Methven has done it with taps, Metra with weather, Glidepath with baggage handling systems. Export success Kiwi-style has host of variations, clutch of creative new business models, wealth of individual stories played out in countries as challenging as China, dangerous as Iraq or familiar as Australia.
But collectively our export endeavours trail dismally behind those of other OECD countries – including smaller players such as Finland or Ireland. As is noted in the NZ Institute discussion paper “The Flight of the Kiwi” our exports to GDP ratio is now 28 percent compared to small OECD country average of 54 percent. The level of foreign direct investment is equally unimpressive – sitting at about 10 percent of GDP ratio compared to developed country average of 27 percent.
We were doing better than that six years ago until high dollar and lower commodity prices took their toll. Plus it seems we’ve developed collective tendency to clip our own wings – to set aspiration levels too low, focus on the difficulties rather than our unique differentiators and stick with tried and tired old trading patterns.
While the rest of the world has been engaging more vigorously in increasingly globalised markets, New Zealand seems dangerously stuck in commodity rut. The milk, meat and merino flow out, the value-added stuff flows in and our balance of trade just seems to keep notching up record new deficit levels.
As the NZI states in its follow up report “Competing to Win”, there has been little change in New Zealand’s export composition and, unlike countries such as Finland (which has shifted its export mix from trees to telephony/electronics), we haven’t developed any substantial new export strengths over the past couple of decades.
Bluntly put, the report says, “New Zealand is not participating in the globalisation process to the same extent as most other developed countries.”
So what’s the problem and, more importantly, how to overcome it?
A market too far?
A quick spin of the earth’s globe reveals what have always been obvious drawbacks – size and distance. Such factors certainly make building and maintaining export markets more costly effort both in money and time.
But being small and remote economy ain’t fatal, says NZI’s David Skilling, though it inevitably adds degree of difficulty – and in most cases huge tally of frequent flier points. The real issue is how New Zealand can best rise to the challenge and that, says Skilling, is question that deserves more focused attention than it’s been getting.
“It’s not that we don’t understand the problem or even have reasonable sense of where the solutions lie as much as having let ourselves down bit around execution. Do we make the sort of investments required to generate material difference or just do little bit here and there – like fighting forest fire with the garden hose.”
New Zealanders don’t seem to have the same sense of urgency around our trade with the rest of the world as we did in the “export or die” drive back in the 1970s, laments Canterbury Chamber of Commerce head Peter Townsend.
“In those days, export was king – it was golden place to work in an export-oriented company because they were regarded as champions. That’s not the case now. An air of complacency seems to have snuck into this country in terms of the role international trade plays in generating wealth.
“If we are going to be world-class economy and enjoy first world status, we are going to have to earn it internationally and I don’t think that is either understood or given much priority by the average New Zealander.”
That, adds Townsend, is evidenced by the relatively small number of New Zealand companies that are heavily engaged in international trade. Latest tallies show that just 151 firms are responsible for 78 percent of our exports. Just one company, Fonterra, accounts for about fifth of our export total. Only 590 firms export more than $5 million per annum and in the past financial year just 17 percent of New Zealand businesses had export sales.
There is, says Townsend, perception that exporting is more difficult than it actually is.
“In reality, it’s not huge leap. When I was selling fish, it was actually easier to sell 20 tonnes to Japan than get 100 kilograms from Dunedin to Auckland. I think this perception that exporting is tough compared to selling domestically needs to be seriously questioned.”
Shifting perceptions, aspirations and attitudes is one of the aims behind the declaration of 2007 as “Export Year” (EY). It’s about providing much sharper focus on the question of how best to boost our levels of offshore trade. Officially launched last December with the announcement that the Government is putting an extra $33.75 million into its Enterprise Development Grant pot for companies undertaking new market development, it’s intended to be much more than one-year
wonder.
As EY’s official champion and chair of successful exporter Glidepath Ken Stevens says the focus is long-term.
“It’s about government and private industry representatives working together to find lasting solutions so we can build sustainable way … to feed the export drive. Because we need to catch up.
“It’s about what we are going to be looking at in terms of our leading companies in 10 years’ time. And they’re likely to come out of the export-oriented group because you’re not going to get any real growth out of four million souls.”
Amongst initiatives being rolled out this year are targeted trade missions led by Ministers, expansion of the exporting mentoring programme, and increasing access to exporter education courses from primary school level right through to senior management. Plus there’s new logo and website www.exportyear.co.nz providing information, checklists and how-to guides for would-be exporters, series of “export breakfasts”, and “new thinking week” being kicked off by NZ Trade & Enterprise next month.
NZTE is also looking at extending its in-market help for exporters.
The latter is biggie, according to Townsend who, as long-time exporter and head of what is probably New Zealand’s most export-oriented business chamber, is not only an enthusiastic supporter of the initiative but member of the industry reference group that’s helping drive it.
“If you’re looking at one or two big hits then boosting the on-ground help in offshore markets is key contribution. The other really important thing is for New Zealanders to appreciate the vital need for this country to export.
“This is not just about 2007, it’s about repositioning the importance of exports in our economy and showcasing the practical examples of how New Zealanders are doing it bravely and differently in very competitive world markets.”
Celebrating and calibrating
So what does export success look like?
Is it selling $1 million or $1 billion worth of goods or services offshore? Is it having stuff made in China, assembled in Taiwan and sold around the world? Is it owning or contracting to factory outlets close to global customers? Is it about leveraging offshore contacts and partnerships?
Well, all of that and more. The good news is that we have bunch of companies that can ‘show and tell’ their individual varieties of export success – and sharing their stories and knowledge is focus not only for the EY initiative but for Manufacturing + (M+) which released its strategic report “A Vision for World Leading NZ Manufacturers” late last year.
As M+ Vision Group chair and University of Waikato Management School dean Mike Pratt points out, manufactured products represent about 63 percent of all Kiwi exports. And manufacturing, he says, is one of the few industries that could realistically double its contribution to the country’s balance of payments. But – manufacturers need to lift their sights, head further and faster up the value-added track and find creative new business models that build on this country’
