It won’t be a case of just turning the tap back on
My new old house sprung a leak last week. The underground feed pipe that runs from my toby box to the house is made of Dux Qest, a brand of polybutylene that was popular in New Zealand from 1970-to-1990. ‘‘Was’’ is the operative word here, as they found it became brittle after exposure to the chlorine in chlorinated water.
Which explained the reason my pipe shattered and turned my drive into a water feature. Fortunately my neighbour is also a plumber and sent one of his workers around within a few hours. I arrived just as the job was being finished.
The plumber greeted me with a smile and said ‘‘no worries mate, all we need to do now is turn on the supply tap again and you’ll be all go’’.
That same phrase ‘‘turning on the tap again’’ was used at a regional development seminar I attended last week. In this case they were referring to Chinese tourists, students and investors; all of which have been throttled right back since the Covid-19 coronavirus took off.
The inference here is that once the two strains of the virus have been successfully contained, the DNA mapped and a vaccine developed, the region in question will somehow magically be able to ‘‘turn on’’ the commercial tap again for services and pick up where we left off.
This assumption is not only dumb, it also risks putting New Zealand at risk of completely missing out on the economic recovery when it does happen.
It’s been a hell of a few weeks in terms of datapoints. Massive international events like South by Southwest cancelled, Italy under lockdown, Aussie toilet paper fights and global stock markets haemorrhaging 8 per cent of value in a day.
CNN’s global fear index is now sitting at 97 per cent – close to what my old mate Gareth Morgan calls the point of maximum fear.
Sooner or later, things will return to normal. But for service industries like investment, tourism and education, the new normal will not be the old normal.
Even as we speak, all around the world service markets are preparing for the new normal. Everyone will want a slice of the world’s largest manufacturing economy, and second-largest contributor to global GDP.
Looking first at tourism, Thailand is readying for a major push for Chinese tourists once the Covid-19 situation has stabilised.
Likewise, Japan is working out the cost if the Tokyo Olympics are cancelled, and how to recoup that revenue. One way to help amelioration would be a major push across the East China Sea to ensure China will continue to be its single biggest tourism market.
More broadly, we can expect a host of countries undertaking measures to encourage Asian visitors and students back, such as fee-free visas and eventbased trade missions to try to kick-start a recovery.
So when the likes of Wellington, Auckland and Christchurch seek to attract Chinese visitors again they will be facing some stiff competition with some deep pockets. So start sooner rather than later, and be crystal clear about your competitive advantage.
Education is going to be tough. Until Covid-19, almost half of our foreign university students were from China, students who contributed more than $5 billion of export dollars.
The Government moved promptly to ban Chinese student visas in early February, which put the kibosh on a lot of that revenue and will have infuriated the students and families. Some institutions, such as Massey and Canterbury universities, have ramped up distance learning to try to mitigate the damage, but it’s inevitable that the regions will take a hit.
They need to be thinking now how to re-engage the foreign student market and fight for market share with other countries.
In terms of conferences, it’s interesting to have seen many European countries starting to put limits on their sizes (1000 pax in Spain and France). Ironically, this may help New Zealand as we have few facilities that can manage conferences over 1000, but we need to be mindful of how we market ourselves in the new context.
To date we haven’t played on our geographical isolation, but in the new environment it might be a competitive advantage as might be our standing as one of the 20 healthiest countries in the world, according to the Bloomberg Global Health Index.
Standing back a bit further, we also need to look at the storytelling undertaken by regional tourism organisations. Relevant single-minded propositions need to be at the forefront of these stories as they target tourists and might be better accomplished by groups of them working together to tell a common story with shared benefits to regions, rather than individual cities.
The fix to my plumbing took my house out of action for a day, and once the toby tap was turned back on, everything was the same.
That’s clearly not going to be case for China once Covid-19 is under control. Better start planning for that now rather than kid ourselves that things will go back to normal.
To date we haven’t played on our geographical isolation, but in the new environment it might be a competitive advantage.