FTA upgrade with China applauded in New Zealand

FTA upgrade with China applauded in New Zealand

New Zealand’s politicians, business people and consumers are welcoming the signing of a protocol to upgrade a free trade agreement (FTA) between their country and China earlier this month.

On Saturday, New Zealand Prime Minister Jacinda Ardern told thousands of participants at the 2021 Chinese New Year Festival and Market Day event in Auckland that the signing of the FTA upgrade was a milestone for both countries.

“Alongside the renewed commitment to our people-to-people links, stands our ongoing commitment to our economic and trade ties, which are equally long and deep and important to us,” said Ardern.
“The FTA upgrade is a really important milestone for both countries, and shows the strength of our relationship,” she added.
According to the protocol signed on Tuesday, on the basis of the Regional Comprehensive Economic Partnership, China will further expand its opening-up in sectors including aviation, education, finance, elderly care, and passenger transport to New Zealand to boost the trade of services.
For the trade of goods, the upgraded FTA will see both countries open their markets for certain wood and paper products and optimize trade rules such as rules of origin, technical barriers to trade and customs facilitation, China’s Ministry of Commerce said in an online statement.
New Zealand will lower its threshold for reviewing Chinese investment, allowing it to receive the same review treatment as members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
In 2008, China signed an FTA with New Zealand, the first deal of this kind between China and a developed country. China is currently New Zealand’s largest trading partner, the largest source country of foreign students, and second-largest source of foreign tourists.
The New Zealand public is also applauding the FTA upgrade. Many people believe that the bilateral ties are getting fresh impetus and gaining greater momentum, while others are looking forward to the future business opportunities that the FTA upgrade will bring along.
Chris Lipscombe, international business strategist, was excited to hear the news.
“It is a clear statement around cooperation, particularly a commitment to fair non-discriminatory and transparent relationships between the two countries,” Lipscombe said, adding that “this is a really positive step forward.”
Bill Dwyer, international business lawyer and head of China Desk, Tavendale & Partners, believed that the upgrade is a welcoming development particularly for New Zealand exporters.
A really important thing is that “both parties are making greater commitments to free trade,” said Dwyer.
Notably, Auckland employee in the financial sector Dale Singh thought the upgrade is amazing news for New Zealand’s economic recovery from COVID-19.
This FTA upgrade will “really benefit the economy” especially with this hit by the coronavirus pandemic, said Singh.
“The FTA upgrade brings certainty during the COVID-19 uncertainty. It will give New Zealand businesses more confidence to plan for the future,” said John Qin, director of a New Zealand honey exporting company.
“We will use this chance to upgrade our products, adding up more honey flavors especially for (the) Chinese market. Let Chinese consumers have more chance to taste high quality New Zealand honey,” said Qin.
“Any trade improvement between China and New Zealand will always have flow on benefits for all exporters, so we will benefit eventually. Any strengthening of trade relations between countries always benefits everyone in the longer term,” said Roy van den Hurk, who runs a dairy company in New Zealand.
“It will speed up the overall supply chain which will benefit the consumers by having fresher product. It will also reduce costs, which will benefit the consumers by having less expensive high quality products,” he added.
Meanwhile, Auckland University student Tama Payne said that “hopefully we could bring some services to China and hopefully we could get services back from China.”
“I think it will be good for all of us,” added Payne.

This article was publised by Bigesnetwork.com (31/01/2021)

“At a real pivot point”: What to expect in 2021 if you trade overseas

“At a real pivot point”: What to expect in 2021 if you trade overseas

We went from recession to recovery at whiplash speed in 2020. And every time the Aussie dollar goes up or down, so do the profits and losses of businesses with foreign exchange (FX) exposure.

Heads up for those SMEs: Steven Dooley, currency strategist at Western Union Business Solutions, says they think the Australia dollar could hit US$0.80 next year, but — well, there are a lot of buts.

For example, will the COVID-19 vaccine prove successful? How will Brexit affect European markets and trade in the UK? What about bubbling geopolitical tensions between China and the US and Australia? And all the other question marks hovering over global economies, as laid out in Western Union’s report Are you ready for 2021?

There’s no way out but through, so here’s what to expect next year — and how to manage all the uncertainties.

Confidence high for a strong recovery

More than 90% of countries could see their economies shrink this year, Western Union’s report says, while emerging markets collectively face their first year without growth in at least 60 years.
Sounds bleak. But the performance of the Aussie dollar tells another story.
Our national currency is traditionally closely tied to global growth expectations, Dooley explains, so we know that within stock markets at least people seem to expect a strong recovery.
“Before COVID-19 hit, the Aussie dollar was buying US$0.55, now it’s at its highest level in two years,” he says.
“And after the Federal budget was released in October, Australian consumer sentiment jumped 32%. So it’s incredible to think people feel more confident now than at the start of this year, when things were looking pretty good.”
Download Western Union’s latest report now in which experts uncover the key themes and events that could reshape the future of foreign exchange.

