AN EX­PORT STOCKTAKE

NZ Business - - CONTENTS - COMPI L ED BY G L E NN BAKER

Our ex­panded ex­port sec­tion cov­ers burn­ing is­sues around mar­ket val­i­da­tion, trans-Tas­man trade, sec­tor per­for­mance, South­east Asian op­por­tu­ni­ties, and in­tro­duces some high-per­form­ing Kiwi ex­port firms.

HOW IS NEW ZEALAND’S EX­PORT SEC­TOR CUR­RENTLY PER­FORM­ING? WHAT MAR­KETS SHOULD WE BE TAR­GET­ING AND WHAT TRENDS SHOULD WE BE PRE­PAR­ING FOR? WHICH EX­PORT STO­RIES STAND OUT? AND WHAT’S THE AD­VICE FOR FLEDG­LING EX­PORT BUSI­NESSES? READ ON FOR SOME AN­SWERS.

Acer­tain for­mer New Zealand Prime Min­is­ter was of­ten known to trot out the phrase “we won't get rich sell­ing to our­selves”. He was right of course – New Zealand’s fu­ture and pros­per­ity rides on the back of its abil­ity to sell goods and ser­vices into over­seas mar­kets, and in in­creas­ing vol­umes ev­ery year. Our past per­for­mance proves we’re very good at it. Look­ing for­ward, with the lat­est Ex­portNZ DHL Ex­port Barom­e­ter as ev­i­dence, there’s ev­ery in­di­ca­tion that ex­port growth will con­tinue. More than half the re­spon­dents (52 per­cent) said their [ex­port] or­ders had in­creased over the past 12 months. Fore­cast­ing ahead to 2019, 60 per­cent ex­pect or­ders to in­crease and 34 per­cent ex­pect them to re­main at sim­i­lar lev­els.

As for mar­kets, Aus­tralia re­mains the most pop­u­lar des­ti­na­tion, with 74 per­cent of re­spon­dents ex­port­ing across the ditch, fol­lowed by North Amer­ica at 41 per­cent, Europe 38 per­cent, the Pa­cific 36 per­cent, UK 30 per­cent and China 27 per­cent. (In­ter­est­ingly, com­pared to last year, Europe jumped ahead of the Pa­cific and the UK bumped China out of the top five.)

New Zealand’s ex­port trade cov­ers many sec­tors but lately has been par­tic­u­larly strong in added-value food and bev­er­ages, man­u­fac­tur­ing, and new digital busi­nesses in the cre­ative sec­tor.

Cather­ine Beard, ex­ec­u­tive di­rec­tor of Ex­portNZ, is pos­i­tive about New Zealand land­ing more free trade agreements (FTAs) to re­duce trade bar­ri­ers and give Kiwi ex­porters a more com­pet­i­tive play­ing field.

“The more mar­ket ac­cess we have the more we can spread our mar­ket risk and shield our­selves from any fall­out from the emerg­ing trade war that seems to be play­ing out be­tween the US and China. We ex­pect

this will not go away any time soon and it could in­ten­sify yet, which is con­cern­ing,” she says.

“Ex­porters are telling us that they are con­cerned with their com­pet­i­tive­ness due to in­creas­ing costs in New Zealand, such as the changes to in­dus­trial relations law com­ing down the track. So it is this, the level of the New Zealand dol­lar and the es­ca­lat­ing trade war that will be keep­ing ex­porters awake at night.”

For new­com­ers there are some pow­er­ful lessons to be learnt from sea­soned ex­port com­pa­nies, and Beard points to some “awe­some speak­ers” at Ex­portNZ’s Go Global con­fer­ence ear­lier this year.

“It was great to see tech com­pa­nies like Ro­bot­ics Plus, Hal­ter and In­venco do­ing the in­no­va­tion in New Zealand, get­ting in­vest­ment from US-based VCs and part­ner­ing with big na­tional or multi-na­tional’s to help take their prod­uct to the US and fur­ther afield.

