$8.20 INC GST

A beginner’s guide to exporting

>>>>Freight>forwarding>de-mystified

>>>>How>to>minimise>risk>on>export>payments>

>>>>ROK>On!>Kiwis>opening>doors>to>South>Korea

JEFF BROAD: MAN WITH A PLAN • NZTC’S EXTREME MAKEOVER • SISTEMA PLASTICS’ EXPORT LESSONS

THE MAGAZINE BEHIND NZ’S EXPORT DRIVE

ISSUE 20 > >SEPT/OCT 2011

$8.20 INC GST

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BIG/VER711/ME1

> COVER STORY

1 8 A BEGINNER’S GUIDE TO EXPORTING

So you have a product or service you think the world will buy? But you’re a bit in the dark as to how, or where to get started? Best you step back and identify your market first. Better still, read this guide and see what else you should be doing first. By Glenn Baker.

> CO N T E N TS

> EXPORTER PROFILES

1 0 PLASTICS FANTASTIC

Sistema Plastics is successful on so many levels – not least of which the controlled way it goes about conquering export markets. Co-founder Allin Russell shares some

valuable export lessons.

1 4 MAN WITH A (EXPORT) PLAN

Jeff Broad is under no illusion about how New Zealand’s economy can recover from its recent lows. It’s all up to our export sector, he says, and his company Autogrow is

setting the pace.

1 6 AN APPETITE FOR NEW MARKETS

Having made a number of strategic readjustments, fine food manufacturer Wild Appetite is poised to take on additional export markets.

1 8

NEXT ISSUE: NOV 2011

> FEATURES

2 4 FREIGHT FORWARDING DE-MYSTIFIED

Shipping goods to overseas customers requires specialised services and sound knowledge. This guide is designed to de-mystify freight forwarding for the uninitiated. By Mary

MacKinven.

2 8 MINIMISING RISK ON EXPORT PAYMENTS

Exporters can free up cashflow by tapping into various trade finance tools provided by the banks and other lending

institutions. ByYoke Har Lee.

4 2 EXTREME MAKEOVER, EXPORT EDITION

The newly refurbished New Zealand Trade Centre.

4 4 REGIONAL FOCUS: IT’S ABOUT RELATIONSHIPS

Claire Grant explores the common factors within three

different Dunedin export success stories.

4 6 TECH SPACE

Bill Bennett compares the tablet options.

4 8 WHERE BUYERS MEET SELLERS

Exporter talks to Robert Laing – whose company represents

most of the Germany-based expos.

5 0 FINDING YOUR NICHE IN THE WORLD

Energy Intellect relishes being a small, agile player in

a global niche market.

> MARKET INTELLIGENCE

3 4 INDONESIA: THE END JUSTIFIES THE MEANS

The challenges of growing your business in the Indonesian market are many, but the opportunities truly warrant making the investment. By Cameron Gordon.

3 8 CHINESE SCRIPT TRADE MARKS

Having made a number of strategic readjustments, fine food manufacturer Wild Appetite is poised to take on additional export markets.

4 0 ROK ON!

Two New Zealand companies are pushing open Korean doors for other Kiwis in very different ways.

5 2 GLOBAL STAGE

Innovative Kiwi products seeking a worldwide audience.

5 4 VIEWPOINT

1 EXPORTER

1 0

3 4

1 0

Early lessonsAs you may have noticed, there have been

a few changes at Exporter magazine.

It has new owners, a new editor, new

advertising manager and production team.

So you’re bound to notice some differences.

Bear with us as we get up to speed with the

export marketplace, and with what you, the

reader, is looking to brush up on – our aim is

to continue improving this publication with

each bi-monthly issue (there will be no Jan/

Feb issue, however).

Borrowing from the editorial approach of

Exporter’s step-sister publication, NZBusiness, our

focus is on short, sharp, easily digestible articles that seek to educate, inform

and motivate New Zealand’s established and early-stage exporters. And yes,

we’re open to suggestions and submissions – we can’t do this alone; there is

a lot of expert advice and viewpoints out there, and we aim to share as much

information as possible with our readers.

Start-up exporters should find our editorial pages especially useful for

understanding overseas markets and gaining a foothold. In fact, we’ve aimed

our first cover story squarely at these companies. We make no excuses for its

simple, basic message – we felt, with so much ground to cover in upcoming

issues of Exporter, this was as good a place to start as any. Give us some

feedback – we’d like to know if it was useful to you.

Nobody reading this magazine needs any reminder that we live in the

toughest of economic times, and exporters are having a tough time coping

with global market uncertainty and roller-coaster exchange rates. Just as the

New Zealand economy starts to mend, and our export sector gains a little

momentum, global economic events threaten to de-stabilise everything.

I’m glad to see that New Zealand’s exporters aren’t letting a little bit of

uncertainty get in the way of their export plans and initiatives. They’re not

holding back – and we have some great examples in this issue for you to get

inspired by.

So, in the course of preparing this issue, what have I learnt?

I’ve learnt that Kiwi exporters are almost spoilt for choice when it comes

to available help from private individuals, consultants and from government-

backed agencies. All they have to do is ask.

I’ve learnt that exporting is extremely challenging; it’s unlike anything

you’ve ever done before. But when you team up with the right people, and

when you stick to the basic fundamentals, you can save yourself a lot of time,

money and agony. Patience is the key virtue.

And I now have a better appreciation of just how many great New Zealand

export success stories fly under the newspaper headlines. There’s a whole

army of heroes out there quietly fuelling our export drive. The problem is –

we just need a bigger army.

Glenn H. Baker

editor@exportermagazine.co.nz

> EDITOR’S LETTER

2 EXPORTER

Exporter’s step-sister publication, NZBusiness, our

EDITOR

Glenn Baker. editor@exportermagazine.co.nz

ADVERTISING MANAGER

Leanne Moss. Leanne@exportermagazine.co.nz

ADVERTISING ASSISTANT

Rachel Witberg. Rachel@exportermagazine.co.nz

DESIGN AND PRODUCTION

Hartman Reid. hartman@adrenalin.co.nz

JOINT PUBLISHERS

Cathy Parker. cathy@adrenalin.co.nz

Yvonne Carter. yvonnec@xtra.co.nz

SUBSCRIPTIONS/ENQUIRIES

Hilary Keen. subs@exportermagazine.co.nz

CIRCULATION MANAGER

Kim McIntosh. kim@adrenalin.co.nz

CONTRIBUTORS THIS ISSUE

Steve Anderson, Cameron Bagne,

Catherine Beard, Cameron Gordon, Claire Grant,

Yoke Har Lee, Ruth Le Pla, David Macaskill,

Mary MacKinven, Andrew Sayers, Ron Scott,

Alice Taylor, John Walley.

Adrenalin Publishing Ltd.

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PO Box 65 092 Mairangi Bay,

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Ph: 09 478 4771 Fax: 09 478 4779

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Subscription in New Zealand is $75 (incl GST).

Please call us for overseas rates.

Copyright: Exporter is copyright and may not

be reproduced in whole or in part without the

written permission of the publisher. Neither

editorial opinions expressed nor facts stated

in advertisements are necessarily agreed to by

the editor or publisher of Exporter and, whilst

all efforts are made to ensure accuracy, no

responsibility will be taken by the publishers for

inaccurate information, or for any consequences

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ISSN: 2230-6528

ISSUE 20

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4 EXPORTER

A recyclable shoe designed for

barefoot running recently

won the coveted James

Dyson Award for emerging

product design. Nicholas

Couch, a 23 year old graduate from

Massey University says his shoe is

designed to help runners taking up the

fast-growing trend of running without

footwear, to encourage the foot to

move more naturally and reducing

injury. He believes his shoe is the only

sustainable barefoot-style design that

features replaceable and recyclable

parts.

“Globally 350,000 million sports

shoes are purchased and discarded

each year. Often, these shoes are

discarded when only one part – usually

the sole – has worn out while the rest

of the shoe remains in good condition

but goes to landfill.”

The designer says the shoe is made

> M A K I N G N E WS

Recyclable shoe wins design award

up of only five parts, each part is

designed to be discarded only when

required, eliminating the need to

discard the entire shoe and extending

its usable life. Made without glue

adhesives, the discarded part can

be broken down into their original

material and recycled.

While Nicholas has researched

the marketplace and produced a

prototype, the product is at concept

stage only, and he would welcome

an opportunity to commercialise his

design.

