How coronavirus is affecting New Zealand’s supply chain

By Allen Jack

According to research conducted by New Zealand Foreign Affairs & Trade, New Zealand has developed a very close economic link with China. 

Stretching back to the 1840s, the relationship between the two countries has been strong - 2018 stats estimated NZ’s exports to China (primarily dairy, wood and meat) at NZ$17.3bn, whilst imports (machinery and clothing) were $13.3bn. 

However, as Covid-19 (coronavirus) continues to affect global trade, NZ has already reportedly already lost $300mn in exports over the last 30 days. Indeed, the virus has impacted nearly every aspect of the supply chain, from raw material resources to shipping routes.

The extent of the problem

In an article by RNZ, Rachel Barker, CEO of Plastics New Zealand, said the problem also extended to manufacturing, as many electrical components are produced in China.

"A company who manufactures medical devices which go all over the world, but their electronics come from China [...], they have had some problems actually getting those electronics to then make the product to then ship to China."


Others state that, whilst coronavirus is certainly a complication, it should not be a cause for widespread panic or alarm amongst NZ’s citizens. For instance, the greatest strain currently on the food industry is not the virus itself but consumer ‘panic buying’.

"The food and grocery supply chain is very resilient. We've been through earthquakes, flood, two world wars and all sorts of upheaval,” commented Katherine Rich, CEO of the Food and Grocery Council. “This is nothing compared to those challenges."

This opinion is shared by the CEO of Foodstuff North Island, Chris Quin. “This weekend we moved 100,000 extra cartons into our stores to try and replenish and make sure customers could just shop," though he stressed that he didn’t want it to happen again.

An enduring issue

Despite the mixed opinions on the extent of the damage that coronavirus will do to NZ’s economy in the long-term, the immediate effects are apparent: the NZX top-50 fell by over 400 points on 2 March 2020, although it appears to be rallying again.

It may be that securing the nation’s supply chain will be dependent on sufficiently reassuring the public that local businesses are able to cope, despite the understandable distress the virus is causing globally. 

For more information on business topics in ANZ, please take a look at the latest edition of Business Chief ANZ.

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