Originally Posted by
Balance
tomm, I returned from a business trip to China (primary produce focus) and after observing how things are changing over there, I think the world, but especially NZ which is ultra-dependent on China trade, are making a very grave mistake if they think that the mistrust of China food and products is going to last forever.
For sure, the Chinese population are still gripped by the many appalling scandals associated with food integrity (or lack there of).
And one does not have to go far, just the local fruit shop, to see how perfect each fruit produced in China is - free from any blemish - to know that there's still abundant use of all kinds of chemicals (insecticide, fungicide). And so I steer clear of consuming any local China fruit - likewise, the Chinese who can afford to.
But the government there is definitely cracking down on food safety violations - starting with the imposition of very strict standards, the ramp up of supervision, the imposition of very severe penalties and requirement to account at a local level for any violations. The many businessmen who I talked to are all very aware of and operate to conform to the strict regime.
As all will be aware, violations there are treated as criminal acts and the criminals are subject to very harsh penalties - including the death penalty.
In time, say 3 to 5 years, when food safety issues are no longer at the forefront of basic consideration in China, the competitive edge enjoyed by foreign goods and food could become a thing of the past.
Make hay while the sun shines and ATM under Jayne is definitely doing the right thing to build on and maintain its leading market position - sacrifice short term margins for long term market entrenchment.
Short term, ATM sp is sure to be volatile and unlikely, imo, to go gangbuster again until ATM demonstrates it is growing profits via higher revenues at lower margins. That could be 2 years away. Xero is a good case in point.
PS. The Chinese flock to every new store opening to grab the opening specials and in the case of Costco, because things are cheaper there than in other equivalent stores. Watch when they open in Auckland - it will be the same. Go to Melbourne and observe the same as in China.