Wesfarmers bosses say limiting retail products to Australian-made would burden customers

Wesfarmers bosses have defended the purchase of retail goods from China and other countries amid a push for Australian-made products, warning any move to limit the countries they purchase from would only burden Australian families.

Chairman Michael Chaney and chief executive Rob Scott faced questions from shareholders at the company's virtual AGM on Thursday over why subsidiaries including Kmart, Bunnings and Officeworks didn’t sell more Australian-made products in their stores.

Wesfarmers CEO Rob Scott.Credit: Philip Gostelow

Shareholders also raised concerns over the company’s reliance on Chinese suppliers and how ethical its supply chains were.

Bunnings sources between 35 and 40 per cent of its products from Australia, but Wesfarmers' wider retail businesses source between 20 and 70 per cent of products from China, depending on the category, Mr Scott said.

Mr Scott said sourcing products from outside Australia benefitted Australian consumers.

"Particularly families that are doing it tough financially benefit from having access to products from all over the world and to limit our options too much would result in very significant increases in prices that are at a significant burden on many Australian families," he said.

Mr Chaney rubbished any suggestion of ethical concerns or that the business was too reliant on China but also defended low-wage manufacturing jobs, which he said had helped bring billions of people out of poverty.

"In saying that we're buying products from suppliers who are paying peasant wages, and so on, is simply not correct," he said.

"We have a factory auditing program, last year we audited 2600 factories and, by the way, we have 37,000 suppliers across our group where we take supplies, not from China but from over 20 different countries.

"Those low wages that were referred to there are the lifeblood for those people in those factories.

"It's the production of goods in those developing nations that has taken billions, literally billions, of people out of poverty over the years and the continuation of that relies on consumers in the developed world."

Buy-local and Australian-made sentiments flourished online during the COVID-19 pandemic as consumers sought to keep struggling small businesses afloat and the collapse of Chinese supply chains cause havoc with imported goods.

Prime Minister Scott Morrison announced the government would pump $1.5 billion into a manufacturing strategy to bolster Australia’s economy through the COVID-19 recovery in the 2020-21 federal budget.

The strategy will be aimed at advanced manufacturing endeavours, rather than focusing on competing with low-cost manufacturing countries.

Mr Chaney said if Australia wanted to start producing more products it needed a more efficient and effective economy.

"I think it's a trend as was suggested that may increase, that people, especially after COVID-19 are saying, 'Let's try and produce more here in Australia'," he said.

"We need a far more flexible industrial relations system, far less regulation and red tape, and a world-competitive taxation system and while those things don't occur, I think it's inevitable that manufacturing will suffer here in Australia."

Market Recap

A concise wrap of the day on the markets, breaking business news and expert opinion delivered to your inbox each afternoon. Sign up for the Herald's here and The Age's here.