But it could go either way

Historic low interest rates and record government stimulus spending are contributing to this rosy outlook, but could be building what the report calls “a false sense of optimism”.
If the economy is an inflating balloon, there are lots of pins around that might prick it, including all the uncertainties and risk factors mentioned above. And with so many possible futures ahead of us, we’re at a pivotal point.
“If people still feel confident going into next year, the Aussie dollar could hit absolutely rocking highs, but if things go bad, it could fall very sharply,” Dooley says.
“Any business with FX exposure needs to recognise how much the fluctuating Australian dollar can impact their profits and their cash flows, and to know that we expect it to be more volatile in 2021.”

Balancing flexibility and FX exposure is key to managing volatility

With so much forecast uncertainty, the best thing SMEs can do is embrace it, Dooley says, while trying to embed as much flexibility and agility into their business as possible.
Here are his top tips for next year:

Plan ahead, twice. On an average year the Aussie dollar fluctuates by 19%, Dooley says. So from our current starting point we can expect it to fall between US$0.60-0.80 in 2021. Have a plan in place for what happens at each end of the range.

Balance short-term market protection against long-term flexibility. With the Aussie dollar at its highest rate in years, it might be tempting to lock them in with forward contracts long-term, but doing so means you could miss out on taking advantage of positive changes to the market.

“It’s different for every company, but in general only being protected for three months is important, giving you that flexibility over month four, five and six,” Dooley explains. “Because we just don’t know how things are going to play out.”
Just like this year, outperforming next year will depend heavily on your ability to react quickly to changing market conditions, not just in terms of FX exposure but also in a broader sense. For example, being able to go after new markets, or if you’re not sure of demand, ordering stock three months in advance instead of six.
“Having the ability to adapt and to identify new markets is going to be critical again next year, as we adjust to a rapidly changing world,” Dooley says. “That’s been the whole story of 2020, and likely to be the story for 2021 as well.”

Good Strategy begins with assessing your Business’s Capability & Capacity

Good Strategy begins with assessing your Business’s Capability & Capacity

2021 has begun with a flurry of activity as we all continue to adapt to an everchanging landscape and plan strategically for an unknown future.

The shifting sands of strategy faced in 2020 will continue well into 2021.

Companies can no longer make decisions based on flight or fight responses, and everyone needs to assess their business’s capabilities and capacities before we can begin to build good strategy. A core focus for the ECA in 2021 across our training and support programs will be helping businesses develop good strategy to succeed in the unpredictable arena of international trade.

Begin with an assessment of 2020 and review how your domestic and export markets evolved. What similarities between your sales channels emerged and what lessons do they take into 2021? Can you through your reporting mechanisms, obtain clear view over pricing trends, inventory control and competitor’s activities. Reporting and the speed at which you report is key to weathering the changing landscape. The fluctuation and volatility of domestic, regional and international trade aren’t eliminated and there will be further hints of disruption along your sales and supply channels. You will need to remain agile in your approach and willing to continually evolve.
Moving forward, your capacity, resources and ability to scale will be tested. Consider how your financial situation has changed. Many businesses are still reigning in bad debt from 2020 and gaining control of cashflow will be critical to your success. Allow an assessment of your capacity to inform your financial plans for growth in 2021.

Next, look inward at your capabilities and how they have been stretched. We have seen new structures employed across a wide range of industries and the development of new expectations across workforces. Many businesses have become much flatter in decision making as they have adapted to the necessity of becoming more agile in decision making.

Where does your business rate on efficiency and speed of communication that is required for making strategic decisions? How are your teams placed and what is their attitude that they have returned with for 2021? The culture of your business has never been more important.

Businesses can no longer rely on old cultural structures; they must be cultures of accountability and learning in order to succeed. It is a business’s responsibility to rebuild staff capabilities to propel them towards the overall corporate objectives. With the world still changing, it’s time to realign.

Finally, a key activity across 2021 should be to assess and review your business’s digital position and data analytics. A digital position is no longer a choice, and most Australian exporters have not devoted adequate resources or skills to build a digital position. If you do not possess a strong digital position, then you will need to look outside of your organisation for the specific skills set. A digital position is a valuable investment and asset.
The ECA is focusing on developing skills and resources to assist exporters plan and measure their capabilities and capacities. These resources will be delivered through online training modules, webinars and face to face seminars. The ECA will also be offering a series of consulting and mentoring services to support businesses in 2021. If you would like to enquire about any of these services, please do not hesitate to contact the ECA at info@export.org.au