Nicholas will travel to the UK with

$3,000 travelling expenses and

accommodation courtesy of British

Council New Zealand, have the

opportunity to tour Dyson’s London

office and meet with other key

members of the UK design community.

Plus, he can select an official fee prize

package from the Intellectual Property

Office of New Zealand tailored to his

design’s intellectual property needs,

$3,000 worth of legal advice, a

Dyson handheld cleaner and a year’s

membership to the Designer’s Institute

of New Zealand.

Two other finalist designs are the

work of Massey University industrial

design graduate, Stuart Smith, for

a solar-powered lawn mower, and

Victoria University graduate, Cameron

Lightfoot for his prosthetic leg

invention, powered by magnets to

allow amputees to walk easier. Ten

New Zealand entries progressed to

online judging in the international

James Dyson Award competition.

The global winner will be announced

in October and together with their

university, they will win a total prize

fund equivalent to £20,000.

All entries can be viewed at

www.jamesdysonaward.org

EXPORTER 5

> M A K I N G N E WS

K iwi beverage company Ti Tonics,

has become a huge hit across

the Tasman, with Australian

sales outstripping those in New

Zealand and expansion tipped

for Asia, the US and South America.

Ti Tonics launched its range of

premium iced teas on both side of the

Tasman in June last year and Ti Tonics

founder Dr Tracey King says signing

a deal with Boutique Beverages in

Queensland, which services up to 10,000

outlets, has seen Ti Tonics go from

strength to strength. “Getting listed

with Boutique Beverages was such a

coup for us and has meant getting the

product out into the Australian market

much easier. We were always confident

Australian consumers would love Ti

Tonics as much as New Zealanders, but

Iced teas a hit in Australiathe fact that sales in Australia are

bigger than those at home exceeded

our expectations.”

On top of its deal with Boutique

Beverages, Ti Tonics has achieved listings

with 12 other Australian café and route

trade distributors in Sydney, Melbourne,

Adelaide, Perth and Brisbane and has

entered into a sales and marketing

agreement with beverage exporter Dion

Mortimer to tackle the North American,

Asian and MERCOSUR markets.

“We’ve also fielded interest from

various other distributors around the

world, including Korea, Japan, Taiwan,

Singapore, Brazil and the United Arab

Emirates, meaning consumers in those

regions will hopefully be enjoying all of

the benefits of Ti Tonics soon too,” says

Dr King. www.ti-tonics.com

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6 EXPORTER

PNG project demonstrates collaborative approach

A large luxury hotel

development in Papua New

Guinea is illustrating the value

to New Zealand companies

of exporting services and

aligning their work with that of

counterparts in other Pacific nations.

On its completion in November, the

five-star Grand Papua Hotel in Port

Moresby will stand as a premier

example of this focused international

collaboration: leading Kiwi specialist

design company Space Studio worked

alongside the architect Cullen Feng

Architects of Sydney designing the

interiors of the hotel and delivering

the interior materials to PNG.

Space Studio also leveraged

its relationship with a similarly

internationally-capable New Zealand-

based firm, Fletcher Construction,

with which it worked on another hotel

development four years ago.

“We were introduced to the PNG

project by Fletchers, and I think

our collaboration demonstrates the

opportunity for New Zealand firms to

be more active in helping one another

get a foothold in these markets,” says

Space Studio director Vee Kessner.

“The need for our skills exists – it is

simply a matter of the opportunity

and the capacity. Our firms can do

a lot for one another in terms of

networking, endorsing New Zealand

consultants and keeping an ear to

the ground in their own sectors and

related ones.

“In our case, projects such as this

require us to collaborate fully with

our Australian counterparts, and the

quality of our performance dictates

how our business develops from

there.”

On the back of the $90 million

Grand Papua Hotel project’s success,

Space Studio has been appointed

to six more projects with the same

client in PNG, ranging from small

refurbishments of existing hotels to

extensions of existing ones.

Space Studio director Vee Kessner.

> M A K I N G N E WS

13-15 OCTOBER

NZ FLAIR 2011

Te Kowhai Airfield, Hamilton. The must-visit aviation expo

event for enthusiasts and professionals. With more than

5000 products and services designed and built locally, Flair

showcases the innovation in aviation within New Zealand.

Visit www.nzflair.com

16-18 OCTOBER

NZ FOOD INNOVATION SHOWCASE

Held at the new Viaduct Events Centre in Auckland. New

Zealand’s food science, processing, packaging, safety

and innovation expertise goes on display. For further

information visit www.nzfoodinnovationshowcase.co.nz

20 OCTOBER

THRIVE INTERNATIONAL

Aotea Centre, Auckland. Featuring a high calibre line-up

of presenters – including Kevin Roberts, Jonathan Ling,

Chris Liddell, Roseanne Meo and Rod Duke. This is the day

business people come together to celebrate New Zealand’s

tall poppies, business leaders, legends and heroes. For

details and tickets go to www.thriveinternational.co.nz

Exporter Diary26 OCTOBERINNOVEST 2011Skycity Convention Centre, Auckland. The Australasian

Innovation & Investment Summit is an opportunity for

entrepreneurs, investors and advisors to examine issues

and share insights.

InnoVest provides information on trends, challenges for

innovation, access to capital and pathways to international

markets. Register at www.innovest2011.co.nz

8 NOVEMBERLEADERSHIP CONFERENCE: LEADING TEAMS TO PEAK PERFORMANCE8.50am-4.15pm Intercontinental Hotel, Grey Street,

Wellington. For more information or to register visit

www.emacentral.org.nz

Let us promote your export business event.Email the details to editor@exportermagazine.co.nz

EXPORTER 7

George Fernandes, Wade Brownlee, Abhijit Roy, Bruce Davies and Ian Cooper of Modtec Industries, with

Sandra Sweetman and Paul O’Brien from sponsor EasiYo.

Export success for Silverdale company

A Silverdale-based

engineering and

manufacturing company

has claimed the major

exporting award at the

Westpac Auckland North Business

Awards 2011. Modtec Industries

took home the EasiYo Excellence

in Exporting Award impressing

judges with its potential for

further growth on the back of its

41 percent sales export increase in

the past three years.

Modtec provides design and

quality solutions in zinc pressure

die cast components, steel tube

and powder coating products.

The company designs and

manufacturers Integ monitor arms

and Apollo mounting solutions.

The judges liked Modtec’s well

designed and constructed product

that serves a growing need in a

huge market. They predict the

company will become even more

successful as it expands its export

sales in Australia, North America,

Singapore, China, India and

the UK.

Wine industry progresses in tough times

Cryogenics pioneer chooses Jade

N ew Zealand’s wine industry

is making progress despite

the tough economic times,

according to the June year

end 2011 Annual Report of

New Zealand Winegrowers.

“Three years ago, our wine sector

was reeling from the combined effects

of the 2008 supply shock and the GFC.

Today excess inventory has been sold

through and we have the confidence

to take in a record harvest based on

anticipated demand,” says Stuart Smith,

chair of New Zealand Winegrowers.

Smith adds that total New Zealand

sales (export and domestic) rose 11

A A free software trial had the

ultimate pay-off for New

Zealand’s Jade Software when

it signed hi-tech Silicon Valley

cryogenics company MMR

Technologies as a partner.

The in-house team of the cryogenics

pioneer will be using Jade Software to

create a bespoke control solution that will

be rolled out to thousands of research

projects around the world, says Craig

percent to 221 million litres for the June

year end 2011 while export value rose

five percent to $1.1 billion.

“These achievements represent

real progress against a background

of increased uncertainty in the global

economy.”

Smith is clear, however, that

significant challenges still remain.

“Profitability is a key concern for

wineries and growers, as many still

struggle with the legacy effects of the

past three years. The wild gyrations of

the Kiwi dollar are a major problem for

exporters, and threaten to de-rail the

recovery that we are starting to see.

Domestically, annual excise increases

impact winery financial returns because

those increases cannot be passed onto

consumers.”

Smith noted there is a need for a

clear path forward for the sector and

New Zealand Winegrowers. “For this

reason we have commissioned a major

independent strategic review of the

sector and our own activities. PwC has

been appointed to conduct the review

which we believe represents an exciting

opportunity to build on the progress

of the industry to date, and to position

New Zealand wine for greater success

in the future.”

> M A K I N G N E WS

Richardson, Jade’s MD.

