Trade turbulence is the new normal, but businesses are not powerless to respond.
Trade turbulence is the new normal, but there are levers businesses can pull to reduce risk, create more options and stay competitive.
For Hawke’s Bay’s food, beverage and agritech businesses, that means looking well beyond the region: understanding what is changing in global markets, staying connected to customers and trading partners, and being ready to adapt as conditions change.
That was the focus of Foodeast Haumako’s sold-out September Innovation Club breakfast, featuring international trade expert Stephen Jacobi.
Stephen, managing director of Jacobi Consulting, has spent much of his career working at the national and international level on trade and economic relationships. A former trade official, diplomat and business association chief executive, he led the New Zealand International Business Forum for 18 years and has held senior roles spanning New Zealand’s relationships with the United States, China, Australia, Europe and the wider Asia-Pacific region.
He told the audience that businesses should not view current international pressures as a series of disruptions that will eventually pass.
Conflict in Ukraine and the Middle East, competition between the United States and China, changing tariff policies, pressure on international trading rules, and disruption to shipping and supply chains are part of a wider shift. “Geopolitics was once largely background noise for many businesses. Today, it is providing the soundtrack.”
For Hawke’s Bay businesses, many of which export or supply businesses that do, what happens elsewhere can be felt here quickly. A tariff imposed in another market, a regulatory change, disruption to a shipping route or a shift in customer expectations can all affect the cost, timing or viability of doing business.
Five things businesses can do now
Stephen’s advice was practical:
- Understand where you are exposed. Know which markets, customers, suppliers, shipping routes or regulatory requirements would hurt your business most if they changed, then decide what alternative you could put in place.
- Create more options. That could mean adding another customer, market, supplier, product or route to market. Diversification does not mean walking away from relationships that are working; it means giving the business more choices.
- Ask the ‘what if?’ questions. What would you do if a tariff changed, freight was disrupted, a new regulation appeared or an important market became harder to access?
- Use the help that is available. If tariffs, regulatory issues or other barriers are affecting an overseas market, raise them with agencies such as MFAT, MPI or NZTE. Do not assume those who can help already know what is happening.
- Look for ways to add value without adding cost. New products, food science, technology, branding, strategic partnerships and better use of by-products could all play a part.
Create options and be ready to adapt
Waiting for international conditions to settle is not a realistic strategy. “There is no point in waiting around for the old world to return, because it probably won’t.”
Nor, for New Zealand, is pulling back from international markets. With a limited domestic market, the country relies on international customers, investment, technology, skills and ideas.
That makes established relationships with markets including Australia, China and the United States important, while new opportunities continue to be developed elsewhere.
Stephen highlighted the new trade agreement with India as particularly relevant to Hawke’s Bay, given the tariff reductions for apples, lamb and wine. But he cautioned against expecting India to become an overnight replacement for other major markets. It is another opportunity, not a reason to abandon markets that are already working.
The same principle applies within individual businesses. Diversification is about more than deciding which country to enter or leave. For an exporter, another option could be a new country. But it could just as easily be new customers in existing markets, a different supplier, another shipping route, a new product, or using existing business capability differently.
A strong relationship with China, for example, does not become redundant because a business wants to broaden its market base. “Diversification should be about adding options, not abandoning opportunities.”
Having those options is only useful, however, if a business is able to respond when circumstances change. Stephen prefers the term ‘adaptability’ to the much-used resilience. “Resilience is an outcome we hope that we can achieve. Adaptability is something you can actually do something about.”
That means doing the thinking before something goes wrong: What happens if a tariff changes? What if a market introduces a new regulatory requirement? What if a shipping route is disrupted? What if an important customer or market suddenly becomes harder to access?
Businesses do not need to policy analysts or be able predict the next geopolitical shift. They do need to consider what they will do if circumstances change.
And they do not have to navigate every international problem on their own. Jacobi urged exporters to use government channels when they run into difficulties offshore. MFAT, MPI and NZTE can provide information about changes in international markets, but they also need businesses to tell them when tariffs, border processes, regulations or other barriers are causing problems.
The question for Hawke’s Bay
For Hawke’s Bay, the same thinking raises a bigger question: how does the region capture more value from what it already produces?
That does not necessarily mean processing more. With energy, labour and other input costs already putting pressure on businesses, Jacobi said it was more useful to consider how to add value without simply adding cost.
That could come from a new product, food science, stronger branding, developing a strategic relationship with an offshore distributor, better use of a by-product, new technology or another way of getting a product to market.
Turning those opportunities into growth is not just a challenge for individual businesses. It also raises the question of Hawke’s Bay’s ambition as a region. Other regions are competing for the same capital, skills, investment and new industries, and Jacobi expects that competition to become sharper as international conditions become more difficult.
“Regional ambition is not something that just happens; it’s something that a region chooses.”
Stephen pointed to Foodeast Haumako as one of the capabilities Hawke’s Bay already has to work with, particularly its role in bringing researchers, entrepreneurs, food producers and investors together around opportunities to create more value from what the region already produces.
In essence: the international forces driving much of today’s trade turbulence are beyond the control of individual businesses and regions. How they respond is not. “We cannot remove the trade turbulence, but we can decide how to respond to it.”