“It is more of a step-up in terms of not hav­ing to own 100 per­cent of a com­pany – but a smaller per­cent­age of a com­pany that has the po­ten­tial to go re­ally big with big­ger part­ners in the mix,” she ex­plains. “The se­cret of these three com­pa­nies’ suc­cess is great in­no­va­tion and find­ing the right part­ners to take it global.

“An­other com­pany with a great story was Doug Hastie and Syft Tech­nol­ogy,” adds Beard. “Again, great tech­nol­ogy, but what was miss­ing and that Doug brought to the com­pany was im­proved sell­ing skills. Doug says just get out there and sell! Talk to your cus­tomers and find out what they want. Give them great ser­vice sup­port and they’ll be­come re­peat cus­tomers.

“He says we may have great tech­nol­ogy de­vel­oped in New Zealand, but we can be lousy at sell­ing it.”

VAL­I­DATE YOUR SOCKS OFF

In the 2018 New Zealand Ex­port & Trade Hand­book there is an ex­cel­lent chap­ter put to­gether by mar­ket devel­op­ment con­sul­tancy Katabolt, which of­fers a com­pre­hen­sive ex­port mar­ket­ing strat­egy. At the cen­tre of that strat­egy is mar­ket val­i­da­tion – the chap­ter de­votes a lot of space to the sub­ject. It raises the ques­tion that Texas Univer­sity pro­fes­sor Rob Adams, a lead­ing author­ity in mar­ket val­i­da­tion, chal­lenges all as­pir­ing ex­porters to an­swer: “Do I have clear, ob­jec­tive proof that a large enough num­ber of peo­ple are will­ing to pay me money for the prod­uct or ser­vice I pro­pose to sell?”

Val­i­da­tion is the es­sen­tial step to in­creas­ing the like­li­hood of suc­cess and di­rect en­try into a new mar­ket. It re­veals what to sell, where to sell it, and to which cus­tomer.

Mar­ket val­i­da­tion leads to an un­der­stand­ing of the mar­ket land­scape, which is of­ten unique and nearly al­ways dis­tinctly dif­fer­ent to New Zealand.

This un­der­stand­ing helps to de­fine which seg­ments of the mar­ket will be most in­ter­ested in the prod­uct or ser­vice – and in turn the value propo­si­tion will be built around where the real mar­ket need has been iden­ti­fied.

Out of the val­i­da­tion process you will have an emerg­ing pic­ture of what the pre­ferred mar­ket-en­try model is for your busi­ness and the type of mar­ket part­ners best suited to achieve your ob­jec­tives.

Katabolt re­search re­veals that New Zealand’s top ex­porters spend time find­ing the right mar­ket part­ners. Choos­ing the right dis­trib­u­tor for your busi­ness is es­sen­tial. Most distrib­u­tors will be able to sell your prod­uct. How­ever, only a few will be able to un­der­stand your vi­sion and will tar­get your prod­uct to the ar­eas that will al­low for the most growth and suc­cess for your busi­ness.

ANALYSING SPE­CIFIC MAR­KETS: SOUTH­EAST ASIA

Ev­ery mar­ket is dif­fer­ent, so it makes sense to work with peo­ple on the ground in spe­cific coun­tries or re­gions.

In the case of South­east Asia, In­cite, an ex­port devel­op­ment agency headed up by Sin­ga­pore-based Cameron Gor­don and Nada Young, of­fers knowl­edge built up over al­most ten years in the lo­cal F& B sec­tor. They work with a num­ber of Aus­tralian and New Zealand F& B ex­porters.

“We’ve found that the best place to start is to fo­cus on your cat­e­gory fun­da­men­tals,” ex­plains Gor­don. In Sin­ga­pore, for ex­am­ple, these are:

1. Cat­e­gory anal­y­sis – As­sess­ing the size of your cat­e­gory pro­vides a key in­sight into the sales po­ten­tial for your prod­ucts. Un­for­tu­nately, un­like in New Zealand where off­take sales data can be pur­chased di­rectly from re­tail­ers, in Sin­ga­pore you must rely on big data firms to ob­tain this data and their fees can be ex­tremely ex­pen­sive.

“Un­less you have very deep pock­ets, a prag­matic way to an­a­lyse your cat­e­gory is to fly to the mar­ket and visit some of the out­lets of the ma­jor re­tail­ers. Take a good look at your cat­e­gory. How much floor space does it cover? How many com­peti­tors are on the shelves?”

