Regrouping for a future beyond the pandemic: New Zealand’s Chinese construction businesses move forward together

 

At 0h on 28 April, following a 33-day Level 4 lockdown, the New Zealand Government lowered the alert level to Level 3, allowing some businesses that do not require face-to-face contact with customers to resume operations.

Construction was the first industry to return to work. With strict disinfection and isolation measures in place to ensure safety, 70% of construction sites resumed work in the first week of Level 3, and that proportion soon rose to almost 100%.

However, resuming work and production is not the finish line, but the starting point for renewed efforts in a new era.

Many longstanding problems constraining New Zealand’s construction industry remain after the return to work, alongside new problems brought by the pandemic. How should Chinese construction businesses respond and resolve them? To help individuals and the wider economy recover and rebuild from the impact of COVID-19 as quickly as possible, the government has introduced numerous policies and measures to support construction. How can Chinese construction businesses use or participate in these policies and projects to make a fresh start and pursue growth?

Frank Xu, President of the New Zealand Chinese Building Industry Association (NZCBIA), believes the post-pandemic recovery of Chinese construction businesses should have 3 stages. The first is perseverance, when construction businesses fight to survive the pandemic with support from the government, employees and business partners. The second is regrouping, when businesses make a fresh start in the new operating environment and gradually get back on track. The third is transformation, when businesses seize new opportunities, adapt their operations to the new environment as quickly as possible and emerge as winners in the new era.

“At present, most Chinese construction businesses are probably in the first or second stage,” Xu said.

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Perseverance: overcoming hardship and striving to survive

New Zealand’s construction sector is worth approximately NZ$40,000,000,000 a year. But it has been dormant since the full lockdown began on 25 March.

For Chinese construction companies, this dormant period has been difficult, even potentially fatal. An NZCBIA survey of 58 Chinese property and construction businesses found that one-fifth could not survive a four-week lockdown. Two-thirds of respondents said they would have to lay off staff if the lockdown continued.

To survive the ravages of the pandemic, Chinese construction businesses, and indeed the entire construction industry, urgently needed to resume work and production. Yet safety was the immediate challenge: how could new measures for safe operations be established? How could safe distances be maintained at work? How could safety and efficiency be balanced? As David Kelly, Chief Executive of the Master Builders association, put it: “We need to demonstrate that, as an industry, we can work safely, because nobody wants to see us return to Level 4. That means the whole industry needs to work together.”

During the full lockdown, industry standards body Construction Health and Safety New Zealand developed industry protocols for safely restarting construction and controlling the risk of COVID-19 transmission. These drew on input from more than 50 industry organisations, including New Zealand residential building contractors, members of vertical and residential construction leaders’ groups, small and medium-sized businesses, and unions. While New Zealand remained at Alert Level 2 or above, all operating civil, commercial and residential construction businesses and contractors were required to follow these health and safety protocols.

NZCBIA closely monitored when construction could resume. It actively participated in developing the COVID-19 construction site health and safety protocols and, after their official release, undertook two initiatives tailored to Chinese construction businesses. It compiled a New Zealand COVID-19 Residential and Commercial Construction Site Safety Induction, offering practical guidance on implementing the new protocols on site; it also prepared a personal protect ive equipment (PPE) procurement checklist, recommending the protective supplies required by businesses and individuals entering construction sites. It also sought sources and provided supplier information to help businesses prepare to restart.

In an interview, Xu emphasised: “As the whole industry works towards a safe return to work, our goal is to use our professional expertise and understanding of Chinese construction businesses to turn industry safety protocols into concrete actions. This will help all kinds of construction sites manage safety risks by following the practical steps we recommend.”

Once safety concerns were addressed, the industry’s return to work resolved the immediate question of survival. But Chinese construction businesses still faced many practical operating challenges: how could they reduce the financial losses caused by lockdown? How could they maintain cash flow with reduced productivity? How could they make effective use of government policies, participate in government projects and seize opportunities for a fresh start? These were typical questions businesses had to confront.

To address operating challenges after the return to work, most Chinese developers and builders chose to share the time and cost losses caused by lockdown in a spirit of mutual support through difficult times. Rather than having their lawyers argue over the original contracts’ cold, rigid provisions, they worked together, helping to reduce lockdown-related financial losses to some extent.

On cash flow, NZCBIA advised members to explore various ways of addressing shortfalls according to their own circumstances. Options included seeking government subsidies, changing progress payments from monthly to weekly or fortnightly, agreeing temporary wage reductions with employees, and reducing operating costs to 50%–60% of their previous level.