“This is an important recognition of

our technology in a significant market.

Our technology solves hard business

problems and cryogenics is an example

of Jade software being used in the most

demanding of environments.”

Originally a spinout from research

conducted at Stanford University, MMR

has a proud history of innovation and is a

world leader in its field of cryogenics R&D.

“Jade was selected based on a number

of factors including high performance,

reliability and ease of development,” says

Richardson.

The company recently showcased at

Microsoft Tech Ed Atlanta and, following

the success of JOOB Mobile as a finalist

in the mobile/wireless category, has

established an office in San Francisco to

be closer to customers and the market.

Kiwi campervans make inroads in US

New Bill creates trade mark rush

K iwi campervan rental company

Escape Campervans now has

100 vehicles on the highways

of California, just two years

after introducing its graffiti

art-styled vans to the US market.

One of the company’s original

founders, Andrew McGregor, now

based in San Francisco, says the

company’s unique hand-painted

campervans and simplified ‘no-hidden

costs’ rental agreements are proving to

be a winner.

“When we first started Escape

in 2003 in New Zealand, there was

nothing like our product on the

market and, after some investigation,

we discovered the same opportunity

existed in the US. It was also a positive

for our customers – they could

continue their New Zealand experience

with Escape in the US, and vice-versa.”

“When we first hit the ground in LA

in 2009, it was a terrifying, crazy place.

We had no contacts or knowledge of

how we were going to pull it off.

“It’s a lot harder to start a business

here in California so we had to quickly

learn all about insurance, business

licenses, legal pitfalls and the US way of

doing business. We were very fortunate

to have a US-based Kiwi

friend and partner guide

us through the choppy

waters.

“We also had a job

convincing locals who

were skeptical about

the compact size of our

campervans, but they

were never our target

customers. They thought

we were crazy as we tried

to explain how there was a

bed, foldaway table, fridge

and kitchen in a small van

and that travellers rented

these for months at a

time. It was a classic case of our Kiwi

Minibago versus their US Winnebago.

“But we are in fact targeting the

same market as we do in New Zealand:

mainly discerning backpackers from

Holland, Germany, Switzerland and the

UK who want a bit more adventure and

freedom on their travels. Now we’re

also seeing an increasing number of

Kiwis taking advantage of the high New

Zealand dollar.”

He says that when they launched in

the US they also realised there was an

advantage in keeping pricing and rental

agreements simple. “We were baffled

by the archaic language, ambiguous

terms and conditions, insurances and

all the hidden costs of the traditional

operators. It took us a while to figure

out how much people were actually

paying.”

McGregor says the key to the

company’s success has been its low,

transparent pricing and its unique

hand-painted campervans. “Our next

goal is to have 200 campervans on the

ground in the US by 2013, and we’re

feeling confident we’ll pull it off.”

www.escapecampervans.com

A New Zealand intellectual

property practice is advising

Kiwi exporters to protect

their IP before new legislation

making trade mark registration

here easier for overseas companies

comes into force.

The Trade Marks Amendment Bill,

brings New Zealand in line with many

countries around the world through

the Madrid Protocol. The Protocol

allows international organisations to

register a trade mark in any country

which uses the Protocol in one

single procedure.

Philip Thoreau, partner at Baldwins

Intellectual Property, says that Kiwi

businesses need to be prepared and

should protect their brands before

the new legislation comes into force,

expected to be mid-2012.

“Companies need to take proactive

steps in response to the new

legislation and ensure they have

protected their trade marks by

registration before the legislation

comes into force. We are expecting

there will be a significant increase in

the number of trade mark applications

filed in New Zealand by offshore

competitors who are already members

of the Madrid Protocol.

“At the touch of a button, large

international corporates could severely

inhibit future economic growth, from

local startup companies to established

exporters, blocking access to key

markets,” he says.

Other countries in the Madrid

Protocol include Australia, China, the

US, the UK, Japan, Switzerland, Korea,

Singapore, the Russia Federation and

members of the European Union.

www.baldwins.com

> M A K I N G N E WS

8 EXPORTER

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Exporter subs.indd 1 23/08/11 3:21 PM

Allin Russell greets me in the

reception area of Sistema

Plastics modern Penrose factory

and ushers me into a display

room of his company’s products.

As I look around the four walls I see that

their food storage containers and drink

bottles come in almost every shape, size

and colour imaginable. You probably

have their ‘Klip-It’ plastic containers in

your cupboard or fridge right now – I do,

and I wonder how many people know

they are made in New Zealand.

Russell explains how Sistema first came

about. It was the early 90s. His business

partner Brendan Lindsay, who was (and

still is) making plastic coat-hangers, had

just returned from the US where, at a

football match, he noticed just about

everybody drinking from cups with

pictures on.

“I can do that,” he said to Russell. “Do

you want to give me a hand?”

The partnership was to prove

incredibly successful – Russell especially

has an uncanny knack for coming up

with smart ideas – developing clever

new products for food storage. Even

their latest product – the world’s first

dedicated microwave range for cooking

and re-heating food – was his brain-

child. It was the middle of launch week

in New Zealand the day of our interview

and Russell informs me that it’s already

selling extremely well via the home

shopping TV network in the US.

Sistema started out manufacturing

and marketing a range of children’s drink

bottles and lunch boxes in 1993. “The

big thing was that we introduced colour

to the market,” recalls Russell. “While

everybody else was still stuck on white.”

Lindsay and Russell went to a fair

in Milan, Italy, the home of cutting-

edge design, and Russell admits that,

surprisingly, they learnt nothing from

what they saw design-wise.

“But what we did realise was that

our competitors around the world

were industrial in their thinking. We set

Sistema up as a marketing company

that makes its own product, and this

still differentiates us in the market

today. Most of our competitors are

manufacturers who employ marketers;

that’s a huge difference.

“Brendan and I still sit down in front of

our customers too, which is unusual for

a company our size. My upcoming road

trip in the US will involve calling on 19

retailers.”

In order to expand quickly, Australia

was the first export market on the radar.

“It’s close, has a similar business

model, and if something goes wrong we

can get there quickly,” says Russell.

He says their initial plan was to take

[export] steps every three years. “But

everything happened so quickly, we were

taking the next step before we’d finished

the previous one.

“We’ve had to keep ourselves in check

because if you have a relationship with

a large overseas retailer and you don’t

perform, there’s no second chance.

“As it turned out, 18 months after

entering the Australian market we

spent $75K we didn’t have and went

BY GLENN BAKER

> E X P O R T E R P R O F I L E

Sistema Plastics is successful on so many levels – not least of which the controlled way it goes about conquering export markets. And it takes great pride in maintaining its world-class manufacturing base on these shores. Co-founder and marketing director Allin Russell shares some valuable export lessons.

Plastics fantastic

10 EXPORTER

EXPORTER 11

to Chicago – the world’s premium

housewares fair.

“We had a tiny stand and nine

products – sat there for four days and

never took an order. Then on the last

day we met a guy from the UK who was

just starting out and held the Pokemon

licence. He liked our lunchbox and asked

us if we could in-mould label. We said

‘of course’, even though we didn’t know

what that meant.

“So we came home and learnt all

about it, and ended up selling hundreds

of thousands of Pokemon product via

that one client – at a time when the

exchange rate was very favourable.

“Where we were clever, I believe,

was that we poured all that money

into developing our capabilities further.

We’ve gone from one cavity dies,

because that’s all we could afford at the

time, up to around 60 cavities. If you’re

serious about exporting, you just have to

invest.”

MADE RIGHT HERE

While many Kiwi manufacturers switched

production to China, Sistema dug its toes

in and remains committed to its ‘Made in

New Zealand’ philosophy.

“It’s about control. Daily there

might be 30 or 40 reasonably major

production decisions. If that’s going on

in China; somebody else will make those

decisions for you. Will they be the right

ones? Plus you don’t get to participate in

the solution.

“Everything is about our brand

standard, that’s what drives our success,”

says Russell.

Being ‘Made in New Zealand’ has its

advantages, he adds, particularly in

America where New Zealand is seen

as a clean, green, easy-to-deal-with

country that invests heavily in new

technology and upholds high standards

of production.

“Don’t forget we were the first people

to produce lead-free BPA product in the

world.”

New Zealand undersells itself as

a manufacturer, Russell believes.

