Economic Performance of New Zealand and Hong Kong for Exporting Baby Products

This paper analyzes the socio-economic performance of New Zealand and Hong Kong to determine which country is better for exporting baby products. It examines the market potential, economic environment, political environment, and business environment of both countries. New Zealand is found to have close proximity to Australia and a strong political environment, making it a favorable choice for exporting baby products.

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

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Table of Contents
Introduction................................................................................................................................3
Market potential of New Zealand..............................................................................................3
Market overview of Hong Kong................................................................................................6
Conclusion..................................................................................................................................9
Reference list............................................................................................................................10

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Introduction
B-Health is an Australian firm in Queensland which is known to specialize in
exporting of baby food. B-Health specializes in the production of cereal food like baby rice
and porridge. It also deals in organic fruits and vegetables, brown rice, organic milk, chia
seeds, milk rusks, organic meat and many more. The paper analyses the socio economic
performance of both Hong Kong and New Zealand and states which country is better for
exporting baby products.
Market potential of New Zealand
Economic environment
The biggest strength of New Zealand is that its close proximity to Australia which
will help in exporting the products of B-Health. The dynamic demographics as a result of
immigration also acts as a strength. New Zealand also maintains a high quality of life. This
country is a land filled with lots of opportunity for any business. The multi faceted market
offers a multitude for both exports and imports for any kind of business (Saunders, Guenther
& Dalziel, 2016). It is also ranked as the 13 the most developed country in terms of Human
Development Index which states that it is one of the best country to do business in. One of
the weakness of New Zealand is that it is dependent on foreign investment. Another
weakness is that there is shortage of skilled labour and lack of proper research and
development.
The gross domestic product of New Zealand is 20585.28 crores USD. The percentage of
growth of gross domestic product is also positive in nature. However, the GDP only grew 2
percent from 2016 to 2017 (Market Research Reports & Analysis, 2019).

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2013 2014 2015 2016 2017
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
% Growth of GDP
% Growth of GDP
Unemployment trends
Presently the rate of unemployment in New Zealand is 4.2 percent which states that around
116,000 people were unemployed.
2014 2015 2016 2017 2018
0
1
2
3
4
5
6
7
Unemployment rate
Unemployment rate
The unemployment rate in the graph shows that the rate have decreased in the present years
which suggest that the economy is in a good state.
The data from World Bank in the year 2017 states that the population 47.9 lakhs. The
majority of the population of New Zealand is of European descent (Yin-Ping, 2016). The life
expectancy at birth is known to increase from 80 to 85 years in 2050.

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The growth of New Zealand will be slightly slow as a result of stalling of consumption
progress which is the main contributor of GDP. The trade balance will also be less in nature.
Political environment and risk
The political and economic stability provides a safe environment for the business and
investors. The government also limits the public spending for following the budget
responsibility objectives. Business are generally attracted to New Zealand as a result of its
efficient fiscal as well as monetary incentives. This country also has a mixed economy which
operates in the principle of free market. The prime minister of New Zealand known to have
announced 12 priorities in along term plan which will drive the government’s work. One of
the most important economic issue which New Zealand is facing is poverty.
The economic and trading relationship between Australia and New Zealand is known
to be one of the closest, mutually compatible and broadest in the world. The trade
relationship between both the countries have increased steadily in the recent years. Both
Australia and New Zealand have committed for creating seamless Trans –Tasman economic
environment which is termed as Single Economic Market. The Australians and New
Zealanders are also free to visit as well as live and work in each other’s country under the
Trans Tasman Travel Arrangement.
Political stability is known as one of the most important factor in business. The
banking sector in this particular sector is also quite strong in nature. In the year 2017, New
Zealand shared the first position on Transparency International’s Corruption Perception Index
(Market Research Reports & Analysis, 2019). It also ranked second on the 2017 Global
Peace Index for the safest country to live in. It is also one of the world’s most stable

