Viw Magazine

Business Coach

  • Written by Hongzhi Gao, Associate professor, Victoria University of Wellington
While tariffs have a direct impact on exporters in the US and China, third-party countries like New Zealand are more affected by non-tariff barriers. EPA/Aleksandar Plavevski, CC BY-ND

Despite disruptions to global value chains, the 18-month trade tensions between the US and China appear to have left New Zealand exporters unscathed so far.

As our analysis of StatsNZ’s merchandise trade data shows, New Zealand has managed an overall growth of 4.7% in merchandise exports over the year ending in August. New Zealand exports to top trading partner China grew by 19.6% (slightly less than 21.1% during the previous year).

There was also strong growth in exports to Thailand (18.7%, compared to negative growth in 2017/2018) and to the Philippines (15.5% compared to 7.2%).

It is not all good news, though. Exports to New Zealand’s second most important trading partner Australia dropped to -0.1% (from 5.8% in 2017/2018). More worryingly, there was a sharp drop from 43.9% to 4.4% for Hong Kong, 39.4% to -10.1% for Singapore, 23.4% to -18% for the United Arab Emirates, and many other countries. Export growths to almost all of New Zealand’s second-tier trading partners have fallen.

Should New Zealand exporters be worried about these shifts in exports? There are several ways we can drill deeper into the impacts of the trade war between the world’s two largest economies.

Politics in the way of trade

First, exporters may be concerned over politically motivated policies that would have an adverse effect on goods from New Zealand. While the impact of tariffs is immediate for US and Chinese exporters, the most worrying aspects for exporters from third-party countries like New Zealand are non-tariff barriers that can be politically motivated.


Read more: How to get ready as the US-China trade war spills over to other countries


For more than 70 years, the dispute settlement system of the World Trade Organization (WTO) (previously GATT) provided a process for countries to resolve trade grievances. But the US-China trade war has sidelined these global principles and replaced them with tit-for-tat exchanges of tariffs and political power wrestling between the two big powers. As politics gets in the way of trade flows, companies are encountering an increasing level of political control or intervention (e.g. stricter checks at customs, stricter processes for issuing or renewing licences for importing, and stricter scrutiny over inbound or outbound foreign direct investment).

While many non-tariff trade barriers are not caused by the trade war, they are amplifying fear and worry about protectionist measures, with negative sentiment among customers and suppliers (especially from the US and China). New Zealand exporters need to calm their customers and reassure them that the current political stand-off between the two giants does not affect New Zealand’s commitments to their markets.

Patriotic consumer response

Second, consumer boycotts can become contagious during international political conflicts. A disagreement with political powers of a country can be interpreted as an attack on the identity of people in in-group cultures.

Some companies, such as the Danish company Arla, were boycotted in Middle Eastern markets because they were associated, through country of origin, with the Danish cartoonists behind the Muhammad cartoons, which offended Muslims. When it comes to China, consumer boycotts can be accelerated and politically directed because of the size of the market and political structure of the country. Consumers often collectively and emotionally follow the guidance of political forces.

China is an extra sensitive market because of its relatively closed society (with internet and other censorship), rising nationalism and strong collectivist and in-group culture. The current Hong Kong crisis could easily embroil any foreign company that has either intentionally or unintentionally supported the youth and democratic movements.


Read more: University under siege: a dangerous new phase for the Hong Kong protests


The most recent example is the boycott of the Houston Rockets and National Basketball Association by Chinese official media and sponsors because the Rockets’ general manager Daryl Morey tweeted a message supporting the Hong Kong movement. Cathay Pacific was also targeted, and its CEO resigned following pressure by Beijing over participation by some of its employees in protests.

Rising costs of exports

Third, exporting costs rise as a result of political disruptions in global trade. A trade war creates uncertainty among managers about the global business environment. Information is largely asymmetrical, complex and dynamic. Firms have to spend more resources to communicate, coordinate and adjust to the threat from political disruptions.

Sluggish export demand, negative customer sentiment, decreasing export prices and volatile foreign exchange rates can all contribute to the costs of exporting.