“Manufacturing-wise we’re a lot better

than we think we are. The emphasis in

this country is on the likes of tourism,

wine dairying and forestry. But there’re a

lot of other things being made here and

if people got the encouragement and

help NZ Inc could become much more of

an exporter.”

The ongoing debate of taking

manufacturing offshore is not just about

profit, as most claim it to be, says Russell.

It’s about peoples’ lives and livelihoods.

“We have 300 people working here

and every single person has bought into

the Sistema dream,” he says. “They love

the product and the fact that it’s sold

overseas. They take great pride in it.”

Staff even wear their Sistema tops with

pride outside of work hours, says Russell.

It’s almost like an All Blacks jersey, it

means something to them he says,

adding that more than half of Sistema’s

employees have been with the company

ten years.

“The fact that we can go anywhere

in the world and say that this product

is made in New Zealand really means

something.”

UNIQUE MARKET APPROACH

Sistema has a unique approach to

the market with its products. “Our

point of difference is functionality and

simplicity – two clips, not four – people

find them extremely easy to use,” says

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We’ve been opening doors to China for over 145 years

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HSB 1103 China Doors Export Mag vf.indd 1 8/09/11 11:54 AM

12 EXPORTER

Russell. “And the quality assurances

are paramount – all our products are

thoroughly tested as required by retailers

of course. A lot of thought also goes into

the labelling – for which we have won

numerous awards.”

Russell says many people thought

they were crazy when they first started

out. “But it would be no different if we

were starting Sistema today – the same

elements are still against us.

“Our strengths are innovation,

flexibility, our response to market trends,

and the fact that we still front up to

buyers in person.”

Another key to their success has been

a thoroughly market-tested product.

“You’ve got to know that it will sell and

go on selling and that there is future

development potential,” says Russell.

Another hard lesson learnt was don’t

just head off to international trade fairs

and expect that big customer to turn up

and answer all your distribution prayers.

“You must source local distributors

who can provide thorough local market

knowledge.

“We now own most of our overseas

operations, but in all of them we’ve

employed local people. They understand

local demands, seasonal and ethnicity

aspects, and so on.”

The global recession has helped fuel

demand for food storage containers as

people look to save money, says Russell.

“Obviously we’ve been challenged with

exchange rates. Swings and roundabouts

is the only way to look at the market.

When things are good you grow well

and invest in technology. In a recession

you may not develop quite so quickly.

Developing eight to ten new products a

year is not cheap.”

The reason why they are so successful,

Russell firmly believes, is that they first

come up with the idea for a product,

make that product, then extend it into

a range. “Retailers often get offered

products, but seldom a whole range of

products. It all makes sense to them.”

Russell isn’t sure exactly where

Sistema sits in terms of size in their

market niche – but thinks it’s around

number three, four, or five in the world.

That makes them a significant business.

So has Sistema received any assistance

over the years to reach world markets?

Russell says in the early days it

was too much hard work to apply for

government grants, and he eventually

gave up trying. But there has been

assistance through NZTE in more

recent times. Russell acknowledges

how daunting it is for many fledgling

exporters to break into markets, and

believes there’s a requirement for much

more funding assistance on things like

travel and attending trade shows.

He says they use a consultancy to

liaise with funding agencies, but believes

a lot of small businesses

would love any easier

connection between

themselves and NZTE.

THE ROAD AHEAD

Lindsay and Russell

still drive most product

development. But

nowadays there’s a major

contribution from ‘a

team of clever technical

people’.

“We’re much better at analysing the

outcome these days,” Russell admits.

“People can get frustrated with us

because they think we over-analyse.

We thrash things out mercilessly –

sometimes for months. And if we can’t

see a way forward, we’ll park the idea

and wait until it’s appropriate to resume

work on it. It might be frustrating, but if

you get things wrong it’ll cost you a lot

of money.”

Looking back over Sistema’s 18-year

journey, Russell describes it as “a

fantastic ride, and we’d do it all again in a

heartbeat.” His advice for other exporters

is to not make the same mistakes twice.

Expect the little trips and stumbles – and

be realistic in your expectations.

“Be market-ready before you make

that move,” he says. “The only times

we’ve had to take corrective action is

when we’ve taken a step before we were

ready.”

Sistema was named Westpac Exporter

of the Year with total sales over $35

million at the 2011 Air New Zealand

Cargo Auckland Export Awards. It

currently exports to 19 countries,

and the next big push is continental

Europe – a complicated series of smaller

sub-markets, Russell says. “We’re

currently identifying distributors that

successfully cover all of Europe. There’re

only a few and there’re many factors to

take into account – so we’re taking our

time to select partners. We’re still in the

learning phase. The key is to know where

to enter continental Europe in order to

best serve the market.”

Brazil is also on Sistema’s radar. “Brazil

has a higher GDP than Australia and

a strong currency. It’s a complicated

market – there are some powerful

retailers and a huge licensing structure

that discourages importing.”

As for China, Russell admits there are

IP-related issues, but they intend to crack

that market eventually too. “We’ve learnt

that if your product is being copied,

you threaten the retailer with litigation.

The offending product is very quickly

removed.”

Has there been a stand-out export

milestone over the years?

“Securing The Container Store in the

States was incredibly satisfying,” says

Russell. “We battled away to break into

that market for a long time. The major

retailers already stocked recognised

competitor brands, so why would they

take on an unknown?

“So we went to The Container Store

about six years ago and offered them

exclusivity for 12 months. They agreed to

trial us on that basis. Well, after just two

months the retailers who had turned us

down came back asking for product. We

had the satisfaction of telling them, sorry,

they would have to wait.

“That was a defining moment for us.

We had the belief that we would be

successful in the States if we learnt the

local dynamics of product.”

Glenn Baker is editor of Exporter.

> Be market-ready. You’ve got

to know that your product

will sell and go on selling.

And that there is future

development potential.

> Source local distributors who

can provide thorough local

market knowledge.

> Expect the little trips and

stumbles – and be realistic in

your expectations.

TAKEAWAYS TAKEAWAYSKEY

“BE MARKET-READY BEFORE

YOU MAKE THAT MOVE. THE

ONLY TIMES WE’VE HAD TO TAKE

CORRECTIVE ACTION IS WHEN

WE’VE TAKEN A STEP BEFORE

WE WERE READY.”

EXPORTER 13

Five years and 100,000 nautical miles on someone elseÕ s super-yacht did a lot for the young, tanned and astute AnglandÕ s perspective on how to design and build one.

But two years of executive MBA study on home soil was a Ò mind-alteringÓ experience that has given him confidence to apply his skills for New ZealandÕ s benefit - beyond building really flash boats.

Angland, a Westie by birth (but more salty by nature) was like any kid growing up around boats. He saw them coming in and out of the marinas, and wanted a job that got him closer. An apprenticeship with a super-yacht manufacturer saw him training towards an engineering qualification until he left for an unique OE. For five years, he was an engineer on super-yachts, where he soaked up valuable insight into design.

Ò It gave me a lot of experience to bring back, a different perspective,Ó Angland says.

That was 2005, and he slipped into a project coordinator role with the same employer. Until he started to wonder what was next.

Ò I started thinking about formalising my experience and was looking to do something that validated what I already knew, like a degree.Ó

But a smart friend told Angland he was barking up the wrong mast. And the University of Auckland executive MBA

came up.The 36-year-old says he was one of

the youngest and least-experienced in the class.

Ò It was a lot more than just the qualification for me. It was about the diversity of the people I would be studying alongside and learning from. I knew it was going to be a lot of workÉ and I underestimated that. For two years, I proceeded to work as hard as I could.Ó

AnglandÕ s cohort was fortunate to take a mind-altering trip of the business-kind to South Korea, where with the added help of New Zealand Trade and Enterprise, he visited some of the worldÕ s largest ship-builders, including Samsung Heavy Industries.

Ò When you look at the vision and investment the Koreans have made in manufacturing, itÕ s incredible.Ó

Korean ship-building is thriving on a grand scale Ð Samsung floats out 60 ships a year. But theyÕ re specialising in LNG-carriers and mega-container ships, recognizing bulk-carriers and small tankers can be manufactured adequately and more cheaply by the Chinese.

He says niche is New ZealandÕ s ticket for manufacturing success, particularly in boat-building. But New Zealand business must adopt a Ò global mindsetÓ from the outset to succeed.

