OPINION: A delegation of business and political leaders leaves Invercargill for China this week. Mayor Tim Shadbolt explains why the city is pursuing business links with the economic superpower.
The reason we are looking to China ultimately comes down to jobs.
Globally, the world is going through tough economic times and while some people in our community are doing very well, or have been largely sheltered from the effects of the downturn, the reality is that more and more of our families are hurting.
In recent weeks there has been the news of 100 jobs being lost at Tiwai, which is one of the biggest employers in our community. Blue Sky Meats is looking at cutting jobs and government restructuring over the past year has led to many of our people losing their jobs at places like Inland Revenue and the Department of Conservation. This is just the tip of the iceberg and doesn't take into account job losses at our many mid-sized and small businesses as they struggle to stay afloat.
Without jobs our people cannot provide for themselves and their families and they are forced to move away. This in turn impacts on businesses, schools, healthcare and other services - as so much of what is provided by the Government is allocated on a population basis.
People in our community are going hungry, they cannot afford to heat their homes or clothe their children warmly. Our social agencies do what they can but they are the ambulance at the bottom of the cliff.
The real answer is for community leaders to take a lead in providing jobs - and that is why we are looking to China. China is the world's largest exporter, the second largest importer and has averaged 10 per cent growth each year for the past 30 years.
So if Invercargill companies can sell to the Chinese our wood, milk products, seafood or the many other things our city produces, it will help strengthen our businesses and create jobs for our people.
Business is about supply and demand. Invercargill can supply and China has the demand.
But we must remember that trade is a two-way street; we also want to bring Chinese tourists, students and investment to Invercargill.
Invercargill, thanks to the Southern Institute of Technology and our secondary schools, already has many international students, who not only pay fees but contribute to city businesses as they study here. We want to build on this.
The more jobs and educational opportunities our city has to offer, the more people will want to live here. This means more customers for our shops and businesses and a more prosperous and thriving city.
It is for this reason that I will be leading a delegation, with council chief executive Richard King, SIT chief executive Penny Simmonds, Chamber of Commerce president Dave Rohan and chief executive Richard Hay, Venture Southland chief executive Paul Casson (who is highly experienced in Chinese business and investment) and forestry representatives Dan Minehan and Dean Johnston.
We are following on from the exploratory visit by Crs Carolyn Dean and Graham Sycamore and two senior staff in June, who paved the way for a relationship between Suqian and Invercargill. The first delegation received a warm welcome and an invitation for this second delegation to further our business and political links by attending an important trade fair and meeting key figures in the administration.
So the delegation I am leading will be attending the Economic and Trade Fair in Suqian City - a city of 5 million people, located halfway between Shanghai and Beijing.
We will also have meetings with the mayor and senior officials of the Suqian Municipal People's Government.
Invercargill is not alone in wanting to forge links with China. It is part of a centralised plan, called NZ Inc China Strategy, introduced by Prime Minister John Key.
Dunedin already has strong links with China, through its sister city Shanghai, and Wellington recently hosted a visit of 180 Chinese business and civic leaders from Zhejiang. This visit led to significant business deals being signed. One of these Chinese companies is signing deals worth $10 million with three New Zealand companies and the province's radio and television group is making a documentary about Wellington.
Even leading bankers and economists see the idea of having a “China strategy” as essential and mainstream.
Kiwibank chairman Rob Morrison has been quoted as saying New Zealand doesn't spend enough time strategising about the future, and he says every New Zealand business should have a China strategy.
BNZ chief economist Tony Alexander advises businesses to focus not on a province, but on one city in China. He said in The Southland Times recently: "It is vital that Kiwi business people understand this way of doing things in China because we are a long, long way from there, we have a tendency not to like spending a lot of time on the ground overseas, and we often assume that once a contract is signed, our profit is locked in. Bad mistake.
"China's business environment moves faster than anything anyone has ever seen in New Zealand and you want to have a trusted, reliable partner on the ground, who . . . will keep your interests at the front as they protect their own returns.”
He also says “unless your firm's most senior people have made multiple trips to China over an extended period . . . they will not accord you ‘face' as conditions change and ensure you are not disadvantaged as things alter".
Some people have suggested we could just use the internet. Tony Alexander explains the importance of face-to-face interaction. After all, what would you do with an email from a stranger asking you to buy something or invest money? You'd delete it.
For those of us in the delegation visiting Suqian this week, our "company" is Invercargill. The returns we want to get are a thriving trade between our two cities - which will help create jobs for our people.
We could stay at home to save several thousand dollars and do nothing. Instead, we are going to risk the criticism of some and do what we think is right. That is leadership.
- © Fairfax NZ News
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