If I had a dollar for every time I’ve heard “we should diversify away from China”, I’d be a wealthy man.
There's much talk about how Kiwi exporters should be preparing for trade disruptions. To inform this discussion, we surveyed almost 100 firms on behalf of the Ministerial Strategic Advisory Group on Trade.
We found firms are more worried about logistics and domestic infrastructure resilience than they are about market access disruption. They are addressing immediate and actual business risks before devoting scarce resources to mitigating potential risks related to market access disruption.
That said, 90% of firms said they were “considering” diversification. But only 26% consider diversification an immediate priority. 30% said it was a short- to medium-term priority.
We suspect firms are more focused on getting through a tough economic time post-Covid, post-floods, dealing with slowing demand and high input costs.
Diversifying is not a simple or costless task, especially for smaller firms, and it may just be that firms are parking it in the ‘important but not urgent’ quadrant of their risk registers.