AnglandÕ s employer is a Ò significant contributorÓ to New ZealandÕ s export

economy, with two multi-million-dollar yachts completed and exported each year, on average. His role is complex, responsible for contract management, client liaison, project scheduling, assessing expectations and ensuring theyÕ re met.

After 17 years, Angland says it would make sense for his future to be with the industry, although the MBA has given him confidence he could apply skills and knowledge elsewhere.

And while heÕ s surrounded by luxurious boats, he doesnÕ t own one and says his goals go far beyond the Ò boat, bach and Beamer.Ó

Ò IÕ ve been motivated by the MBA to try and contribute more, significantly, to New Zealand business. And I would be surprised if many of the people in my MBA cohort didnÕ t end up as recognised leaders in the future.Ó

AnglandÕ s desire to influence is grounded at home. He is passionate about young people, a mentor for Project K. He has been a volunteer Coastguard skipper. He is on the board of Foundation for Youth Development Waitakere. He has just become a father. And who knows, perhaps that will alter his mind-set again.

WhatÕ s certain is the MBA has solidified AnglandÕ s views that New ZealandÕ s export industry needs to alter its collective thinking to succeed globally.

Ò Right from the top you need the vision, you need people who believe weÕ re capable of it.Ó

The University of Auckland Master of Business Administration (MBA) has an intake in January each year, and welcomes applications from business leaders. Find out more at www.gse.auckland.ac.nz.

The business of studying ships and super-yachts

ADVERTISEMENT

Lessons learned from a South Korean ship-yard have relevance for New Zealand exports, according to MBA graduate and super-yacht project manager Warren Angland.

14 EXPORTER

> E X P O R T E R P R O F I L E

T he founder of Autogrow

Systems, Jeff Broad believes

the only way forward for our

economy is to increase exports

and he’s excited that his

small company is part of this wealth-

generating activity.

Although Autogrow has been

exporting in a small way for some years

the North Shore company is now on the

brink of a significant growth phase and

most of this will be in export markets.

Autogrow designs, manufactures

and markets electronic controllers

for greenhouses. These automatically

control all routine activities such as

opening and closing vents, shade

screens, foggers, heaters, fans,

dehumidifiers, lights, CO2 and the

irrigation process – which involves

mixing in the correct amount of

fertilisers, correcting the pH and

switching on pumps and valves to

water each section of the farm in

sequence.

What makes Autogrow different

is that they have built-in some of

the science of horticulture into their

controllers. “This makes them easier to

set up to achieve excellent results both

in crop yield and quality,” says Broad, a

scientist turned businessman.

Autogrow’s controllers are easy to

Man with a (export) planJeff Broad is under no illusion about how New Zealand’s economy can recover from its recent lows. It’s all up to our export sector, he says, and with his company Autogrow, he’s determined to set the pace. Exporter magazine was there when Broad was awarded the Export Assistance Prize in the recent ANZ Flying Start Business Plan Competition.

translate into any language and font,

ranging from Arabic to Mandarin. This

decision was taken with exporting in

mind; especially emerging markets such

as Turkey, Mexico and China, where

greenhouse development is still very

strong.

“Autogrow’s mantra is easy to use,

easy to install, easy to service and

easy to upgrade,” says Broad. “In fact,

everything about our Multi system has

been designed to be easy.”

Broad says that many growers are

excellent with their plants but are

not really control system savvy and

are often heard complaining bitterly

about how difficult most systems are

to set up. Jeff identified this as a great

opportunity – Autogrow has a lot of

experience in simplifying the user

interface.

Autogrow’s new control system is

flexible and modular. One controller

can operate up to eight greenhouses,

a full ‘fertigation’ system, up to eight

hydroponic dose tanks and eight full

monitoring stations. Being modular

the customer only pays for what they

use and so the system is economical

for both small and large growers. This

is also great for export markets as the

distributor only needs to import the

relatively low cost hardware. Only when

they sell the equipment do they need to

buy the appropriate software modules

over the Internet.

Having a centralized control system

with sensors spread out through the

farm presents other issues. For instance,

to calibrate a sensor you need to be

close to the sensor as well as close to

the controller. Autogrow solved this

problem by making a Wi-Fi tablet a

primary user interface.

Jeff Broad (right) with Beekist tomato grower and director of Horticulture New Zealand, Tony Ivicevich.

“The grower can wander through the

greenhouse with his iPad performing

calibrations and settings reviews on the

spot,” says Broad. “Besides providing

a new level of grower convenience and

control, the iPad interface also provides

a bit of a ‘wow’ factor. Ours is the only

system in the world that utilizes the

iPad.”

With the new Multi system about to

launch Autogrow expects a tenfold or

greater increase in exports over the

next few years. It’s not wishful thinking.

The judges of the recent ANZ Flying

Start Business Plan Competition named

Autogrow the Exporter prize winner

for having the best export potential.

(For a complete list of winners go to

www.business.govt.nz)

A delighted Broad says the prize

money of $10,000 will go a long way

to helping fund a couple of planned

market trips. He believes that if enough

Kiwi companies both large and small

could boost their exports receipts it

would go a long way towards solving

many of the issues we face in this

country – including the exodus of

people across the Tasman to live.

“With all the extra money coming into

the country we could afford to have the

best health care, best education system,

best transport system and definitely the

best environment in the world. With

full employment and challenging job

opportunities why would anyone want

to leave?”

ADVISORY BOARD

So how did Autogrow win the export

award? Well, for a start, there was a

certain business plan that needed some

work on.

“About a year ago I decided to set up

an advisory board. I invited three local

business leaders who ran successful

businesses much larger than my own,

and who were all extremely passionate

about exporting, to join me. To my

surprise they all agreed!”

he says.

“These people were selected for

particular skills – namely, export

market development, management and

financial management. The first thing

they wanted to see was my business

plan. Their verdict wasn’t great. ‘Jeff,’

they said. ‘This is a good start but it

needs a lot of work’.

“Over the months they forced me to

really focus on issues and develop a

level of clarity that I otherwise would

not have achieved.”

www.autogrow.com

> Start with a good product that

really does fit a niche in the

market and has some “wow”

factor.

> Research and select one or

two markets to focus on.

Avoid a scatter-gun approach.

> Make sure the market is large

and your product/service is

scalable.

> Get yourself an advisory

board.

> Develop an excellent business

and financial model.

> Then export, export, export.

TAKEAWAYSTAKEAWAYSJEFF’S

The wisdom of taking the initiative

is well demonstrated through one

of Jeff Broad’s early market trips,

which was sparked during a sales

call to a US wholesaler.

“The wholesaler didn’t think she

knew enough about greenhouse

climate control to be able to

successfully sell it in the US,” recalls

Broad. “But when she said she

would attempt to test the market

during a sales trip to California the

following week, I cheekily asked if I

could go with her. It just seemed like

a great opportunity.

“To my surprise she agreed, and

I immediately booked my flight to

the US.

Well, after hearing my sales patter

repeated so many times during that

trip, and seeing the interest in the

product, the wholesaler said she was

more than confident enough to sell

the controller.

“That particular product now

represents around $400,000 in

annual sales.”

Taking the initiative

EXPORTER 15

Jeff toasts his Award win with Wayne Percival, ANZ’s senior regional manager.

“Everything about our Multi system has been designed to be easy!”

16 EXPORTER

T he origins of the Wild Appetite

brand date back to 1989, when

Gerald and Virginia O’Leary

began making gourmet

preserves and conserves on

their blueberry farm at Matakana, north

of Auckland. Gourmet sauces and

dressings were added to the range four

years later.

Export orders started at the turn of

the century, with Denmark becoming

the first, and subsequently to this

day, the ‘flagship’ market, thanks to

the Danish distributor having strong

ties with this country. Exports have

since expanded to Australia, Germany,

Austria, UK, Norway and Dubai.

Today, Wild Appetite is a very

different company to the one that

started out all those years ago. The

two new owners have spent the past

two years masterminding an intensive

restructuring and repositioning

programme for the company and its

products. As a result they are now in

a much better position to launch the

brand into additional export markets.

Executive directors Peter McCracken

and Mark Tasker purchased the business

in early 2009, right in the middle of

the economic slowdown. They had

previously met socially – Tasker was

originally from Zimbabwe and had a

corporate background; McCracken was

a food technologist with extensive food

industry and export experience. It was

to prove a well-matched partnership.

