Rules strike right balance between foreign investment and control: Chapman Tripp boss.

Racism is behind negative reactions to Chinese buyers in the property market, says the head of one of New Zealand's largest law firms.

The firm, Chapman Tripp, has acted for a number of foreign investors and Chinese clients - including Shanghai Pengxin Group, the buyers of the Crafar farms.

The firm's managing partner, Andrew Poole, said he believed the country's existing rules struck the right balance, facilitating foreign investment while not allowing it to continue unrestricted.

Asked for his view on the adverse reaction from some quarters to Chinese buyers getting into the local property market, Poole said: "Look, it's hard to get past thinking it's racism, to be honest. We seem less perturbed by Germans and Swiss and Canadians buying land than we do Chinese.

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Andrew Poole, managing partner of law firm Chapman Tripp talks to NZ Herald reporter Hamish Fletcher about foreign investment, the legal market and business activity in this country.

"I think the pressure point is because most Kiwis regard our competitive advantage internationally as dairy, and so when we see inbound investors looking at dairy assets that generates a lot of publicity and the Chinese have had a significant interest in the dairy assets but obviously your comments apply to residential housing and all sorts," he said in an interview as part of the Herald's Meet the CEOs series.

"We've got to try to strike the right balance, as I say I think we are striking the right balance. And it is always interesting to note that the clamour from the public is generally about Chinese buyers - not even so broadly across Asia - it's particularly about Chinese buyers and it's hard to reconcile that on any basis other than some discrimination."

Elsewhere in the interview, Poole said the legal sector faced ongoing challenges, noting that even before the global financial crisis there had been a "consistent shrinking of the legal market in New Zealand".

"The GFC's exacerbated that trend but a permanent change of the legal landscape has been taking a lot of work away from private law firms like ours and bringing it in-house to significant, large in many cases, in-house legal teams ... there's quite a lot of stress in the market," he said.

Poole believed there was an imbalance between demand and supply. "We've got way too many lawyers, way too many law firms and, quite frankly, way too many law schools as well," he said.

Because of Chapman Tripp's size and the work it did, Poole said the firm was a reasonable barometer of New Zealand's business activity.

"If clients aren't doing anything, we're doing nothing," he said.

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"We're still an economy in transition. We'll know that the economy has truly transitioned, I think, when we see corporate finance, property, tax going very strongly and the litigation load and the insolvency load really easing."