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China Bigger Threat Than Opportunity?

10 April 2006

China Bigger Threat Than Opportunity? New Zealand Businesses

While Australia forges stronger economic relations with China, New Zealand businesses see China as more a threat than an opportunity.

This is one of the findings of the Grant Thornton International Business Owners Survey (IBOS) of mid-sized businesses, which included New Zealand companies.

The survey asked each country which other country they saw as their biggest threat or their biggest opportunity.

In the case of New Zealand, the highest proportion (27%) saw China as their biggest threat, while only 14% gave Australia that tag.

When it came to identifying the biggest opportunity, the majority of New Zealand businesses plugged for Australia (29%), while China was rated by 13%.

"Clearly there is a concern about China dominating export trade," said Grant Thornton New Zealand chairman Warwick Jones. "We know that there are tremendous opportunities in China for New Zealand companies, but the reverse effect unfortunately overshadows that.

"It appears New Zealand Trade and Enterprise and our other export organisations are going to have to put in a lot more spade-work if the opportunity that is China is to be realised. Only in this way will the spectre of China as a threat be diminished."

Mr Jones said that if there was an encouraging sign in the survey, it was provided by another segment which asked business owners what the impact of the Chinese economic boom had been on their business.

New Zealand was one of the countries that said it had increased business for them (albeit at the bottom of this list), as against being largely unaffected. Four countries (Poland, Turkey, Botswana and Thailand) considered it had actually decreased business (see chart below).

"China's importance in international trade is demonstrated by the fact that nearly one in five medium-sized businesses in the survey now imports from there," said Mr Jones. "It is at this point ahead of the other major growing economy, India, when compared by imports.

"In the North American Free Trade Area and East Asia, more than a third of businesses responded positively to China being both a threat and an opportunity. But in New Zealand, the accent is more on it being a threat and this could reflect concerns about New Zealand companies being put out of business by Chinese imports."


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