BY GLENN BAKER

An appetite for new markets Having made a number of strategic ‘readjustments’ to their product, pricing and positioning, fine food manufacturer Wild Appetite is poised to take on additional export markets.

“Despite the tough economic times,

Mark and I were confident we had the

skills and nous to take the business

to a new level here in New Zealand

and overseas,” says McCracken. “The

business had a strong brand image and

excellent range of products positioned

at the top end of the sauce, condiment

and gift categories.”

But there was a lot of work to be

done if Wild Appetite was to tackle

new markets – and much of that work

involved fundamental changes to the

business strategy.

One of the first jobs was to change

the packaging from a 375ml bottle to a

new 250ml signature embossed bottle

owned by Wild Appetite – complete

with refreshed labels and branding.

This process took a year to execute. It

allowed the retail price to be lowered

and the re-aligning of pricing in each

export market.

“We realised that with the previous

larger sized bottle we had become

uncompetitive,” explains McCracken.

Peter McCracken and Mark Tasker

> E X P O R T E R P R O F I L E

EXPORTER 17

“So the change was critical; as was the

market pricing strategy.”

On the export front there were a

number of other adjustments made.

A UK distributor was appointed in

October 2010, but it was across the

ditch where the biggest change was to

happen.

“This was our most immediate

challenge when we took over the

business,” recalls McCracken. The

previous owners had run a single

distribution warehouse in Sydney

serving the whole of Australia. Wild

Appetite’s new owners now had to

take charge of that stock and set up

independent distributors in each State,

using Sydney as a hub with ‘buffer

stock’.

“Third parties seldom represent

your products as well as yourself in

markets, but at this stage of our export

strategy, this direction was seen as the

only feasible option,” says McCracken.

“Needless to say there were many

hours spent talking with potential

distributors.”

Other achievements since 2009 have

included the development and launch

of the Urban Appetite brand in the

New Zealand and Australian grocery

markets and the launch of a new range

of cooking sauces (Sauté Sauces).

Summing up the targeting of their

brands in Australasia, McCracken says

the Urban Appetite products are aimed

at retail grocery (“in the deli or ‘down

the aisle’”) – while Wild Appetite targets

the gift and deli markets.

CHANGING PERCEPTIONS

McCracken explains the positioning

strategy of their brands to me which,

again, was critical to sales growth.

He says the brand Wild Appetite was

traditionally just seen as a specialty

‘gift’ product. “We had to change that

perception. We wanted to keep the

gift segment of the market, but it’s

important that we also moved the brand

into the everyday retail grocery market

– which is already the case in Denmark,

Germany and the UK.”

One of the key benefits of

repositioning the brand was the better

use of production capacity at Wild

Appetite’s manufacturing facility in

Albany.

“Now that export sales are on the

rebound in Denmark, Germany and the

UK, their peak sales are in the June to

September period,” says McCracken.

“This allows us to produce for Northern

Hemisphere requirements during our

slower sales and production periods

here in New Zealand.”

And speaking of production capacity,

Mark Tasker says they have worked

to eliminate the peaks and troughs in

production and optimise staff utilisation.

“We had spare factory capacity

during the year, so we instigated a new,

very flexible working hour week with

our staff. Employment contracts were

re-negotiated to allow the flexibility

for us to remain viable in the slower

selling periods.” He says it also means

that when the growth comes in export

markets, they’ll easily accommodate the

extra production required.

BREAKING NEW MARKETS

McCracken follows the 4Ps marketing

principles (Product, Price, Promotion,

Positioning) when breaking into new

export markets – although he tags

on another three Ps: profit, passion

and perseverance. He knows all about

perseverance through the “market

legwork” required to access the UK.

“Much research and three visits,

including trips to the Anuga and Sial

Food Fairs, were necessary before

appointing our distributor.

“Due to the nature of the UK retail

market and logistical spread of

customers, we decided it was better

to run with a larger organisation,” says

McCracken.

One of the upsides with Europe, he

says, is that many of the distributors

have a marketing philosophy in regard

to positioning, selling and promoting

products to consumers.

“We work closely with their marketing

departments to ensure we maximise the

resources available.

“Yes, it is relatively easy to get our

products to the front of the big, dark

tunnel. But to get consumers paying

and returning to the light of the tunnel

will always be a challenge – because

there are always new competitors trying

to dislodge you from that tunnel exit,”

says McCracken.

“We’ve stuck to our principles

on quality, which will never be

compromised. We’ve adjusted to market

conditions by providing a facelift to our

key products and reduced the selling

prices,” he says.

Another key to success has been

their policy of providing price stability

to overseas distributors by selling in

the currency of the market – the Krone,

Euro, Pound and Australian dollar.

“This means we’re taking on

the currency exchange risk,” says

McCracken. “But we believe this is

necessary to provide price stability ‘in

market’.” He admits that with the high

Kiwi dollar this has been somewhat

painful.

In the short term, the objective is to

build on the base established within

Australia.

“We have a favourable exchange rate

against the Australian dollar – so this

provides expansion opportunities across

the Tasman,” says McCracken.

It’s certainly easier to expand sales in

an established export market than open

up a new region, he adds. Long term,

the US and Northern Asian markets are

on their radar – but they’d rather wait

until the US economy is under control

before venturing into that market.

Meanwhile, Wild Appetite products

continue to gain recognition through

winning awards overseas. At this

year’s prestigious Great Taste Awards

in London, known as the Oscars of

the food world, Wild Appetite was

awarded seven gold medals over seven

categories.

That’s marketing mileage that money

simply cannot buy.

Glenn Baker is editor of Exporter.

> Follow the 4Ps marketing

principles (Product, Price,

Promotion, Positioning) when

breaking into new export

markets – although you might

want to add Profit, Passion

and Perseverance.

> The key to export success

is to provide price stability

to overseas distributors by

selling in the currency of the

market.

TAKEAWAYSTAKEAWAYSKEY

IT IS RELATIVELY EASY

TO GET PRODUCTS TO

THE FRONT OF THE

BIG, DARK TUNNEL. BUT TO

GET CONSUMERS PAYING AND

RETURNING TO THE LIGHT OF

THE TUNNEL WILL ALWAYS BE A

CHALLENGE – BECAUSE THERE’RE

ALWAYS NEW COMPETITORS

TRYING TO DISLODGE YOU

FROM THAT TUNNEL EXIT.”

> COV E R STO RY

18 EXPORTER

A beginner’s guide to exportingSo you have a product or service you think the world will buy? But you’re a bit in the dark as to how, or where to get started? Best you step back and identify your market first. Better still, read this guide and see what else you should be doing first – if, indeed, you’re ready at all.

T ake a deep breath. This could

be an information overload.

The purpose of this story is to

arm intending and fledgling

exporters (I assume you are in

that category) with as much information

as possible, so you’ll make the least

mistakes and maximise your chances of

success on entering the big, wide and

somewhat scary world of exporting.

Are you up for it?

Let’s get started then. First stop

NZTE. That’s New Zealand Trade and

Enterprise if you’re really new to the

game – the agency charged with

helping to realise the Government’s

Economic Growth Agenda of doubling

New Zealand’s exports to $120 billion a

year by 2025.

NZTE is responsible for, or associated

with, more export-related programmes

in this country than any other

organisation by far and receives 2000-

plus enquiries a year, many from early-

stage exporters.

Carole Wright, director Business

Services, kindly agreed to address

my rather long list of questions. They

begin, quite logically, with the issue of

preparation. How do businesses prepare

for export? What are some of the

common oversights?

“For a start they need to have a

good business structure. In our initial

discussions with businesses we want

to find out how ready they are, in order

to take that next step,” says Wright.

BY GLENN BAKER

“We like to manage their expectations

about what it’s going to take to get to

where they want to be and encourage

them to take one step at a time. In most

cases, they need a firm foundation in

this country from which to launch their

internationalisation journey. Or, in the

case of an IT company, they’ll probably

need some good reference sites in

New Zealand.

“In our experience, through talking to

exporters, it generally takes them three

times the expected timeframe and cost

twice as much as expected to break

into a market,” she says. “The need to

have a coherent plan is the biggest issue

with these businesses – they want to

run before they can walk. It’s important

they step back and consider the

bigger picture – where they want their

business to be and how they’re going

to get there. They might be looking at

Australia, for example, but that might

not be where the best opportunity lies

for their product. Validation is crucial –

don’t necessarily just go by a friend

or family member’s suggestion.

