4. How Global Trends Are Shaping Our Local Business Environment

Explores how China, global markets and supply chains are impacting NZ SMEs

1. Introduction

Many New Zealand SME owners are finding that pressures once considered “global issues” are now showing up in their bank statements, delivery schedules and customer orders. Whether it’s shifting supply chains, falling export demand or volatile currency, international trends are making local decisions harder.

This article belongs to Pillar 1 - The Economic Reality. Its purpose is to explain in plain English how global economic forces are filtering through to affect small and medium-sized businesses in Aotearoa. We’ll explore China’s slowdown, currency shifts, international inflation and supply chain disruptions. Most importantly, we’ll focus on what you can do about it.

2. Representative Narrative

Brian runs a medium-sized furniture wholesaling business based in Nelson. He sources parts from Malaysia and China, assembles them locally and supplies to retailers across the North Island.

Until recently, he’d felt confident managing rising costs. But in the last six months, he’s had delays in shipments from China, a 15 percent increase in freight charges and a noticeable drop in orders from two big retail clients. One told him consumer confidence is down.

Brian wasn’t sure whether this was a pricing issue or something broader. He called John Luxton from RegenerationHQ, who had helped him during the early days of COVID disruption. John listened, then gently asked, “What’s changed upstream for your suppliers and what’s changing downstream for your customers?” That question reframed the issue completely.

3. Recommended Actions

• Understand your exposure to China
  China’s economy is slowing, driven by property sector instability and weak domestic demand. If your business exports to China, expect reduced orders. If you rely on Chinese components, build in longer lead times and have a backup plan.

• Monitor currency movements
  The NZ dollar has been volatile, which affects import and export prices. A weaker dollar means higher costs for imported materials and parts. Track exchange rates monthly if your cost base relies on foreign currencies.

• Stay alert to global inflation and rate policies
  While inflation is easing in many countries, it remains persistent in services and energy. If the US Federal Reserve or the European Central Bank cuts rates, it could ease global funding conditions and eventually benefit New Zealand. But don’t plan on it happening quickly.

• Reassess your supply chain strategy
  Diversifying suppliers across more than one country can reduce your risk. Consider holding slightly higher stock levels for critical items if delays have become frequent.

• Stay connected with customers and distributors
  Retailers and wholesalers in NZ are being squeezed by falling consumer demand. Frequent, open communication can help you understand their pressures and adjust your offer accordingly.

4. Expected Outcomes as Narrative

After his conversation with John, Brian took a closer look at the freight invoices and noticed his margins had been eroding without being fully passed on. He contacted his two key suppliers and negotiated split shipments to reduce congestion-related fees.

He also sat down with one of his retailers and offered them more flexible payment terms to maintain order volume. With guidance from John, he built a three-month rolling cash flow forecast that included currency risk and import delay buffers.

The steps were not dramatic, but they turned uncertainty into planning. Brian now feels better equipped to explain cost movements to his team and customers alike.

5. Red Flags & Mitigating Strategies

Red Flag 1 - Assuming international shocks are temporary
Mitigation -  Track long-term patterns and build in operational flexibility

Red Flag 2 - Passing on all cost increases without dialogue
Mitigation -  Collaborate with customers to maintain volume and loyalty

Red Flag 3 - Single-sourcing key inputs from one country
Mitigation -  Explore alternatives and build local partnerships if possible

6. HR Best Practice

Global pressures can quietly increase stress for your team. Delayed stock means frustrated customers. Unpredictable workload can lead to uneven rosters.

Good HR practice in these conditions includes -

• Communicating clearly about delays and how the business is responding

• Being transparent about inflation-related wage constraints

• Involving staff in operational improvement ideas, such as reducing waste or reworking timelines

• Offering stability where you can, even if growth is off the table for now

As John often says, staff who understand why a decision is being made are more likely to support how it’s implemented.

7. Psychological Perspective

Global uncertainty can make local owners feel small or powerless. You can’t control interest rates in Europe or factory slowdowns in Asia. But you can control how you respond.

One of the most mentally freeing things is separating what’s within your influence from what’s beyond your control. John encourages owners to build this distinction into their weekly check-ins. It sharpens focus and protects energy.

8. Recommended Owner's Mindset

Adopt a mindset of global awareness, local control. You are not at the mercy of world events, even if they matter. Understand how they shape your environment, then make intentional choices with what you can influence.

9. Reflective Questions for the Owner

• How reliant am I on international suppliers and do I have viable alternatives?

• Have I reviewed how exchange rates are affecting my costs or margins?

• What are my customers telling me about their own pressures?

• Have I built in realistic lead times and buffers for global disruption?

• Who do I speak to regularly to help make sense of these broader trends?

10. Suggested Ongoing Actions

• Subscribe to monthly updates from NZTE or the BusinessNZ network

• Map your supply chain with a basic risk rating by country

• Set up regular check-ins with key suppliers and customers

• Review your forex exposure and speak to your bank about hedging if needed

• Meet quarterly with a business advisor like John Luxton to review your positioning

Critical Takeaway - Global trends shape the pressure, but your local decisions shape the outcome - awareness allows action.

If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.

📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact

If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview

🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.