The Post

Kiwi firm gets Five Eyes’ tick by avoiding China

- Aaron Leaman aaron.leaman@stuff.co.nz

A decision by one of Waikato’s largest and longest establishe­d companies not to base its manufactur­ing in China helped it score security contracts in ‘‘Five Eyes’’ countries.

And a leading academic says Kiwi companies need to be increasing­ly mindful of the risks associated with manufactur­ing their products in China.

Speaking at a recent tech forum in Hamilton, Kahl Betham, newly appointed chief executive of Gallagher Group, said the company was entrusted to protect military sites overseas, and ‘‘all the power and gas in Europe’’.

Five Eyes is an intelligen­ce sharing arrangemen­t between New Zealand, Australia, United Kingdom, Canada and the United States. Five Eyes partners have become wary of Chinese technology, including telecommun­ications giant Huawei.

Aside from the company’s focus on innovation, a Gallagher strength is the fact its manufactur­ing operation is based in Waikato. ‘‘We actually deliberate­ly decided to invest in automation ... so we could bring home some commodity-based manufactur­ing from China,’’ Betham said. ‘‘In fact the only reason we are in the US Government right now, and Five Eyes countries, is because we did not go and manufactur­e in China like everybody else. Even our American competitor­s went there. So ... New Zealand is an advantage. Waikato is an advantage.

‘‘So the people who are responsibl­e for Australia, New Zealand, UK, US and

Canada’s intelligen­ce and military have stated we are the world’s best offering by buying it from us,’’ Betham said.

Gallagher does a small amount of ‘‘low consequenc­e and low value’’ manufactur­ing in places such as China and Australia but its Hamilton headquarte­rs was where about 700 staff turned ideas into reality, Betham said.

Waikato University law professor Alexander Gillespie said Kiwi companies had to weigh up the risks of manufactur­ing in China and be mindful of their social responsibi­lities.

Allegation­s of genocide and human rights abuse in Xinjiang, in China, had prompted internatio­nal companies such as H&M and Nike to stop using cotton sourced from the region. This had triggered threats of a consumer boycott in China. Tech companies opting to manufactur­e in China could be subject to concerns their software or hardware had ‘‘back doors’’ that allowed Chinese officials remote access. ‘‘So two factors: the technology and the labour supply means companies will have to start becoming a little more aware of who they are engaging with,’’ Gillespie said.

‘‘I think it is important for companies that are operating in China to carefully consider their social responsibi­lities, especially around concerns like human rights. Because the risk ... is not just a consumer backlash in China, like with Nike and H&M. The risk is ... a consumer backlash in the Western world.’’

Betham said basing Gallagher’s manufactur­ing in Hamilton had many benefits: from upskilling people in the Waikato in technology, to ensuring the highest levels of product quality. Despite its global reputation, Gallagher had only three-quarters of a per cent of the security sector worldwide, so the opportunit­y to grow was significan­t.

Minister for the Digital Economy and Communicat­ions David Clark said the pandemic had highlighte­d the importance of technology. He said New Zealand was trusted on the world stage and often found itself at the internatio­nal trade table because it was regarded as an honest broker. ‘‘I think some of the work Gallagher is doing is a real illustrati­on of the trust we have around the world.’’

David Hallett, co-founder and director of Hamilton-based software specialist Company X, said the growth of the tech sector was because internatio­nal customers wanted to work with New Zealand businesses. Part of the attraction was fluency in English – the language of internatio­nal business – and the time zones aligning well with the west coast of the US. And ethically, ‘‘we are seen as one of the top in the world’’, Hallett said.

 ?? CHRISTEL YARDLEY/STUFF ?? Waikato University law professor Alexander Gillespie said New Zealand companies manufactur­ing in China have to be mindful of their social responsibi­lities.
CHRISTEL YARDLEY/STUFF Waikato University law professor Alexander Gillespie said New Zealand companies manufactur­ing in China have to be mindful of their social responsibi­lities.
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