China NZ Business Summit: Air NZ chief warns opening borders will be complex

Greg Foran, chief executive of Air New Zealand. Photo / Supplied

Air New Zealand chief executive Greg Foran has sounded a note of caution for those pushing to open New Zealand's borders: it is not as easy as it might seem.

"It's complex," he said. "You can sometimes sit around the dinner table at night and have a discussion with the family, and say, well why aren't we opening with the Cook Islands. Just get on and do it."

But when you got into the details it was not nearly as simple, Foran said.

He cited the example of dealing with transit passengers.

"Let's say a plane comes in from the United States from LA or San Francisco and it's got a hundred passengers on it ."

"About a third of them are simply in transit through this country to try and get somewhere else," he said.

"You have to make sure that those transit customers aren't mixing with anyone else in the plane, or in the airport or anywhere else … otherwise you're then going to have to quarantine all of those people as well."

Foran was speaking as part of a high-powered chief executive panel at the China Business Summit in Auckland today.

He was joined in the discussion by ANZ chief Antonia Watson and Fonterra chief Miles Hurrell.

Air New Zealand had lost 99 per cent of its revenue in the immediate wake of the Covid-19 outbreak, Foran told the gathering.

China alone had been delivering about 450,000 visitors to New Zealand every year, he said.

But Air New Zealand was growing again and would cope with a "new abnormal".

The airline was now back to five flights to Shanghai a week, primarily handling freight.

"As we think about borders … I don't think it's in anyone's interests not to get the country back up and running again," Foran said.

"But we've got to deal with all the stakeholders and do this sensibly and carefully.

Antonia Watson

Watson highlighted the impact that Covid-19 has had on a range of businesses that banked with ANZ.

Some, like seafood exporters, had been hit hard in the initial stages of the pandemic.

Others like horticulture - particularly kiwifruit - were seeing strong growth off the back of Chinese demand for healthy foods.

In fact, the kiwifruit industry was tracking 20 per cent up on last year in terms of export volumes.

Watson also alluded to Chinese trade tensions with the US.

ANZ chief executive Antonia Watson. Photo / Getty Images

ANZ research suggested that economic fallout from Covid-19 had accelerated the decline of the US economy as the driver of global growth.

China would emerge from the pandemic more strongly than the US, she said.

ANZ has forecast that the size of the Chinese economy will grow from 67 per cent of US GDP at the end of 2019, to 75 per cent by the end of 2021.

"The combined effects of the US/China trade war, the global downturn triggered by Covid and the rapid growth of China's neighbours have reduced the importance of the US consumer market for Asian economies," she said.

But while China's importance to the global economy would continue to increase, the US dollar and financial institutions would remain central to the recovery.

That meant that drivers of recovery from this global downturn were likely to be Chinese growth and US Federal Reserve policy - much as they had been after the Global Financial Crisis a decade ago, she said.

Miles Hurrell

Fonterra's Hurrell talked about continued growth prospects for New Zealand dairy in the Chinese market.

Despite an initial hit to the retail-focused food services part of the business, the ingredients business had stayed strong.

With the Chinese economy getting back on to more normal footing the outlook was strong, he said.

"No market is without risk but we've never been in better shape than we are today," he said.

Miles Hurrell, chief executive of Fonterra. Photo / Getty Images

Growth in Chinese dairy consumption continued to outpace the growth of domestic production there.

Fonterra was continuing to expand its presence on the ground in China and was investing in a new R&D site in Shanghai as would next year build a new application centre in Wuhan - the epicentre of the original Covid outbreak.

Application centres are facilities where new products can be trialled with consumers.

Expanding the business beyond Shanghai to regional centres like Wuhan was key to Fonterra's strategy in China, Hurrell said.

The sixth annual China Business Summit was presented by the Auckland Chamber of Commerce and NZ Inc.