To Export, or Not to Export: A Kiwi Conundrum.
TL;DR: According to NZTE data, our trust rating is high for foreign consumers, but concerns of location and local knowledge can hinder this. As a result, New Zealand's technology economy (our 2nd largest export) is at risk of losing our most innovative suppliers to more profitable markets.
Contents:
Recently, I attended the NZ TechWeek workshop that provided insight on how the 'New Zealand brand' can be used to leverage marketing.
The event was part of Techweek facilitated by New Zealand Story Group and the New Zealand Trade and Enterprise (NZTE), and featured special guest, New Zealand's Minister for Economic Development, Hon Melissa LEE .
Delegates were provided an opportunity to understand foreign consumers perception of New Zealand tech providers. With 23k+ NZ technology businesses that employee over 118k jobs, the Tech industry is our 2nd biggest export.
That means it's a vital part of our economic growth.
Despite some inspiring and innovative discussions, I came away pondering the inherent risks to exporters, and our heavy reliance on the tech industry. I've become conflicted in the messages these events are sharing.
Do we want NZ businesses to develop and sell their solutions locally? Or are we encouraging them to go off-shore to accelerate growth?
Keeping things on home soil.
The first challenge appeared to be the ongoing struggle to keep New Zealand businesses operating here.
There are some verticals that do well, like the aerospace sector who launch the fourth most rockets behind the United States, China, and Russia, according to aerospace.org.nz.
But there are many that do better elsewhere.
Markets with bigger budgets, lower corporate taxes, more consumers, and a more affordable way of life are pulling our entrepreneurs west (like myself). Given the statistics I pulled from the ASEAN Business Council in Auckland, it's easy to see why; cloud based products can avoid high tax based locations and still have access to great technical talent.
For the same reason we want NZ businesses to remain here, it makes sense that other countries are following suit.
Malaysia, who is a key export market for protein based NZ products, is thinking this way. According to a recent post by Simon Walker and oec.world,
...of our total exports in 2022, 67.78% was Animal Products with another 8.86% listed as foodstuffs. That’s about $700m out of $920m total exports.
A huge chunk of the economy is at risk while foreign buyers are preparing to produce locally.
NZ businesses often see opportunities overseas, and rapid commercial growth often encourages the move.
Take Allbirds , arguably NZ's most successful business story. They're registered and HQ'd in San Francisco, US. And whilst there are nods to NZ in their marketing, they have seen substantial success as a US registered entity with a 2023 turnover of US$254.1 million. This would put All Birds 1,594% higher than Fonterra's 2023 $15.0m (usd) turnover - our biggest organisation.
I also worked closely with Xero back in my London days as they attempted to take on Sage and Intuit in a highly competitive market.
A famously Wellington based success story, Xero transitioned to a sole listing on the ASX on 5 February 2018, delisting from the NZX on 2 February 2018, moving upwards of $10b away from NZ investors.
These strategic moves are obvious. We'll never compete with the opportunities in Australia and the States.
When "made in" no longer matters.
The second statistic came from NZTE's market research on 1,700+ tech decision makers across AU, US, UK, and Singapore.
It said:
68% of those surveyed say country of origin matters.
Recommended by LinkedIn
Considerations like local knowledge, geo-political relationships, technical advancement, compliance, and local support all played a part in building new partnerships.
But when does this stop working?
For me, it's when you change address, where you physically reside, what time zone you consider comfortable.
Most decision makers will be reasonable enough to consider an NZ tech business, but there are factors in place that make that redundant.
When a website is heavily NZ branded and the About page talks of kiwi roots, it can be off-putting when the customer service team are foreign to New Zealand. It's indisputable that this can and does effect perception and reputation.
So, when I hear New Zealand Story tell us the positive impacts the NZ brand can have on our exporting journey, I argue that this is limited to those determined to stay here.
Talk about risky business!
If you've followed along so far, you would have seen that I've been to a few exporting events in 2024. But I've noticed something missing in all these:
Resilience maturity can be a competitive edge.
There is evidence to suggest that adding resilience and presenting your risk tolerance is a commercial advantage when approaching new markets. But because these workshops are mostly aimed at Startups or SMEs, resilience measures seem reserved for the FTSE500 crowd.
Oceania (not so much Australia) is slowly ticking away at regulation and compliance that keeps up with a rapidly evolving threat landscape. But boy is it slow.
New Zealand has an deep rooted laid-back-culture, which becomes more prominent if you spend time in Singapore or the UAE. As a result, some AU and NZ businesses are neglecting the urgency of enhancing their operational and strategic resilience against ballooning compliance needs.
Ian Meadows , General Manager - IMEA | Security at Gallagher Security answered my question on... that from his experience in operating in India,
Our customers want to know who they're doing business with...the company...not just the products or services we have available.
He said that due to the rise in India's GDP and a growing expectation in the quality of work provided to foreign businesses, partner managers wanted to know about the fundamentals of a business. One in particular, he remembers well, said
I just like to have a handle on the company I work with.
This is an understanding of operational values at a cultural level, and I'm all for it. It's not just about asking for proof of compliance, it's understanding why you got compliant in the first place.
Whereas in Europe, the United States and the ASEAN regions, complex and stringent protocols are being implemented rapidly that it's at risk of becoming a tick-box exercise.
We can use this to our advantage. Appearing in a new market with local knowledge of risks and security measures can build strong confidence in consumers. But we can also present this as why we choose to be resilient and prepared.
In summary, we need to speed things up.
According to the data shown the other night, our isolated, beautiful little island is well respected around the world. But we need to get real about the work required to be ranked as one of the most favourable exporters outside of dairy and tourism.
And the recurring message I heard from successful directors was that we're not moving quick enough.
I believe we need to be more bold about what kiwis can offer the world. We need to shout a little louder. And most importantly, we have to get quicker at making decisions.
Where it takes us days or even hours to sign off a project in Australia or Kuala Lumpur for Fixinc , it takes months here in NZ. And that's not good enough.
I write about often about resilience, technology, marketing, and how we can all collectively build better solutions to keep businesses and people resilient. If this sounds like you, give me a follow!
Our businesses 👇