Overall, the current trade war or the evident (or potential) political decoupling between the US and China has made global business and export environments especially sensitive.

Companies in New Zealand should watch closely how the trade tensions develop and avoid politically provocative marketing, communication and public relations while finding ways to address rising export costs.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.

Authors: Hongzhi Gao, Associate professor, Victoria University of Wellington

Read more http://theconversation.com/nz-remains-unscathed-by-us-china-trade-war-but-thats-no-reason-for-complacency-125710

Important Instructions for Australians Living in Camper Trailers

Living in a camper trailer offers Australians a unique way to embrace adventure and freedom while exploring the vast and beautiful landsca...

Maintaining Your Mini Digger: Tips for Longevity and Performance

If you're a proud owner or operator of a mini digger in Australia, you understand the importance of keeping your equipment in top-notch co...

Transform Your Business To Success: The Role Of Branding Agencies In Melbourne

In the bustling city of Melbourne, where every corner tells a story of innovation and creativity, the importance of branding cannot be o...

Revealing The Timeless Appeal Of Ladies' Bodysuits

Fashion has always been a canvas for self-expression, a realm where innovation and tradition intertwine to create garments that not only a...

What Is Crude Oil, and Why Is It Important to Investors?

Crude oil is the lifeblood of the global economy. As an investor, understanding the ins and outs of this vital commodity can be crucial to...

A Sweet Tooth's Guide to the Best Cakes in Melbourne

Indulge your sweet tooth in Melbourne's finest cakes! Brunetti offers decadent chocolate delights like Ciambella Chocolate Teacakes. Mel...

Alan Williams' Impact on Chicago's Defense: Analyzing Key Changes and Improvements

When Alan Williams stepped onto the field as the defensive coordinator for Chicago, expectations were high. His reputation for crafting di...

Understanding the Different Types of Pickup Truck Car Covers

Picking the right truck cover starts with understanding the various types available on the market. Each type is designed to address specif...

Understanding Commercial Plumbing in Adelaide

Introduction In the bustling city of Adelaide, where businesses thrive across diverse sectors, the seamless operation of commercial facil...

Driving into the Future: The Evolution of the Automotive Market in Australia - Trends and Predictions

Examining “the evolution of the automotive market in Australia: trends and predictions” reveals a swift embrace of electric vehicles a...

Crocs: Defying Fashion Norms and Redefining Individuality

In the realm of contemporary footwear, a singular item has emerged as a polarizing yet undeniably iconic choice: the versatile rubber shoe...

Benefits of Network Monitoring Devices in Businesses

In an era where seamless connectivity underpins business operations, ensuring a robust and secure network is paramount for any enterprise...

Tips for Staying Socially Active as a Senior

Staying socially active as a senior can be a challenging task. It becomes particularly difficult as mobility decreases, and friends and fa...

The Benefits of Living in Nature

Have you ever dreamed of buying a mountain property for sale, living immersed in nature, and being surrounded by the beauty of trees and w...

Affordable and Chic: A Guide to Stylish Splashback Tiling on a Budget

When it comes to kitchen renovations, splashback tiling stands out as a game-changer. Not only does it serve a practical purpose by protec...

How to Choose the Perfect Trailer for Your Needs

Whether you're hauling equipment for work or embarking on a weekend adventure, selecting the right trailer is essential. With a myriad of ...

Is There a downside to Taking collagen peptides? Understanding the Side Effects for a Healthier You

Introduction  Lately, everyone seems to be talking about collagen peptides. They're a type of protein that comes from collagen, a key pa...

The Best Materials for Living Room Plantation Shutters: A Comparison

Plantation shutters are a timeless and elegant window treatment that adds both style and functionality to any living space. When it comes ...

Top 5 Home Renovations That Increase Property Value

Enhancing the value of your property is a common goal for homeowners, whether they plan to sell soon or simply want to boost their investm...

Discover the Elegance of Sheer Curtains in Melbourne: A Guide to Custom-Made Sheer Elegance

When it comes to enhancing the aesthetics and functionality of your living spaces, the right choice of window treatments can make all the ...

Tomorrow Business Growth