The Impact of the Regional Comprehensive Economic Partnership (RCEP) on Perceived Entry Strategies of New Zealand SMEs: A Case Study of China

Haowen, Yan
Nagar, Swati
Hikmet , Taghreed
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Master of Business
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Auckland University of Technology

The Regional Comprehensive Economic Partnership (RCEP) was officially signed in 2020 and will take effect on 1 January 2022 (MFAT, 2022). The entry into the force of RCEP will mean further integration of resources between New Zealand and China, which will be more conducive to the further development of bilateral trade and economic relations (MFAT, 2022). NZ SMEs have been identified as having a significant impact on the country's economy and international business activities (Jin & Hurd, 2018). In particular, 97% of businesses in New Zealand are defined as SMEs and play an important role in the New Zealand economy (OECD, 2019). However, there has been limited discussion of New Zealand SMEs' entry mode choice in the Chinese market under the context of the RCEP framework. This dissertation examines the impact of the Regional Comprehensive Economic Partnership (RCEP) on New Zealand’s small and medium-sized enterprises (SMEs) entry strategies into the Chinese market. The study explores the benefits and competitive advantages that New Zealand SMEs may obtain in the Chinese market under the RCEP framework through a systemic literature review and a case study of Zespri, a New Zealand-based kiwifruit exporter. The research focuses on the effects of RCEP on market openness, trade integration, and the theoretical basis for influencing SMEs' entry mode choices based on the transaction cost economics (TCE) framework.

The findings reveal that RCEP has provided significant benefits and competitive advantages for New Zealand SMEs by fostering closer trade and market integration between the two countries. However, the study also highlights ongoing challenges, such as environmental stability concerns and insufficient regulations. Despite these challenges, New Zealand companies can leverage RCEP policies to obtain support and protect their intellectual property and brands. The analysis suggests that high asset specificity makes New Zealand SMEs more suitable for equity-based entry modes, allowing for greater control over their businesses. In addition, strong bilateral relationships between China and New Zealand can help SMEs overcome challenges such as environmental uncertainty, complex regulatory environments, and counterfeit products. In conclusion, RCEP has provided New Zealand SMEs with significant benefits and competitive advantages in the Chinese market, and adopting equity entry models and establishing connections in the Chinese market can help SMEs capitalize on these opportunities.

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