The fuss made by some over the possible sale of dairy assets to a Chinese Government owned company just shows how little some New Zealanders know about business, investing, commerce in general, how it all works and how it provides income for the country as a whole.
There is little negative about the prospect of the Chinese or any other foreign organization or business owning dairy assets or any other asset domiciled in New Zealand.
Money will flow into the coffers of the sellers and then that gets reinvested into future business, in this case lenders will receive the funds and this will give them the opportunity of lending that money out again.
These farms and assets bought in general will need New Zealanders to look after them, work within them and manage them. The company will pay tax, so will individuals. GST and other taxes will provide State income as well if you are worried at all by that.
The alternative to not selling to the Chinese or any other high bidder for an asset would be to seriously devalue that asset, any asset in its class and assets in general in this country. A case in point was Michael Cullen's last minute veto of the sale of Auckland International Airport [AIA.NZ] to the Canadian Pension fund in 2008. That particular asset is now worth roughly half the offer the Canadians made for it and the losers were the shareholders who forgo more than NZ$1.5 billion in profits that could have been reinvested in other stock exchange businesses.
Seriously, would you sell to an alternative lower offer to a high bidder for your car simply because you didn't like the genetic origins of that buyer?
It sounds dumb when you put it that way doesn't it?
Those that say the dairy industry is a "strategic" one and shouldn't go offshore or that the "Government" should buy these "strategic assets" miss the point entirely. These businesses are privately owned and as such Governments shouldn't have any say in such business transactions.
To allow this sort of intervention merely puts business in the hands of politicians and the political mood of the day and is no way to run a business let alone a country. It slow downs commerce, interferes with economic growth and provides an uncertainty for business when certainty is essential to a smooth running business and growing economy.
Free trade is also stifled by this head up the backside approach to business. New Zealand business has investment overseas and specifically in farms the world over. NZ Farming Systems Uruguay [NZS.NZ] owns many dairy farms in South America and in turn its majority owner, PPG Wrightson Ltd [PGW.NZ] has a cornerstone Chinese owner.
Any entertainment of such interference from State sanctioned knuckle draggers, who know little about successful business, simply devalues the value of private property rights and the right of the owner of an asset to do what he sees fit to do with it.
Private property rights and the upholding of them, ironically by the State, are one of the most important parts of a smooth running democratic society and it is essential that these rights are upheld at every available opportunity.
The refusal to allow dairy farms, other dairy assets and assets in general to be sold to the Chinese or anyone else for that matter is merely a symptom of xenophobia, the wish to maintain monopolies, in the case of Fonterra, and small mindedness of some New Zealanders who need to either read more widely ( or perhaps read at all) and do a little overseas travel to countries whose main inhabitants have a different skin colour to them.
Shame on you if you think this way.
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