Kiwi companies appear to be adopting a "China and ... " approach to our biggest trading partner — not diversifying trade away from China, but seeking to maintain their Chinese footprint and business links while also growing into other markets.
"It's pretty obvious to say you should diversify your risk to China but actually it's not that easy for some businesses," said an independent director. "We operate in markets globally that have various trade barriers — so it's not a case of simply supplying customers elsewhere. Building new markets takes time and the inability of key executives to travel to develop new markets with Covid has a negative impact on progress in developing relationships. China is a huge market, wants many NZ products and will pay for it.
Those of us doing business there are not blind to the risks. Mitigating them is not so easy for the reasons explained.
"It is important that our politicians recognise the positive impact China has on the NZ economy and finds ways to communicate humanitarian concerns in private without the loudhailer. Loud-hailer politics will achieve nothing with China, exposes our economy and might simply be playing to local politics and media over what is in the national interest."
Dairy players report being well diversified in products, customers and markets is especially important now and has served New Zealand well during Covid-19 disruptions to date. Said an electronics firm boss: "We do not do business in China, but do source some components there. As part of risk management, we continually look at alternative supply options (not just in respect of China). It may pay at some point to ask a similar question about Taiwan, a place where many components come from and which is rising on the risk register.
A banker said it's bit late to talk about diversification. "NZ has been a long time on the road to China, it demonstrates a laughable level of naivety to now consider that road."