Regrouping: seizing opportunities and getting back on track

Since taking office, the Labour Government has been enthusiastic about infrastructure development. Before the pandemic, at the end of January this year, it had already proposed an NZ$12,000,000,000 investment programme. On 1 April, it announced additional infrastructure investment through an expert panel inviting submissions for shovel-ready projects. In early July, Parliament passed legislation to fast-track approvals for these projects. Almost simultaneously, 150 shovel-ready projects worth approximately NZ$3,000,000,000 had received approval in principle.

The National Party, which had previously expressed greater concern about the severe economic damage a full lockdown would cause New Zealand businesses, also emphasised infrastructure’s importance, arguing that it could boost the economy and help the country respond to future crises. Discussing the government’s role in infrastructure investment, National’s finance spokesperson Paul Goldsmith also stressed the importance of private-sector participation. He said private investment remained the fundamental driver of economic growth. “With effective government support, strong private-sector capital investment in infrastructure and technology, drawing on our exceptional environmental advantages while carefully protecting our global brand, will offer a path back to work and towards prosperity in the years ahead.”

Shovel-ready projects are therefore crucial both to New Zealand’s overall economic recovery and to helping participating private businesses navigate the crisis and achieve renewed growth. By actively participating, Chinese construction businesses can seize opportunities at this critical moment while contributing the Chinese community’s share to New Zealand’s economic recovery.

Although Chinese construction businesses had long held an established place in New Zealand’s building industry, they had never had the opportunity to participate in government infrastructure projects. Xu said the introduction of shovel-ready projects and the accompanying fast-track approvals could become a “burning platform”, creating an opening for change in government policies that had remained immovable for years and bringing new opportunities for Chinese businesses: 

• The fast-track approval process signals greater government willingness to adjust the Resource Management Act. Even if temporary and limited to specific projects, it is a rare breakthrough. It could eventually extend to other construction sectors, simplifying and accelerating approvals and making private investment and development more efficient.

• Both the shovel-ready programme and the new financial year’s Budget include commercial and residential projects, offering Chinese construction businesses an unprecedented opportunity to participate in government projects. Seizing this opportunity and building a strong reputation that makes such participation routine after the pandemic would be enormously significant for all Chinese businesses.

To help Chinese construction businesses understand shovel-ready policies and persevere through hardship towards a fresh start, NZCBIA organised an online Kengqiang Forum. Experts from across the relevant industry supply chain were invited to analyse the policies in depth, clarify their implications for economic development and assess their feasibility.

NZCBIA will also help member companies tender for shovel-ready projects and secure more government contracts, while assisting them in gaining the greatest benefit from government subsidies and economic stimulus measures.

Transformation: focusing on growth and positioning for the future

Most shovel-ready projects currently awaiting government approval focus on urban development, transport improvements and the environment. In the long term, they will naturally benefit the country and its people, while large projects’ substantial staffing needs will create more jobs. In the short term, however, these government-led projects face practical obstacles to delivering rapid results, including complex preparation and operations, long construction periods, large capital requirements and significant technical challenges.

By contrast, some smaller private-sector projects can be initiated quickly and completed sooner, with relatively modest funding and technical requirements. If the government offered policy support to private businesses, or even used some funding earmarked for future large infrastructure projects to support smaller private projects first, the effects on business survival, employment, consumer spending and economic recovery could be more immediate. 

Speaking as a private-sector construction professional, OKLA Albany developer Frank Li offered this assessment: “Private developers are the backbone of the New Zealand Government’s property market. Whatever the size of individual projects, it is the cumulative effect of these seemingly modest developments that has led the industry forward and provided substantial employment.”

In an English-language report, Franky Li used his own company’s projects to explain how small and medium-sized private businesses can respond more flexibly to rapid market changes during project initiation and construction. Speaking for many Chinese businesses, he asked: “I am certain our projects are shovel-ready. But the key question is: is the government’s Shovel Ready policy ready?”

Xu also believes: “As an important component of private investment, Chinese construction businesses’ shovel-ready projects are an indispensable means of stimulating the economy in the current crisis. The coming months to a year will be crucial for recovery. Compared with large government projects, private shovel-ready investment and development projects can proceed more flexibly and quickly, giving the economy a much-needed boost during its most volatile and uncertain period, before those larger projects begin to have an effect.”

One of NZCBIA’s future missions is to actively help member companies, and all Chinese construction companies, transform as they regroup: bringing together their shovel-ready projects and working with relevant government agencies and industries to advance them.

“From the coming months through to the next two years, the industry will be full of opportunities. Government-led infrastructure and affordable housing construction in particular will play a pivotal role in its recovery. NZCBIA also advises our members and all Chinese property and construction businesses to shift their focus as quickly as possible to operating in the new environment, adapting, maximising benefits and minimising risks.” Xu’s words reveal that, while working tirelessly to help Chinese construction businesses regroup, he remains confident about the recovery of New Zealand’s construction industry.