Global Insights – October 2022
Our Kea Regional Directors give on-the-ground insights into what is happening in their region and the opportunities this presents for New Zealand export businesses.
This month in China consumer prices have risen modestly, in sharp contrast to the high global inflation, and employment has generally remained stable. The country celebrated Golden Week during the first week of this month – which generates a huge holiday economy brought about by the 7-day consecutive holiday. This year 422 million domestic tourism trips were made nationwide, a decrease of 18.2% year-on-year due to the pandemic.
Local tours and trips around the area have become the first choice for the majority of residents to travel and the urban outdoor industry is growing rapidly. Camping, cycling, frisbee and trekking are moving from niche to mass consumption. This growing trend may give hints to some of the New Zealand companies in similar industries as business development targets.
With increased movement taking place during the Golden Week, the number of positive cases has risen across China and the outbreak control policy has been tightened again with stricter travel restrictions and more frequent PCR tests to curb the outbreak from deteriorating further. President Xi declared in the keynote speech at the opening ceremony of the 20th CPC National Congress that there would be no immediate loosening of the “Zero Covid” strategy. The current practices remain. All residents in China need to carry out a PCR test every 72 hours to ensure a normal daily routine.
October also saw the much anticipated 20th CPC National Congress where the 20th Central Committee and the 20th Central Disciplinary Committee were elected on the closing day. With an upgraded FTA between China and New Zealand, new tariff reductions, customs clearance facilitation measures and greater area opening will bring more convenience and benefits to trade between the two countries. Following the congress, New Zealand companies may see more favourable policies and opportunities to invest in more sectors in the China Market.
Rebecca Bao, China Regional Director
UK & Europe
This month the big news in the UK is the stepping down of Prime Minister Liz Truss after just 45 days on the job, with her replacement yet to be announced. We also have a new Chancellor, Rt. Hon Jeremy Hunt, who has announced a reversing of most of his predecessors ‘mini budget’ announcements from three weeks ago as the Government looks to stabilise financial markets, reduce borrowing costs and address fiscal policies. Some of the highlights include;
- The basic rate of income will remain at 20p indefinitely instead of being reduced to 19p.
- Axed proposals around cutting dividends tax including scrapping the new VAT-free shopping scheme
- The cap on energy prices charged to households is now only guaranteed until April 2023 and then will be reviewed.
- The freeze on alcohol duty has been scrapped which will see prices increase – This will affect the price of NZ wine, beer and spirits in the market.
- Cuts to stamp duty and National Insurance remain in place.
The pound is gaining against the dollar but still has a long way to go in stabilising confidence in the market. This uncertainty and constant change is an upheaval for UK businesses, consumers and businesses exporting to the market, things are moving fast and it’s hard to predict what will happen throughout the rest of October.
In other updates, we were thrilled to join Zak Cole, Head of Services for Europe and Beachhead network to welcome new Beachheads to the New Zealand Trade & Enterprise (NZTE) UK & Europe
network, including fellow World Class New Zealander, Sarah Smart, and Kea member Matt Cummings. Sarah offers insights and support from FMCG and dairy industry perspective and Matt is an e-commerce specialist. We also attended the NZTE roundtable session with NZTE CEO Pete Chrisp, Nick Swallow, Trade Commissioner UK & Ireland, and Commercial Advisor Joel Simms. This was a wonderful opportunity to meet with fellow NZ exporters that have teams and operations in and across the UK & Europe and provided an opportunity to share general sentiment including the challenges and opportunities currently faced by businesses as a result of the pandemic, the ongoing conflict in Ukraine and the effects of Brexit.
Sara Fogarty, Kea UK/Europe Regional Director
This month Kea was pleased to support a visit led by Air New Zealand which included the Minister of Finance Hon Grant Robertson, the shadow Minister of Finance and CEO’s and Chairs of some of New Zealand’s largest businesses as well as Air New Zealand’s Executive and Board.
The two and a half day programme saw the delegation interact with business and thought leaders in New York and strengthen connections with a vibrant New Zealand community. The purpose of the delegation was to promote New Zealand and learn more about the economic environment, trading conditions, and the latest global trends and innovations. Kea World Class New Zealander Kirsty Graham, the Global President of Edelman’s Practices and Sectors, was one of those who spoke to the group and offered thoughts and insights on trends in corporate governance, and Sean Marks, General Manager of the Brooklyn Nets, hosted the group at a special team practice session in Brooklyn.
Kea identified and invited a diverse range of people from Kea’s community to be part of a networking event allowing the delegation to meet some of the inspiring New York-based Kiwi. A number of our Kea community discussed their journeys to New York, giving a glimpse into the challenges and rewards of living and doing business in this market. While the rewards can be significant in this market, so are the challenges of doing business in the USA. A slow and calculated approach is the most prudent in this economic environment.
Fun fact: If New York State were an independent nation, it would rank as the 10th largest economy in the world.
Gary Fortune, Kea North America Regional Director
This month Education Minister Chris Hipkins will lead a delegation to The Republic of Korea, Indonesia, and Singapore to encourage people to study in New Zealand and promote the fact our country is welcoming international students back.
Korea is our 4th largest source of international students – and education links were hit hard by the pandemic. The Minister will speak at Korea’s largest student expo, the International Education and Career Fair, and at the same time mark the 60th anniversary of diplomatic relations with Korea. In Indonesia, which is a strategic and growing market, he will be promoting New Zealand’s commitment to education cooperation and in Singapore, where he will sign a refreshed Education Cooperation Arrangement. He will also cover innovative practices and discuss the potential for greater exchange in education and public service training with his ministerial counterpart.
October also saw the Independent Electoral Review, established by the Minister of Justice, began its first stage of engagement on the future of New Zealand’s electoral system. Elections are a critical part of our democracy, and the Review is seeking a range of views and perspectives before deciding what changes they think may be needed.
This is a broad review of New Zealand’s electoral laws. It covers almost everything to do with how elections work, including voting rights for overseas-based New Zealanders, voting methods, the length of the Parliamentary term, political donations, election campaigns, and the thresholds for parties to enter Parliament under MMP. Written submissions from Kiwi anywhere are invited until 14 November. You are encouraged to share what matters most to you within the Terms of Reference and the full consultation document is available here.
Finally, the hotly contested Forest and Bird annual Bird of the Year competition is on! The competition aims to raise awareness of New Zealand’s endangered bird species, and every year Kiwi flock to the polls to decide who will take out the top honour. Right now, 80% of our birds are in trouble. Climate change and habitat destruction are big threats to all our native species. If we protect and restore our rivers, forests, oceans, and climate, we can bring our native wildlife back from the brink. Listen to some contenders here and vote for your top 5 choices before 30 October!
Saya Wahrlich, Global Director, Government & Industry
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