“We get a lot of ‘product push’

without any quality research on

fundamentals. Is the product the right

fit for the market, is it the right format?

Just replicating what they’re doing in

New Zealand may not be the best way

to approach other markets.”

A lack of financial resources is

another potential stumbling block.

Wright says it’s important to have a

plan and allocated budget rather than

try and fund things just from normal

cashflow. And be mindful that it could

be a long time before there’s any return

on investment. Can they manage during

that period? Do they have enough

people resources?

“It’s an added stress on the business.

It’s not just planning around your market

entry; it’s planning around the broad

fundamentals of your business.”

Wright says NZTE’s role is to help

provide guidance and information.

“We’re here to ask some hard questions.

To make sure they’ve thought about

their approach and they’re taking good

advice. They may, for example, need to

look at an advisory board or take on a

mentor to guide them through the next

phase.”

Wright says many early-stage

exporters are directed towards one of

its 14 Regional Business Partners around

the country. The Regional Business

Partner programme is a nationwide

network of organisations that delivers

capability and R&D support to smaller

businesses. The network was set up

about a year ago by NZTE and the

Ministry of Science and Innovation to

Carole Wright, director Business Services, NZTE. “NZTE is refocusing on

the way we operate so we are even more client-centric and ‘user-friendly’.”

EXPORTER 19

20 EXPORTER

1. Understand the business culture

of your target market so that

you don’t turn people off - even

before you open your mouth!

For example, the ‘we’ll just give

it a go’ approach is a major turn

off in many countries where it

comes across as amateurism or

even a lack of respect. Do your

homework before you go and

change your approach, just as

they do when they come here!

2. Find out what your customers

want to buy, not what you want to

sell. For example, Indians like to

cook with ghee (clarified butter)

so Fonterra now produces ghee

for that market.

3. Ask yourself ‘Am I invisible?’

Imagine yourself as a customer

trying to find what you have to sell

– how difficult or even impossible

do you make it for customers

to buy from you? Do you have

web-based sales?

How do customers find you?

4. People will buy from people

they like. How likeable are you

and your company or do you insist

on such nonsense as ‘24-month

contracts’ and hidden charges or

fees on top of the price quoted?

5. If you think training is

expensive, you should try the

alternative. When was the last

time you used an amateur dentist?

5 ways to grow your exports

Supplied by The New Zealand School of Export (www.export.ac.nz) – now registered to accept

NZTE Capability Development Vouchers. All eligible companies get 50 percent off the cost of

the distance-education Diploma of International Trade. To see if your company is eligible go to:

www.business.govt.nz/growing

support business growth and innovation

in New Zealand’s regions. For example,

“businesses can access vouchers up to

$5000 to offset the cost of training and

buying expertise into their business,”

says Wright. “The Regional Business

Partner will assess the business for

any capability gaps and recommend

options to help that company through

the next steps, perhaps through some

specialised training; perhaps to address

some productivity, management or

leadership issues.

“The Regional Business Partner

can also put businesses in touch with

Business Mentors New Zealand or the

Tech NZ research and development

programme.”

Wright says they’ll sometimes share

support responsibility with a regional

partner in terms of assistance. “We

might do some desk research, for

example, to help the exporter select

markets.

“There’s no one size fits all. Generally

it’s about networking the early-stage

exporter into a broader range of

services. Our aim is to help apply the

right set of support and services, people

and information at the right stage of the

business’s lifecycle – it’s about doing the

right things at the right time.”

Wright says there is an extensive

range of help on offer from her Business

Services team for both established

exporters and businesses new to export.

“In recent years NZTE has applied

more resource to companies that really

have that capability to deliver economic

benefit to New Zealand. It’s not about

scale and size it’s about focusing on

high growth potential businesses with

high-value, high-margin products.

“That said, we still service and support

all businesses out there.”

And don’t discount the great

web-based resources for exporting

either, adds Wright. NZTE can help you

through the online maze to get to the

good practical advice, she says. Plus,

there are some great guides and a

pragmatic ‘Are You Ready?’ assessment

on the NZTE website for businesses

to work through. “At the end, they

can press a button and learn from the

information provided whether they are

under prepared or ready to go to the

next step.”

And in case you’re wondering,

most of NZTE’s services are free of

charge. Charges may apply to any

commissioned market research through

its International Office Teams. “But this

is for customised service information

covering, for example, regulatory

information, or an analysis of the

distribution channels for a specific

product, or partner identification, says

Wright. But there’s a lot of help NZTE

can provide on strategy before they get

to that point, she adds.

DON’T JUMP THE GUN

Of course, there are those start-up

exporters who want to leapfrog the

process when accessing markets.

Wright warns when a business is

unprepared, for example pitching too

early to customers, they risk “burning”

their contacts. This can have a flow

on effect if they assisted with the

introductions, potentially damaging

NZTE’s market credibility, and its future

ability to network them to other NZ

exporters.

Wright, who was instrumental in

getting the ‘Path to Market’ programme

established in 2006 (a successful

planned and structured approach to

the Australian market that’s still running

today), says it’s easy to underestimate

the impact of some of the small pieces

of advice they give new exporters. She

remembers one smart exporter that

constantly applied the advice they

received, and this proved pivotal to

their success. A recommendation by an

NZTE agent to enter an international

design award was acted on, which

resulted in several wins, and subsequent

international credibility. It’s an example

like this, says Wright, that gives them

real satisfaction.

INTEGRATED SERVICE SUITE

Going forward, Wright says NZTE has

identified a number of key challenges.

“One is the opportunity to deliver an

integrated service suite. We’re looking

at any gaps in our products and services

from a client’s perspective. It’s really an

audit to further improve on our overall

service.

“NZTE is refocusing on the way we

operate so we are even more client-

centric and ‘user-friendly’, adds Wright.

“The focus for my team is to get out

there and improve our networks and

linkages into organisations, and to

identify business that we should be

working with and demonstrate the

value of what we can offer and engage

with them.”

> COV E R STO RY

Fast tracking the export process

I f you’re looking to accelerate your

entry into foreign markets, but

still keep costs and resources to a

minimum, you might want to talk

to KATABOLT CEO Christopher

Boys.

“We help early stage businesses and

entrepreneurs fast track into export

markets and turn the revenue on in

those markets,” explains Boys, whose

business (www.katabolt.com) is a joint

venture with The ICEHOUSE Business

Growth Centre in Auckland and works

in partnership with other exporter

support organisations around the

country.

“I refer to it as an ‘end-to-end’

process – clients can use us for the first

stage or for all three stages. Our key

driver is speed.”

The stages Boys refers to are, first –

the selection and validation of markets;

second – implementing the commercial

and distribution plan; and third - market

entry and sales (engaging with business

partners and entering those target

markets).

“We provide the information,

skills, support and the introductions

exporters need to win early customers,”

he explains. “We utilise our global

KATABOLT Associate Network, which I

affectionately refer to as ‘the associate

mafia’ – which includes The ICEHOUSE’s

connections, the network of Kea World

Class New Zealanders and my own

business relationships from ten years in

London and working around the world.

The in-market feedback from these

associates is invaluable for exporters

who want to quickly validate a market,

says Boys, and to ensure a win/win on

these relationships, the associates can

be ‘incentivised’ on revenue sales.

“The key message I get is that people

love to help business. However, Kiwis

don’t like to accept help. One of my

key messages to exporters is – you’ve

got to ask for help. And our in-market

associates are passionate about helping

Kiwi exporters.”

When it comes taking your first

export steps, that famous slogan

springs to mind – ‘just do it!’

“Many businesses hold back because

they don’t feel they can do it,” says

Boys. “It’s a DNA thing – they don’t feel

comfortable.

“Trouble is, when they do it – they

absolutely go in all guns blazing! That’s

when they need to take a step back.

Don’t take on a whole country; break it

down into segments – think California.

Or in the case of Australia, think New

South Wales perhaps.

Another mistake, he says, is assuming

that the rest of the world is like us –

the cultures are very different. “Even

if you’re going just into Australia, my

advice is to ‘Australianise’ your product

or service a lot in terms of branding,

marketing and communications to

ensure that they don’t perceive you as

being a Kiwi. Look what happened with

our apples.

“If you’re smart you wouldn’t push

the Kiwi-made aspect as the be all

and end all. You’d tone it back a bit,

and localise your product’s look and

feel perhaps. If it was Germany say, no

problem, push 100 percent pure and

put as many waterfalls and ferns on the

packaging as you like!”

