Global Insights – August 2021

CHINA

The growth of profits generated by China’s industrial companies has slowed for the fifth straight month, suggesting that the post-pandemic recovery in the world’s second-biggest economy is losing momentum.

Factory activity slipped into contraction in August for the first time in nearly one and a half years as coronavirus containment measures, supply bottlenecks and high raw material prices weighed on output. This slowdown of the manufacturing sector is in part due to China’s strict efforts to control its worst COVID outbreak since last year, after a number of Delta cases were discovered in the eastern city of Nanjing late last month,

These strict measures continue to affect Kiwi food and beverage exporters that have again been warned that a single positive COVID case in their workforce could lead to Chinese authorities immediately suspending their export rights and forcing a recall of products. 

In a recent guidance note to export businesses, the Ministry for Primary Industries said it was aware of new import measures being applied by China, covering all cold chain food products that are normally stored and transported under refrigeration, including vegetables and fruit.

“Cold chain food establishments, packhouses, and cold stores registered with China Customs to produce/store food products for export to China should operate on the assumption that if a staff member returns a positive Covid-19 test result it is possible this will result in China suspending the premise’s registration.”

Chinese customs officials expected any business with a staff member returning a positive test to “immediately recall any affected exports to China”, and suspend all further shipments of goods.

In other efforts to bolster the economy China has also announced the opening of a third stock exchange. The announcement comes amid heightened concerns over a potential “decoupling” of the Chinese and U.S. financial markets, with governments on both sides of the Pacific implementing policies that will make it harder for Chinese companies to go public on American markets.

The main goal of creating the Beijing Stock Exchange (BSE) is to alleviate a longstanding issue in the Chinese economy: the difficulty faced by many small and medium-sized enterprises in accessing financing.With the Beijing Stock Exchange set to focus on servicing fast-growing SMEs, experts say the move is part of China’s effort to encourage startups to list domestically.

Ciara Liu, Kea China Regional Director

UK & EUROPE

The improving health situation and ensuing continued easing of virus containment measures are putting the EU economies back in motion with the near-term outlook for the European economy brighter than expected.

In the UK kids across the nation have finally headed back into classrooms, prompting a collective sigh of relief from parents and carers alike. With the return to school also comes the return to work for many parents. The first Monday of September was the busiest rush hour on the London Tube since the first national lockdown, with 831,000 taps in to the tube network between 0700 – 1000. 

Across the UK businesses are starting to reopen, and consumer confidence is up as people look to spend money saved during lockdown on beauty, clothes and hospitality in the midsummer months. 

This desire to get out and eat is good news for Kiwi food and beverage exporters that will start to see demand rise, however supply chain issues continue to cause problems, particularly with a lack of refrigerated shipping containers arriving at New Zealand ports. There is already some nervousness around pre Christmas shortages.    

The European Commission says positive survey results among consumers and businesses, as well as data tracking mobility, suggest that a rebound in consumption is set to strengthen in the coming months. There is also evidence of a beginning revival in tourism activity, which should also benefit from the new EU Digital COVID Certificate. 

Overall the commission says, GDP is now forecast to grow by 4.5% in 2022 in both the EU and the euro area. The volume of output is projected to return to its pre-crisis level (2019-Q4) in the last quarter of 2021, which is one quarter earlier than expected. 

This growth will provide opportunities for Kiwi exporters awaiting the details of the Government’s free trade agreement with the UK. With New Zealand’s Chief Negotiator in London for the last few weeks in August, solid progress is being made and an update on the agreement is expected soon. 

Sara Fogarty, Kea UK/Europe Regional Director

North America

Hi, My name is Gary Fortune and I’m Kea’s new North America Regional Director.

My love for music and the music business has taken me on many amazing journeys all around the world where I have built a deep network of contacts. I served as an Export Manager for the New Zealand Music Commission’s Outward Sound program from 2005 to 2016, where I travelled extensively building global networks, assisting musicians and music businesses in developing their creative and business platforms to expand internationally. 

I moved to New York in 2016 with the startup music festival and business summit Mondo.NYC. where I directed the international development of the event. 

As the Regional Director for Kea in North America, I am most excited about working with the variety of innovative New Zealand companies. I am looking forward to working with Kiwi business owners to bring together connections that will make the difference to their success, and being a part of their story will be extremely rewarding.

Arriving back in New York this week after being back in New Zealand for the past 18 months, I see a city embracing the new normal to open up successfully. Bars, restaurants, and entertainment venues are now mandated to require proof of vaccination to enter. Although not required by law, New Yorkers have adopted the ‘be safe’ message and masks are worn in all retail stores. 

While there are many stores and restaurants that have not survived and shuttered because of the pandemic lockdown, there are now new businesses popping up in their place. There are opportunities here for Kiwi entrepreneurs and businesses with cheaper rents and the ability to be part of a country getting back to business. 

New York feels like it is ready to open up and be normal again, and with that come new opportunities. I look forward to sharing insights and the latest export trends with you in the coming months.  

Gary Fortune, Kea North America Regional Director