2. Com­peti­tor anal­y­sis – How does your prod­uct mea­sure up against the in­cum­bent com­peti­tors in the cat­e­gory? Does your pack­ag­ing live up to the stan­dard set by the lead­ers in the cat­e­gory? Will con­sumers en­joy the taste of your prod­ucts? Do the mar­ket­ing mes­sages on your pack­ag­ing res­onate with Sin­ga­porean con­sumers? 3. Price po­si­tion – Cor­rect price po­si­tion­ing is ar­guably the most im­por­tant fac­tor in de­ter­min­ing suc­cess when en­ter­ing South­east Asian re­tail chan­nels. A good pric­ing strat­egy will en­sure your prod­ucts are po­si­tioned well against your com­peti­tors in the cat­e­gory. Even an ex­pen­sive ad­ver­tis­ing and pro­mo­tion strat­egy can­not save a poor pric­ing strat­egy.

4. Dis­tri­bu­tion chan­nels and cost of en­try – The best way to mit­i­gate the high en­try costs (list­ing fees) in Sin­ga­pore is to gain an un­der­stand­ing of which re­tail groups and store lo­ca­tions are the most rel­e­vant for your prod­ucts. The goal should be to pay to en­ter only those stores that have a suit­able cus­tomer base for your prod­ucts. If you let your dis­trib­u­tor or the re­tail buyer solely make this as­sess­ment for you, there is a good chance that you will end up pay­ing list­ing fees for stores that are not rel­e­vant for your prod­ucts.

“Tak­ing the time to un­der­stand the re­tail land­scape and your abil­ity to com­pete in your cat­e­gory will set a strong plat­form for de­vel­op­ing a win­ning ex­port strat­egy,” says Gor­don. (A Sin­ga­pore Re­tail Chan­nel Val­i­da­tion Guide can be down­loaded from get.ex­port­incite.com)

REFOCUSING ON JA­PAN

With so much fo­cus on the tur­bocharged China mar­ket in re­cent years, it’s hardly sur­pris­ing that Ja­pan, a mar­ket that has a long and sig­nif­i­cant diplo­matic and trad­ing his­tory with New Zealand, may have slipped un­der the radar of Kiwi ex­port firms.

But that should all change when the now-rat­i­fied 11-na­tion Com­pre­hen­sive and Pro­gres­sive Agree­ment for Trans-Pa­cific Part­ner­ship (CPTPP) delivers its first round of tar­iff cuts in early 2019.

The CPTPP is New Zealand’s first FTA with Ja­pan – the world’s third largest econ­omy and New Zealand’s fourth largest ex­port mar­ket (our ex­ports to Ja­pan in the year to June 2018 to­talled NZ$4.2 bil­lion).

Those tar­iff re­duc­tions will de­liver a com­pet­i­tive ad­van­tage for many Kiwi ex­porters – for a start it im­me­di­ately re­moves the tar­iff ad­van­tage Aus­tralia’s beef pro­duc­ers have en­joyed at the ex­pense of our red meat farm­ers.

The Ja­panese mar­ket will also de­liver a num­ber of one-off op­por­tu­ni­ties in the shorter term, with the up­com­ing Rugby World Cup and Olympics sched­uled to be held there.

Hav­ing lived in Ja­pan for sev­eral years, Ye Miao, as­sis­tant head of Asia Di­vi­sion at James & Wells, notes that New Zealand’s premium prod­ucts are well suited to the de­sires of Ja­panese con­sumers, and mar­gins are rel­a­tively high.

“Ja­pan is a highly com­pet­i­tive mar­ket and its con­sumers are loyal to brands that de­liver high qual­ity prod­ucts,” he says. “It’s there­fore es­sen­tial to get both the brand­ing and prod­uct right at the begin­ning.”

