America’s Cup boost to exports
Yachting success showcases Kiwi exporting ability, says PwC advisor
New Zealand’s America’s Cup prowess is an excellent example of a wave companies can ride to boost export receipts, according to a senior business advisor.
Mike Bignell, a partner at PwC specialising in emerging business and helping New Zealand companies enter the export arena, says Emirates Team New Zealand’s strong showing at the America’s Cup in Bermuda was a “fantastic” example for Kiwi companies on the international stage.
“It has been a great ad for New Zealand and Kiwi expertise,” he says. “They have showcased our ability to innovate and have taken it to the world; it’s a fine example of us being able to compete against the very best in the world.
“It will not have gone unnoticed,” says Bignell, adding ETNZ’s America’s Cup showing was achieved on a comparatively shoestring budget – about $75m versus Artemis’s $186m and Britain’s campaign, by Ben Ainslie Racing, of $176m.
Bignell’s advice to companies planning to export their product or services hinges around what he calls the Four Ps: people, product and position all work together to achieve profitability.
He says the Team NZ approach to the America’s Cup largely mirrored that: they planned a whole new design for the foils and wing on the catamaran, they employed the right people – cyclists as well as sailors – to power the hydraulics and ensured their “product” was timed right so they did not give too much away to competitors.
The Cup was also good for New Zealand in that it highlighted our ability in an export space Bignell says has gone “from strength to strength” in recent years – New Zealand’s hitech manufacturing and services industries.
“There is still a huge export opportunity there – if companies get into markets the right way and if they plan from a long way out to develop and position their products to tackle problems in their target markets.”
Bignell says New Zealand’s services sector also has “huge untapped potential” in exports. Official figures from Stats NZ back him up. Our total exports in the services sector totalled $16.4 billion in 2013, growing to $21.6 billion last year – growth of 32 per cent.
Among the best performers in the sector was travel (up 53 per cent in the same period), telecoms, computers and information services (up 31 per cent), while transportation grew by 7 per cent, financial services by 8 per cent and insurance services by 198 per cent – although from a small base.
Travel includes spending by all visitors to New Zealand, testament to the growth of the tourism industry here. Bignell says there is still room for growth – and says New Zealand’s professional services are also ripe for significant growth in the global market.
“I’m talking about architecture, engineering, legal services, financial services and that combination of technology and services,” he says.
The TPPA and Brexit will offer more export opportunities over time, he says. The TPPA had lost the US market of 326 million people – but about 500 million remained, including Japan which was a huge growth market for New Zealand’s value-added products.
“I am also sure, with our excellent relationship with Britain and the European union, that more free trade agreements will occur over time.”
He says Pushpay – the mobile payments company recognised as one of the fastest- growing companies not just in New Zealand but in Asia-Pacific – was an example of a company that had positioned its product at exactly the right place in the market.
The digital payments market is crowded but Pushpay differentiated itself with a focus on mobile and non-point of sale application.
“In exporting, you have to know how to position your product,” says Bignell. “You have to plan to invest when entering a market – and you need to invest to truly understand the consumers you are selling to.”
One food company he had worked with had tried to enter a major export market – but had failed before realising their mistakes and trying again a few years later, this time successfully.
“They hadn’t invested in their people, their product and their positioning to make the attempt successful,” he says. “They were good in that they learned the lessons and got it right the next time.
“However, they were also a successful business here and could afford to fund more than one attempt; most companies cannot do that and some make the mistake of giving it a crack without doing the precise planning.
“Many do not understand what a large investment has to be made – in the four Ps and in capital terms. Some underestimate what they have to do – you can’t just give it a crack for a month or so.
“And you can’t go in all guns blazing or you’ll burn money and burn capital. Careful planning and positioning are key and so is the forecasting of your cash flow so you can sustain the commitment for 12 months to gain a foothold in the market.”