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Barry Soper: Difficulty of doing business with China highlighted by Air NZ

Author
Barry Soper,
Section
Opinion,
Publish Date
Tuesday, 7 May 2019, 7:03a.m.
Jacinda Ardern and Chinese Premier Li Keqiang at the Asean Summit in November in Singapore. Photo / ASEAN
Jacinda Ardern and Chinese Premier Li Keqiang at the Asean Summit in November in Singapore. Photo / ASEAN

COMMENT

One thing that seems to have been spelt out loud and clear at yesterday's China Business Summit in Auckland is that the People's Republic isn't an easy place to do business.

But with so many eggs in the one basket (around 30 billion of them in terms of annual two-way trade) we have little choice. Our prosperity is dependent on a healthy relationship even if on occasion we feel the heat of the dragon's breath.

The difficulty of doing business was probably best highlighted by Air New Zealand's chief executive Christopher Luxon who gave a good example of how uneven the playing field is for our national carrier.

They're forced to contend with what is an oxymoron, asymmetric competition, where there may be two competitors but they're totally uneven. Our airline's lost $100 million in the 13 years it's been flying to China, essentially because it's been competing in the Chinese market with government affiliated airlines in an environment stacked against this country.

These large, state-backed businesses can afford to run at a loss flying into New Zealand where they have unfettered access, says Luxon, but we have nothing like that when it comes to the Chinese market.

For the past four years Air New Zealand's been trying without success to double the number of slots in and out of Shanghai airport and to change the timing of them, which would allow it to fly Chinese passengers into South America. As it is, if they want to fly on our airline there, they have a 12-hour stopover in Auckland.

There are a couple of things Luxon would like the Government to do: throw a bit of its weight into negotiations with China over the Shanghai flights issue and to loosen transit visa requirements for Chinese visitors coming through New Zealand.

Seems a fair enough request given that our airline's 53 per cent owned by us the taxpayer. It appears to have fallen on deaf ears as far as Jacinda Ardern goes though with her dismissing it as an operational issue for Luxon.

There was a clear message for the Prime Minister's ears from the China summit, delivered by Mainfreight's boss Don Braid, telling her one visit a year's not enough.

Braid said political and business relations with China were tenuous and difficult at the best of times and Ardern and her key ministers have to put in the hard yards to get the best out of the relationship.

As Zespri's chair Bruce Cameron put it simply: You have to turn up.

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