(Yicai) Aug. 27 -- More than half of New Zealand companies operating in China have traded expats for local residents, as their staff in the country is now fully localized, according to a report by the industry association for New Zealand’s businesses in China.

Fifty-one percent of the 70 firms polled by the New Zealand Business Roundtable in China employ zero New Zealand nationals in China this year, up from 35 percent last year, as localization of talent is now the majority model, according to the NZBRiC 2026 Business Outlook Report.

The 70 respondents were drawn from NZBRiC's wide membership network, which the organization says accounts for more than half of New Zealand's export value to China.

“The New Zealand expat community in China has shrunk materially, and leadership travel frequency has eased.” NZBRiC noted. “At the same time, confidence in local Chinese talent is rising, and those firms that do maintain New Zealand staff on the ground are increasingly clear-eyed about the strategic value that presence provides.”

The results of this year’s survey can be summarized by three overarching themes -- opportunity, optimization, and localization -- according to Daniel Young, chairman of NZBRiC and president of Tatua China.

“As China continues to grow domestically, New Zealand businesses are moving to capture new markets outside the traditional tier-one cities, optimize their supply chains, and utilize local talent to move faster in the ever-changing Chinese market,” Young said.

Of the companies still hiring New Zealand nationals, those employing three to five New Zealanders dropped to 8 percent in 2026 from 17 percent in 2025, and none employ more than 20, according to the report. Meanwhile, the proportion of respondents with zero employees in the Chinese mainland has grown to 17 percent from 7 percent.

Optimism about staff growth has moderated. Only 43 percent of respondents expect to increase their headcount in China in the coming 12 months, down from 54 percent last year. Twenty-seven percent have already trimmed their Chinese teams this year, up from 20 percent in 2025.

Forty-three percent of respondents said they are no longer concerned about New Zealand staffing being a challenge, as they have fully adopted an “in China, for China, with China” model, entrusting their operations entirely to local professionals.

Executive travel has also softened, with the share of executives visiting China two to four times a year falling to 48 percent in 2026 from 57 percent last year, according to the report. Meanwhile, the proportion of executives making no trips to China at all rose to 21 percent from 15 percent.

For businesses that deploy or are considering deploying New Zealand staff in China, the cost of employment and relocation is by far the biggest challenge at 38 percent. For instance, a single New Zealand expat hire in Shanghai can cost two to three times the equivalent local hire. Language barriers have grown notably as an impediment to travel, up to 22 percent from 13 percent.

Increasing domestic competition is by distance the most commonly cited challenge New Zealand companies face in China, named by 60 percent of respondents this year, up from 57 percent last year, the report showed. Rising labor and input costs jumped to 40 percent from 25 percent.

New Zealand’s exports to China are concentrated in agricultural products and raw materials that largely complement rather than compete with Chinese manufacturing, unlike more directly rivaling European exports, said Xu Mingqi, senior researcher at the Shanghai Academy of Social Sciences.

Most of the competitive pressure New Zealand firms face is in categories such as beef and dairy products from other exporting nations, including Australia and South America, rather than from Chinese companies, Xu noted.

New Zealand’s exports exceeded NZD100 billion (USD59.4 billion) for the first time this year, with China remaining its largest trading partner, said Andrew Hoggard, New Zealand's associate minister for agriculture, biosecurity and food safety. Bilateral trade climbed 10 percent to record NZD40 billion (USD23.8 billion) last year from the year before, with dairy exports up 31 percent to NZD8.2 billion (USD4.9 billion).

Confidence in Chinese Market

Optimism about the Chinese market is at a multi-year high this year, the NZBRiC report showed. Sixty-four percent of the polled New Zealand businesses expressed high or very high confidence in the Chinese market in 2026, up from 51 percent last year, with 97 percent reporting at least moderate optimism, up from 94 percent.

The scale of China’s consumer market remained the primary draw for New Zealand businesses, cited by 75 percent of respondents this year, compared with 91 percent in 2024.

Geographically, New Zealand business activity is consolidating rather than dispersing within China. Eighty-six percent of respondents with an on-the-ground presence are based in Shanghai this year, up from 78 percent in 2025. Hangzhou has emerged as the fastest-growing secondary hub, rising to 12 percent from zero in 2024.

Investment intentions remain firmly positive. Eighty-one percent of respondents ranked China among their top three global investment priorities this year, and 76 percent expect to increase their investment in China over the next three years, with unsure responses dropping to 3 percent from 13 percent last year.

Editor: Futura Costaglione