From an IP per­spec­tive, com­pe­ti­tion in the Ja­panese mar­ket means it’s es­sen­tial to de­velop an IP strat­egy as part of an over­all Ja­panese mar­ket strat­egy. That means en­sur­ing your brands are: • Not in­fring­ing on any pre-ex­ist­ing brands on the Ja­panese

Trade­mark Reg­is­ter, and • Are ad­e­quately pro­tected to pre­vent other par­ties from neg­a­tively af­fect­ing or ‘coat-tail­ing’ off the rep­u­ta­tion of the brand. Ja­pan is a ‘first-to-file’ ju­ris­dic­tion for trade marks, Miao points out, so en­sure your brand/s are pro­tected as early as pos­si­ble.

He ad­vises Kiwi ex­porters to ob­tain ac­cu­rate lo­cal ad­vice and trans­la­tion for their in­tel­lec­tual prop­erty. He notes, for in­stance, that James & Wells works with lead­ing Ja­panese as­so­ci­ates to achieve the best re­sult in the Ja­panese mar­ket.

Ja­pan can be a very prof­itable mar­ket for New Zealand busi­nesses, par­tic­u­larly in the F&B and health­care sec­tors, adds Miao. But it re­quires care­ful plan­ning for the long-term. “Prod­ucts and ser­vices should be tai­lored specif­i­cally to the Ja­panese mar­ket, where con­sumer ex­pec­ta­tions can be very dif­fer­ent to other ex­port mar­kets,”

Miao says ex­porters must con­sider ev­ery­thing from the pack­ag­ing and pre­sen­ta­tion of their prod­ucts, to mar­ket­ing and devel­op­ment of their brands, and to their choice of Ja­panese busi­ness part­ners/ad­vi­sors.

TRANS-TAS­MAN TIES STRONGER THAN EVER

Of course, no ex­port stock-take would be com­plete with­out ref­er­ence to our most pop­u­lar ex­port des­ti­na­tion, Aus­tralia.

Ac­cord­ing to the Ex­portNZ DHL Ex­port Barom­e­ter Aus­tralia con­tin­ues to dom­i­nate as our ex­port des­ti­na­tion.

Mark Foy, coun­try man­ager of DHL Ex­press New Zealand, re­ports that ex­port growth to that mar­ket is best re­flected in the rise in e-com­merce ship­ments that re­quire a B2C de­liv­ery.

“Ex­port vol­ume from New Zealand to Aus­tralia has seen a steady growth. Our net­work recorded a 40 per­cent year-on-year in­crease be­tween May 2017 and May 2018. The main driver of this growth is New Zealand e-com­merce busi­nesses sell­ing into the Aus­tralia mar­ket­place.”

Foy says over the past five years, the B2B mar­ket has changed and grown, al­low­ing the ex­pan­sion of busi­ness-to-con­sumer dis­tri­bu­tion be­tween Aus­tralia and New Zealand. “Con­sumers are be­com­ing more fa­mil­iar with on­line shop­ping in­ter­na­tion­ally, and those who do so are spend­ing more on­line,” he says. “The chang­ing land­scape is pre­sent­ing e-re­tail­ers with in­valu­able op­por­tu­ni­ties to ex­ploit new mar­kets and ex­pand glob­ally. These op­por­tu­ni­ties are not only for Kiwi busi­nesses ex­port­ing to Aus­tralia, but also the US, Asia and Europe.”

The use of so­cial me­dia tools to boost sales and ex­ports is also on the rise, he says.

“We pre­dict this to be a strong mar­ket­ing tool to fur­ther drive e-com­merce be­tween Aus­tralia and New Zealand.”

Foy ex­plains that the sim­i­lar busi­ness cul­ture and po­lit­i­cal en­vi­ron­ment be­tween the two coun­tries mean that New Zealand busi­nesses can mar­ket and ex­port on the Tas­man trade lane like it is an ex­panded do­mes­tic mar­ket.

“My ad­vice to a Kiwi ex­port firm look­ing to do busi­ness in Aus­tralia for the first time would be to ex­plore on­line mar­ket­ing and e-com­merce op­por­tu­ni­ties to ex­tend their net­works. “And do it right with a trusted lo­gis­tics part­ner with a global foot­print.”

DHL's LAT­EST FREIGHTER SERVES THE GROW­ING TRANS-TAS­MAN TRADE.

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.