Informal Relationships Between New Zealand SMEs and Sub-National Officials in China

The signing of a free trade agreement was a watershed moment in New Zealand-China relations and provided a number of advantages for New Zealand firms seeking to expand their presence in the Chinese market. However, it is well established that many businesses in China use informal relationships (guanxi) to create business opportunities and facilitate their way through bureaucratic obstacles. Doubts have also been raised in the past about local governments’ implementing China’s international agreements and about the current efficacy and reliability of China’s legal institutions. This thesis examines the informal relationships New Zealand SMEs based in China maintain with local officials and street-level bureaucrats and how they experienced the implementation of the FTA. Interviews with New Zealand businesspeople in Shanghai and Xiamen reveal that SMEs were encountering problems getting their goods across the border at the lower tariff rates provided in the FTA. They were very positive about the FTA, however, as the profile of New Zealand officials and firms had risen considerably. It is established that New Zealand firms are engaging in collaborative activities with New Zealand government representatives in an attempt to gain further competitive advantage and that the practice of guanxi is adapting in response to Beijing’s attempts to formalise officials’ interactions with private sector firms. It is suggested that a firm’s reputation (mingyu) with officials may be becoming established as an alternative to guanxi.