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democracies. New Zealand is regarded to have one of the lowest corrupted country in the
world.
Business environment
New Zealand ranks first in the ease of doing business which states that this country is
the most profitable country for doing business. This country have improved its ranking in
enforcing contracts and now ranks 11 in 2017. New Zealand also have lower tax rates than
the OECD countries and it also does well. This country also ranks second in terms of political
stability. New Zealand scores 71.48 out of 100 for enforcing contracts. Hong Kong has the
second best infrastructural facilities in the world after Singapore. On the other hand, New
Zealand is much below Hong Kong in this aspect.
Market overview of Hong Kong
Honk Kong
Economic environment
The high quality infrastructure and the open economy acts as a strength for Hong
Kong. More than 7,000,000 people stays in this place. It also have a close proximity to the
Asian markets and have highly skilled workforce with excellent law and order. This country
is also the natural gateway for trade and investment to the vast market of the Mainland China.
One of the weakness of Hong Kong is that the income inequality have also increased and
presently the economy is also facing slowdown. The gross domestic product of Hong Kong is
34,144.93 crores USD.

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2016 2017 2018 2019
0
0.5
1
1.5
2
2.5
3
3.5
4
% Growth of GDP
% Growth of GDP
Figure 1 Percentage of GDP growth in Hong Kong
The graph shows that the growth rate of the gross domestic product will be declining
in the present year. The rate of inflation is 1.5 percent in the year 2017. The slowdown of the
Chinese economy and the global trade war is known to weaken the trade growth in the
economy. The gross domestic per capita of Hong Kong is 49,193.61 USD. More than 70
lakhs people reside in Hong Kong and is also one of the most densely populated areas in the
world. Although Hong Kong has one of the world’s lowest birth rate. The largest age group
of Hong Kong is around 50 to 54 years of age.
Political environment
Hong Kong is one of the most liberal countries in the world. The recent trade war
with USA lead to the slowdown of the economy. The government however is actively
seeking for signing the Free Trade Agreements with other economies (COFACE : Credit
insurance, Debt Collection, Factoring, Business Information, Bonds, Economic studies,
2019). It also signs the investment Promotion and Protection Agreements to fortify the
position of Hong Kong for international trade. The unemployment rate is known to be stable
in the year 2018 and will also remain same during the coming years.

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Australia and Hong Kong have longstanding trade relationship with each other. Australia
mainly exports gold, food and beverages to China (Kelsey, 2015). Hong Kong is also
Australia’s one of the popular business base. The Australian government supports the high
degree of autonomy of Hong Kong. In the year 2017, Hong Kong was Australia’s twelfth
largest trading partner. The political stability of Hong Kong is not very strong in nature. This
county is also the 14th least corrupt nation in the world.
Business environment
Hong Kong ranks fourth in the ease of doing business during the present year. High
cost of living with lack of web development talent does not make this country very suitable
for doing online business. In terms of trading across borders, Hong Kong ranks 27 and ranks
30 in terms of enforcing contracts (Rankings, (2019). World Bank). Hong Kong is also the
natural gateway for trade and investment to the vast market of the Mainland China. One of
the weakness of Hong Kong is that the income inequality have also increased and presently
the economy is also facing slowdown
Weighted index
The trade weighted index is a useful tool for measuring the overall performance of the
currency.
New Zealand Hong KongVariabl
e
Weighti
ng
Adjus
ted
Score
Adjus
ted
Score Score Score
Ease of 25% 9 2.25 7 1.75

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Doing
Busines
s
Wealth
Distribut
ion
15% 5 0.75 3 0.45
Econom
ic
Freedo
m
25% 6 1.5 8 2
Taxatio
n &
Tariffs
15% 4 0.6 6 0.9
Political
Stability 20% 8 1.6 6 1.42
Total !00% 6.7 6.52
(Source: Rankings. 2019).
Conclusion
B-Health should be exporting its baby food products to New Zealand since it has the
closest proximity to Australia. New Zealand also ranks the second in terms of ease of doing
business and has one of the strongest political environment in the world. The biggest strength
of New Zealand is that its close proximity to Australia which will help in exporting the
products of B-Health. The dynamic demographics as a result of immigration also acts as a
strength. It have also been found out that Australia has a very good trade relationship with
New Zealand. There is also presence of only few barriers in this industry. The demographics
of New Zealand also states that the majority of the population are under 18 years old,
therefore exporting baby foods will be profitable. New Zealand have a strong demand for
prepared baby food and organic vegetables and fruits.

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Reference list
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Williams Books.
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http://www.doingbusiness.org/en/rankings
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