The purchase of 16 Crafar farms is a base for expansion in dairying by Zhaobai Jiang, reputedly the wealthiest person in China, according to the Overseas Investment Office (OIO).
The OIO recommended the sale to Shanghai Pengxin Group. Associate Finance Minister Jonathan Coleman and Land Information Minister Maurice Williamson have approved it.
The sale by receivers KordaMentha has stoked anti-foreign investment sentiment and a rival consortium led by businessman Sir Michael Fay is promising a legal challenge.
The OIO decision does not reveal the sale price but says the buyer wants to invest more in New Zealand and will spend more than $100 million in the next five years to promote New Zealand dairy products in China.
Pengxin has extensive business interests and is owned by Nangtong Yingxin Investments, a Chinese company owned 99 per cent by Zhaobai Jiang with his brother Lei Jiang owning 1 per cent.
Zhaobai Jiang is a professional engineer who founded a construction company in 1988 and was listed by Forbes as the wealthiest person in China.
The OIO decision says he intends to identify dairying and processing operations in New Zealand which may be appropriate for partnerships.
He does not want to build or own milk processing plans but may invest with joint venture partners in expanding capacity.
He intends to increase production at the Crafar farms, which have suffered from under investment and poor pasture quality, by investing $15.75 million in the first two years.
The new owner intends to sell its milk to dairy co-operative Fonterra.
"The applicant would be interested in offering expertise from China to collaborate to develop new dairy products for the Asian, and particularly the Chinese, market such as baby formula."
This decision suggests processing would be in New Zealand.
Zhaobai Jiang is also investing in a farm school on one of the acquired farms to be operated by New Zealand's state-owned Landcorp, which will manage the farms purchased.
The applicant submitted that a refusal of his application may adversely affect New Zealand's trade relations in China. The countries have a free-trade agreement.
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