NZIJ 125 - October 2007

Good advice is vital

The recent publicity around the recall of goods ‘made in China’ has raised a number of questions. While not all of the recalls are necessarily due to sub-standard manufacturing (some are undoubtedly design faults), it has brought about a swift reaction from the government who realise the threat negative perceptions about Chinese goods could be to the future of the rapid expansion of the Chinese economy. Our lead article introduces some of those issues which threaten to derail China’s continued industrialisation and globalisation. These are important questions for the investor too.
In the West we have enjoyed the benefits of ever cheaper goods which have raised our standard of living but it has been at a cost.

Increasingly we are being forced to look at how people are treated and how the environment fares with this scale of industrialisation. The answers aren’t pretty. One just has to remember how Nike was shown to be using Asian sweatshop labour to produce its sports shoes and the ensuing furore. Adidas, Puma, Wal-Mart have all been connected to charges of ‘slave labour’. Consumers are becoming a lot more aware of ethical and environmental issues. Consider the huge growth in ‘fair trade’ here led by the fair trade organic coffee market.

New Zealand companies obviously don’t have the clout of the international giants but perhaps we also need to look into the ethical and environmental practices of some companies that use Asian manufacturers to make their goods. The list has got a bit longer lately as high manufacturing costs have forced more offshore. Consider Pumpkin Patch, Hallensteins, Briscoes, The Warehouse, Fisher & Paykel.
Industrialisation has put a lot of pressure on natural resources and energy. The challenge is to use what we have efficiently, to conserve what we can, to look for sustainable ways of operating while compensating for unavoidable pollution.

In these times of rapid change, not only do investors need to take into account the usual fluctuations of markets caused by the two historically-recognised market emotions - fear and greed - but also recognise the trends in a world where people’s very existence is threatened by our collective actions.

Fritz de Boer is available to help you with advice for planning your financial future. Email him on fritz@nzij.co.nz .
David Pine (david@nzij.co.nz) will help you to protect your assets through risk management cover. Caglan (mortgages@nzij.co.nz) keeps a watchful eye on all issues to do with property and mortgages. Alternatively, contact them through NZIJ on 0800 90 60 90.