Business told embrace SE Asia or feel its bite

By ADAM BENNETT

New Zealand businesses face the prospect of brutal domestic competition with Southeast Asian competitors unless they focus on rebuilding trade relationships within the region.

The warning was given yesterday at the launch of a new website for local companies looking to trade in the region, by Tony Nowell, chairman of the Singapore chapter of the Asean New Zealand Combined Business Council.

He told business people, trade officials and diplomats at the launch of the website in Wellington that New Zealand businesses had the choice of working with or against their Southeast Asian counterparts.

"They can either reap valuable competitive advantages from partnerships with South East Asian businesses, expanding together into larger markets, or they can suffer the consequences of brutal domestic market competition with them, right here in New Zealand."

Nowell said New Zealand had enjoyed a beneficial trade relationship with the region until the Asian financial crisis of 1997, but this had reversed since.

"From having once enjoyed a trade surplus with Southeast Asia, we now have a half-billion-dollar deficit.

"We're losing a lot of our exports simply because we're losing focus on this part of the world."

He said local and foreign traders in the region got burned when Asian currencies collapsed in 1997 .

"What's happened is that New Zealanders have shied away after that and have been a bit scared to go back."

Nowell, who is also managing director of biscuit manufacturer Griffins, downplayed any link between the region's economic troubles and the fall in New Zealand exports to those countries.

"In relation to my own business up there, the multinational I work for, we're doing very well in Indonesia.

"It's not so much an issue of what's happening in a particular commodity or what's happening in a particular sector, the issue is one of focus ...

"People have lost sight of Southeast Asia," he said.

Instead, business and Government attention had shifted to markets in China and the Americas, but these presented their own challenges - in many cases more onerous than those in the Southeast Asian markets.

Although China had "huge exciting potential", Nowell said his company's successful dealings there had been "incredibly, torturously difficult" compared with Southeast Asia.

And as for trade with the United States, he said, some Australians were beginning to "learn a few hard lessons as they go down that road. It may not be as rosy as people would like to think."

The challenges New Zealand businesses interested in trading with Southeast Asian countries faced, while significant, were by no means insurmountable.

They included cultural differences and corruption.

"It's a reality in some markets of Asia. It's a reality you've just got to learn to deal with, you've got to know how to deal with, and if you can deal with it successfully you can do wonderfully well."

He said Southeast Asia's competitive labour costs were "worth noting for those battling with the constant rise in New Zealand overheads".

Did he advocate New Zealand companies outsourcing production to Southeast Asia?

"If there is a net benefit to the New Zealand economy then why not?"

- NZPA