China FTA gives NZ export edge

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One of Australia's most successful mid-sized exporters has had to undergo a serious strategic rethink as the Australian dollar stubbornly hovers around parity or higher against the United States currency.

Sabrands, which operates the Sunraysia fruit juice brand, and others, has found the going so tough that it's almost impossible. New Zealand's trade advantage with China hasn't helped.

"Since 2008 or so, it has been a whole series of hits," says group managing director Justin Presser. "Our exports to China and Asia are at the premium end of the market and any broad fall in confidence feeds through to that sector very quickly. So we were trying to cope with the consequences of the GFC while also being squeezed by the currency, as well as with interest rates that are high relative to our international competitors."

While the Asian region might have escaped the worst of the global financial crisis, some areas crucial to Sabrands, such as Hong Kong, have been mired in recession.

"There is also the issue of trade barriers, particularly in China," Presser says. "Our products face a 35 per cent tax going in, which made life hard even when times were good. It stems from the lack of a bilateral trade agreement between Australia and China.

"Significantly, New Zealand has a trade agreement with China and because of that faces zero duty for the same category of products. In fact, some of our Chinese customers have suggested that we re-locate our operations to New Zealand. We've looked at the idea but at heart we consider ourselves to be an Australian company.

"A bilateral trade agreement with China would be very welcome to level the playing field on that side," he says.

AFR

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