Coronavirus has created new economic uncertainties in China and beyond. There is no doubt the short-term impact on New Zealand’s businesses will be severe, but how exactly is difficult to foresee.
The outlook for global trade already looks grim compared to our expectations late last year. CNN reported that Maersk, the world’s largest container ship operator, has cancelled more than 50 sailings since the Chinese New Year because of the outbreak, and further cancellation are expected.
The disruption is affecting multinational companies and SMEs around the globe. For example, Adidas has reported an 85 percent decline in business activity in greater China since the Chinese New Year. And locally, Simon Cheung, the New Zealand Chinese Travel and Tourism chair predicted that about 300 tour bus drivers have temporary lost their jobs.
Exporting New Zealand businesses as well as those heavily relying on imported goods from China are facing an uncertain and challenging situation. China was our largest trading partner in 2019 and is a key market for many NZ businesses. Industries affected include tourism, education, meat, retail, and so on.
Not knowing the odds is sometimes worse than knowing the odds are bad: it means nobody can predict how the situation will unfold which makes strategising very difficult. But there are two strengths of our domestic businesses that should make us optimistic about continuing to compete globally: empathy and the New Zealand brand.
First, it is widely accepted that building and maintaining trust is critical for successful business partnerships. Chinese business partners are currently vulnerable and face a much more challenging situation than their New Zealand peers. Owners of New Zealand businesses should be showing empathy and communicating frequently with their overseas partners to find solutions together. Giving support to overcome this challenge will strengthen trust and lay foundations for a fruitful business partnership in the future.
The Chinese ambassador to New Zealand, Wu Xi, spoke at a media conference in Wellington this week stressing the strong bilateral political relationship between New Zealand and China. She said “when in prosperity friends know us, and when in adversity we know our friends”. This comment is also relevant for individual business partnerships.
China’s businesses are very resilient and how relationships with New Zealand businesses evolve will also depend on how current challenges are navigated. With empathy, owner-managers of New Zealand business have a key asset which can be a powerful tool for strengthening relationships in times of uncertainty.
Second, uncertainty erodes confidence and trust. A distinct feature of the coronavirus outbreak is the spread of rumours on social media, which have further heightened uncertainty. You can understand how it happens – people are afraid to be infected with the virus; they exchange information through social media such as Weibo and WeChat on how to protect themselves and their loved ones, only to learn later that some of the information is incorrect. As a result of experiencing false information on the internet during this crisis, Chinese consumers might become more sceptical when making purchasing decisions in the future, wanting validation of brand authenticity and demanding greater transparency.
In this case, New Zealand’s reputation for being a stable economy with strong values and integrity will be a huge asset for our businesses. This reputation is reflected in the New Zealand Story, a programme created by government agencies to help grow international markets by telling stories of what makes New Zealand business unique. It is already resonating very well with overseas consumers and, in these times of heightened uncertainty, it may provide an even greater asset for New Zealand businesses in connecting to consumers and building trust.
It can be expected that demand for many New Zealand products will restore after the coronavirus outbreak subsides. Local businesses can leverage the New Zealand Story if they can demonstrate authenticity of their product, integrity of their supply chain and alignment of their brand to New Zealand values.
Overall, while we are facing uncertain and difficult times currently, we are well positioned to weather disruptions to global trade by focusing on our strength: what we stand for as people as well as a country. And let’s not forget while times are uncertain for many of us, the true tragedy is felt by the people affected by the virus: Let our hearts go out to them.