Simon Draper: Why are we afraid of Asian investment?

Anzco has two major Japanese investors since the 1980s, which is handy, as Japan is the world's biggest importer of beef.
SUE O'DOWD/FAIRFAX NZ.

Anzco has two major Japanese investors since the 1980s, which is handy, as Japan is the world's biggest importer of beef.

OPINION: Back in the 1980s, Kiwi meat company Anzco Foods found itself facing an attempted takeover amid dramatic economic reforms.

It avoided this by securing investment from two of Japan's largest listed food companies, Itoham Foods and Nissui, which it already enjoyed a good working relationship with.

The two companies bought major shareholdings in Anzco and have remained substantial owners, alongside the company's New Zealand-based management and directors.

Decades later, Anzco's chairman Sir Graeme Harrison recalls that some of the company's New Zealand stakeholders were sceptical and "didn't want to understand how Japan worked". It was an era of unease about Japanese investment.

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But Japan later became the world's largest net importer of beef – and today Anzco is one of New Zealand's largest exporters, with its beef and lamb sold in more than 80 countries.

Anzco is one of eight case studies featured in the report, Asian Investment in New Zealand, published by the Asia New Zealand Foundation last week.

Anzco chairman Sir Graeme Harrison likens the company's partnership with its Japanese investors to a marriage.
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Anzco chairman Sir Graeme Harrison likens the company's partnership with its Japanese investors to a marriage.

The case studies gathered by University of Auckland academics cover a wide variety of sectors – engineering, e-commerce and pet food to name a few –and a range of Asian source countries and New Zealand regions.

I'm an economics graduate, I've spent a lot of my life overseas, and I've been a policy wonk for much of my career. But reading this report made me realise I didn't know much about foreign direct investment.

Like many other New Zealanders, all I had heard about was land sales, and that was something I felt conflicted about as a New Zealander. In commissioning this report, we wanted to include a range of case studies so people could get a more rounded picture.

The report highlights the fact that investment from Asia accounts for a relatively small share of foreign investment in New Zealand – less than 10 per cent of the stock of all foreign-owned assets, according to the data we have available.

Australia, the United Kingdom and the United States are New Zealand's largest sources of foreign investment, representing 58 per cent.

And yet, media coverage and public conversations about investment seem to have a disproportionate focus on Asia.  

Simon Draper: ''Asia accounts for a relatively small share of foreign investment in New Zealand – less than 10 per cent.''
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Simon Draper: ''Asia accounts for a relatively small share of foreign investment in New Zealand – less than 10 per cent.''

We know from our Perceptions of Asia and Asian Peoples research that overseas investment in housing and land is something New Zealanders feel squeamish about.

The annual survey asks respondents what Asia-related media items they can recall from the previous year. In 2016, Asian investment in housing was the most-recalled topic.

That survey also found that the type of investment influenced people's feelings about the issue.

Survey respondents said they were comfortable with Asian investment in tourism, technology. business and education. They were less comfortable about investment in housing, land and farms.

Perceptions of Asia shows a growing number of people think New Zealand is allowing "too much" investment from Asia. How much is too much? And what kind of investment do we need and want?

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If New Zealand wants to have an informed discussion about these issues, one of the challenges we face is around data.

The Overseas Investment Office is the only organisation that captures information about both investor origin and industry sector – and it only covers sensitive investment like land, high-value businesses and fishing quota.

This data doesn't include most foreign investments in small and medium manufacturing and service-related industries.

So, most people who have to talk about foreign investment in this country have to base these discussions on some pretty sketchy data.

The Asian Investment in New Zealand report therefore uses case studies to help paint a fuller picture.

These show that investment from Asia is about far more than just money. New Zealand companies have learnt a great deal about Asian business cultures through their relationships with their investors, and have been able to access new markets.

They've also gained access to new technology, knowledge and expertise. Regional centres have benefited from increased employment opportunities – for instance, 40 full-time staff work at Singaporean company Addiction Foods' pet food plant in Te Puke.

Asian investors also often a more long-term focus than New Zealanders. Many of the New Zealand companies interviewed for the research attribute their export success to constructive, long-term relationships with Asian investors, sometimes going back over generations.

Harrison even likens Anzco's relationship with its Japanese stakeholders to a marriage.

The good stories about Asian investment aren't often told – and yet these are the stories that help New Zealand exporters thrive in Asia. 

We hope that sharing these stories strengthens the quality of the debate about investment, because the way we talk about this issue has implications for our wider relationships with Asia.

Simon Draper is the executive director of the Asia New Zealand Foundation.

 - Stuff

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