’s strategy to invest in the NZ forestry industry, by acquiring additional forests to expand its total forest estate over time and exploring profitable opportunities to add value to its NZ forest assets.
The forestry estate comprises some 13,600 hectares of which around 10,400 are productive. The two largest blocks are RototunaForest on the Kaipara Habour’s KauriCoast and Coroglen on the CoromandelPeninsula. Smaller blocks are located around Raglan; Rotorua; Waimata, Gisborne and Wainuioru in the Wairarapa. See appendix attached.
China Forestry Group NZ has also committed to providing a two-year scholarship to the value of $20,000 per scholar in order to promote the language and business skills of New Zealanders with an emphasis on developing trade and business opportunities with China.
The scholarship includes a $3,000 grant and travel and other costs, and will be awarded to a final year student with New Zealand citizenship, either studying forestry or another business related industry at a New Zealand tertiary institution.
On completion of the student’s qualification in New Zealand, in the second year the student will be offered language training at a Chinese language institution in China, coupled with an internship with the company’s parent group or similar organization.
Graeme Wong said, “The intention is to provide the student with the language skills and business experience to successfully carry out business with Chinese partners. We have committed to providing this scholarship for an initial five years. If the scholarship proves as successful as we expect, then it will be renewed.
“Owning the forestry estate will not likely see any reduction in the purchase of export logs from other New Zealand suppliers. Rather it should see the company sourcing more of its timber requirements from New Zealand,” Graeme Wong said.
Lin Zhan, General Manager of China Forestry Group NZ said, “China Forestry Group NZ will establish a permanent base in New Zealand in order to manage the newly acquired forest estate. To ensure that the forests are managed to best practice, New Zealand based in-forest suppliers will continue to provide the in-forest services. We don’t envisage job losses, in fact over time; our forestry interests in this country should generate additional employment opportunities for New Zealanders.”
As a condition of the Overseas Investment Office approval, China Forestry Group NZ must consult the Department of Conservation, the QEII Trust and the New Zealand Walking Commission.
About China Forestry Group NZ
China Forestry Group NZ is a New Zealand registered company and wholly owned by China Forest Group Corporation, a Chinese owned state owned entity.
China Forestry Group NZ will be permanently based in New Zealand. It will own and operate the newly acquired forest estate. New Zealand based in-forest suppliers will continue to provide the in-forest services and the forest estate will be managed to international standards.
The Company’s directors are: Ji Baojun, Mark Chennells, Wang Liwei, Li Wei and Graeme Wong.