ODT on xenophobia

An excellent editorial:

Recently, control of Fisher & Paykel Appliances, the company which maintains a presence in Dunedin, passed quickly and almost quietly into the hands of the Chinese-owned Haier Group. Haier already owned 20% of FPA after effectively rescuing the company in 2009, when it acquired the holding as part of a capital raising that let FPA refinance its debt. FPA got distribution into China as a result of the deal and the ability to further licence its technology.

David Parker has said he wants Ministers to decide on private owners selling their shares to other private owners. What this may mean is companies going bankrupt, as F&P may have gone under if Haier hadn’t rescued them in 2009. We saw this under the last Labour Govt when they refused Singapore Air buying Air NZ, leading to the airline facing bankruptcy.

While the semantics would suggest that 52% ownership means the company is still in Kiwi hands, the reality is that a controlling interest is just that: controlling. (Haier’s offer is still subject to Overseas Investment Office approval, but it seems a formality.)Compare then the ease with which Haier took control of a long-established New Zealand company with the prolonged struggle by Chinese company Shanghai Pengxin to buy 16 central North Island Crafar farms. It now hopes to settle the purchase of the farms after the Supreme Court last week removed the last obstacle to the deal, an appeal by Maori trusts.

While it would be easy for Haier, a global whiteware group, to shift FPA to China, it is impossible for Shanghai Pengxin to shift 16 dairy farms anywhere. It seems ruled in the farm debate. Why should the Chinese be allowed to buy New Zealand farms, the critics howled?

Exactly – you can’t move a farm or land. I’d point out that companies can move their manufacturing offshore also, regardless of who owns them.

And compare that reaction with the welcoming of recent news that Canadian film-maker James Cameron continues to expand his south Wairarapa property portfolio.

Incidentally, Mr Cameron’s neighbour, American billionaire Bill Foley, has won permission from the Overseas Investment Office to expand his Kiwi-based wine operation.

However, just like Haier, it is likely both Mr Cameron and Mr Foley paid market rates for their purchases. If the Maori trusts, and their benefactor Sir Michael Fay, had been truly serious about buying the Crafar farms, all they had to do was offer a higher price than that being offered by Shanghai Pengxin.

Xenophobia is not the determining factor in such sales: shareholders make their own decisions based on price and their own circumstances.

Not if Labour gets in. Their policy seems to be that Ministers will approve all sales that are not purely domestic. Decisions will be based on Ministerial opinion, not what is good for shareholders and investors.

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