Businesses brace for a bumpy ride as China reopens its doors

“We are getting reports from factories that they are struggling with staff and that this will cause order delays,” he said.

Online trading pioneer Ruslan Kogan.

Online trading pioneer Ruslan Kogan.Credit:Josh Robenstone

The impact of factory shutdowns on the consumer electronics sector will also be a hot topic when Australian retailers land in Las Vegas for this week’s Consumer Electronics Show (CES).

General manager of electronics retailer Bing Lee, Peter Harris, said he will address the issue of stock availability at major brands while attending CES.

“It’s definitely on the agenda,” he said. “No alarm bells are ringing right now, but it’s obviously such an important issue.”

Australian exporters of food and premium goods expect above-average demand as Chinese consumers buy ingredients, meals and gifts, but many recognize they may face challenges getting their products onto shelves.

“People have access to produce in supermarkets, but foodservice could be impacted if restaurants are unable to stay open or are restricted by staff. When you mix these together, you start to get results that are difficult to predict,” said Asialink’s Howard.

However, the COVID outbreak in China hasn’t stopped business leaders from being generally optimistic about commercial opportunities or the resumption of travel in and out of the country.

Kristy Carr, CEO of Bubs Australia.

Kristy Carr, CEO of Bubs Australia.Credit:Louis Trerise

Kristy Carr, CEO of infant formula maker Bubs Australia, which generated more than half of its total sales from China in 2022, welcomed the relaxation of China’s zero-COVID policy and dismissed the current wave as “short-term”.

“From a back-end logistics point of view, I think once we overcome this short-term spread affecting many people’s lives, the actual logistics, operations and traffic flow for Australian companies trading with China will be very be positive,” she said.

“From an economic perspective, hard and fast spread can mean in many ways that everyone can get back to their normal life more quickly.”

China is a key growth market for Bubs Australia, which has an office in Shanghai with 11 employees, a handful of whom have fallen ill or have family members who have fallen ill, Carr said.

“But for us as a company, we export and don’t import raw materials from China… So that doesn’t bother us in terms of our own manufacturing and processes.”

Bubs’ Carr plans to travel to China in February or March this year to rekindle business ties following the two-week shutdown common across Asia during the Lunar New Year.

Her last visit to China was in December 2019. “I look forward to returning and continuing with business in China.”

Australian business leaders have signaled their willingness to return to China after Foreign Minister Penny Wong and her Chinese counterpart Wang Yi made renewed commitments to ease business ties in the new year, although the federal government has yet to issue a formal invitation.

The Australia China Business Council said it was unfazed by the policy of pre-departure testing for travelers entering Australia from China. “After several years of not being able to travel to and from China, the recent resumption of travel has been overwhelmingly welcomed by business travelers in Australia and China,” said National President David Olsson.

A spokesman for $62.8 billion iron ore giant Fortescue Metals said the company is monitoring the evolving situation and how it may affect its long-standing relationships with customers and key partners in China. “We will continue to closely monitor the impact of COVID-19 and do not currently expect any material operational impact,” the spokesperson said.

However, some in the airline industry fear the new directive could slow the return of airlines, including Qantas, to the market. Qantas and Air New Zealand have yet to resume passenger services to and from China despite the eased restrictions.

The government confirmed to Qantas on Tuesday that the new requirements would not apply to flight crew. The airline did not provide any further information.

Matthew Findlay, director of Ailevon Pacific Aviation Consulting, said the government’s announcement was “unexpected” and would limit airlines’ ability to operate with the flexibility needed to operate efficiently.

“It’s seen as a step backwards and given the announcement it appears to go against health advice. I can’t see Australian airlines rushing to serve routes to China again.”

All international airlines are struggling to return to full international aircraft capacity due to supply chain disruptions and staffing issues following the pandemic. Findlay said it was hard to imagine airlines returning to Chinese routes at the expense of capacity on other routes given the uncertainty.

“Airlines work to make a profit, but not at the expense of safety. Routes to the US and Europe are seeing record demand and most airlines have all their aircraft deployed or on standby on existing routes,” Findlay said, adding that airlines would easily adjust if there was certainty about how the policy will impact demand and operations.

New Zealand has yet to follow Australia’s lead in testing international arrivals from China. If the country chooses not to follow suit, Air New Zealand could be well positioned to become a dominant airline on flights from China to the region. Air New Zealand did not respond to a request for comment. The New Zealand government will announce the country’s position following a public health assessment on Tuesday.

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https://www.smh.com.au/business/companies/businesses-brace-for-bumpy-ride-as-china-reopens-doors-20230103-p5ca43.html?ref=rss&utm_medium=rss&utm_source=rss_business Businesses brace for a bumpy ride as China reopens its doors

Brian Lowry

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