If it’s China you’re targeting, don’t

expect to ‘seagull’ the market, adds

Boys – that’s fly in, do the deal and fly

out. It could take several meetings, and

finally a lunch or two, while trust is built

up, as ultimately it could be a family

decision.

Boys says KATABOLT’s market

validation process through its Associate

Network means that exporters can

have their first customers committed

before they’ve even left the country.

“No expensive ‘seagull’ flights – you can

do a lot of the groundwork via phone

and Skype.

“There’s a Kiwi perception that you’ve

always got to go overseas and go face-

to-face with potential distributors. My

argument is, no you don’t in the first

instance. Qualify it hard at first, and get

referrals, then utilize the face to face to

further your relationship or cement a

deal.”

You may also want to test their

commitment by getting them

to propose how they think the

distribution/partnership could work, he

adds. And see if they follow through on

what they say they will do – listen to

EXPORTER 21

what your intuition is telling you!

On the subject of advice, a lot of

people don’t realise the tax implications

of a market either, says Boys. A great

example is accessing the China market

through Hong Kong or Singapore,

which avoids tax penalties of up to 66

percent. Which just goes to show there

is a lot you can learn from people with

vast experience in these markets.

KATABOLT has a number of clients

under its worldwide wings, with some

exciting, innovative products – such

as TravelQuote, a web-based lead

management system tailored for the

travel industry; EODData, a leading

provider of quality end of day stock

market data and historical quotes for

many of the worlds top exchanges;

and 1Above, the world’s first Aerotonic

Flight Beverage.

1. Identify the pain – make sure your product or service directly addresses a need or pain point for your customer.

2. Assess the pain – call potential customers, channel partners and distributors and ask them if you can produce a product or service to solve their pain.

3. Validate the pain – go back to those customers and tell them you’re working on a product and ask them how much they’d be prepared to pay for a solution that solves their pain.

Only once you’ve validated your product or service should you then develop it or at the very least launch it in to that international market.

THE 3-STAGE VALIDATION PROCESS

22 EXPORTER

Q: From your experience in

assisting companies into offshore

markets, what aspects have they

required the most help with?

JC: Firstly, how to best enter

an export market, as there’re

more ways than going direct or

appointing offshore distributors or

agents. Exporters need to understand

the full range of market methods open

to them as they grow and evolve (for

example, licensing, strategic alliances,

joint ventures) and how each method

works – it’s advantages and disad-

vantages, taking into account time,

resources and risks involved for best

competitive advantage.

Secondly, developing an effective

sales pitch or value proposition. An

export market entry strategy is not

complete without a strong sales

pitch to win export business. When

Kiwi exporters meet with potential

offshore buyers or business partners

they need to be able to “tell their

story” persuasively and concisely.

This is where many fall down despite

having fantastic, innovative products

or services. Typically, they get bogged

of strategic market research to

fully understand market dynamics,

potential, competition and typical

distribution channels by key export

product/service. If it’s all looking

positive, the next step is to research

and determine the best market

entry strategy. This also includes

identifying and quantifying a short

list of suitable established business

partners for each target market or

segment for ‘best partner fit’.

The key is to proactively find and

leverage from your offshore partners’

in-market and sector experience,

reputation and established client base,

matching your ideal customer profile.

Q: Do you have a good example of

a market entry strategy?

JC: A fruit grading machine

exporter, currently selling

successfully to Australia and the US,

is experiencing continued low export

sales to Europe despite distributors on

the ground there. They re-assess their

market entry options and undertake

market research to determine the key

export marketing challenges they

Jacinta Clark, a marketing strategist and former trade commissioner and diplomat, fields Exporter’s questions on marketing strategy.

Market entry strategies

> COV E R STO RY

down in talk about their product/

service features rather than key

benefits that matter to their target

export market audience. Exporters

should never leave home without

preparing a world class sales pitch,

well rehearsed so it rolls off their

tongue with confidence.

Q: Where do companies let

themselves down the most?

JC: Rushing into an export

market and appointing the

first person who shows any kind of

interest, then signing them up as

their exclusive distributor or agent on

a nationwide basis. This is a common

scenario for new and experienced

exporters alike. Then several months

down the track they find that export

sales just don’t eventuate or go

beyond their initial sample shipment

order. Worse still, the exporter is

locked into a long term agreement

it cannot terminate legally when

things go bad and potentially

misses out on lucrative export

business in the target market. This

scenario highlights the importance

EXPORTER 23

face in Europe – namely high duty

rates, onerous EC safety regulations,

very high, uncompetitive freight

costs from New Zealand for heavy

machinery, slower delivery times and

lack of branding profile in Europe. The

exporter then considers a number of

different market entry method options

to put them in the most advantageous

position – including appointing new

distributors, manufacturing under

licence, the sale of their technology

or a joint venture arrangement. They

compare key advantages of each

method against key criteria, also

taking into account costs, resources

and risks involved to determine their

best entry method that will maximise

export sales. Following this analysis

they decide on a joint venture

arrangement with a complementary

fruit bagging manufacturer in Italy –

to manufacture and sell their grading

machines under license.

This strategy significantly improves

delivery times, accesses favourable

EC duty rates with quicker safety

compliance, and increases the

exporter’s leverage by tapping into

the partner’s strong brand profile

and established customer base for

increased sales to Italy and other EC

countries.

Q: What are the keys to

breaking into the Australian

and US markets?

JC: Both are complex, highly

competitive and sales savvy –

so approach them fully prepared with

a world-class sales pitch and loads of

stamina. Having a thorough under-

standing of your market dynamics

and potential is essential. You need to

know in advance and before talking

to potential business partners where

your product or service fits into these

markets and what your key point of

difference is.

Both countries have three levels of

government – local, state, and federal

– which means more complex business

and import laws including safety,

health, environmental and packaging

compliance regulations (although

we’re helped by our CER agreement

with Australia).

Both countries are litigious,

especially the US, which means

adequate product liability insurance

cover is essential to protect against

the risk of expensive law suits over

death, injury or business disruption

caused by faulty or unsafe products/

services.

Annual budgets need to factor in

the added costs of doing business

offshore, and supporting off shore dis-

tribution channels, including a regular

marketing visit programme.

Distribution channels are typically

state based so multiple distributors

are needed as you grow and expand

into other regions. In Australia there

are seven discrete markets (by state);

in the US there are 52 independent

and distinct markets also organised on

state lines, so a very focused regional

approach is recommended. While

both countries are English speaking,

marketing terminology and spelling

can differ. Imperial measurement is

also used in some market segments so

marketing collateral and user manuals

must be tailored accordingly.

Q: How do you go about

identifying the right markets

for your products?

JC :To avoid a scatter gun

approach exporters need

to focus on fewer ‘best prospect’

markets to maximise export sales

with limited resources (time and

funds.) Start by drawing up a short

list (three to six) of attractive export

markets based on existing market

knowledge and key selection criteria.

Source: Jacinta Clark, Oystershell Ltd

• Is there a demand for our product or service?

• Is this demand sustainable?

• What are the relevant business and import regulations and

compliance?

• How is the market structured?

• What are the industry/consumer trends?

• What competition will we face?

• Are we competitive (product and price wise)?

• What can we charge for our product/service?

• Is there a potential profit?

• What are the normal retail, industry or distribution markups/margins?

• What areas of our target country should we concentrate on?

• What are the key distribution channels for our product/service?

• Are we (IP) protected e.g. patents, trademarks, registered designs?

Checklist for new exporters

Then make market comparisons before

deciding on your ideal target export

market. Also consider the cost of

doing business, time and resources

needed, and the risks involved. Select

an export market where you have the

strongest competitive advantage that

is easiest to access cost effectively.

Attractive market characteristics could

include, for example, lower duty rates,

easier regulatory compliance, lower

competition, attractive market size and

growth potential, product and price

competitiveness, existing distribution

channels, English speaking, strong IP

protection, and a stable economy.

WEBSITES TO VISIT:

> www.nzte.govt.nz

> www.businessnz.org.nz

> www.business.govt.nz

> www.nzmea.org.nz

> www.nzeco.govt.nz

> www.export.ac.nz

> www.mfat.govt.nz

> www.kea.org.nz

> www.theicehouse.co.nz

24 EXPORTER

Federation of New Zealand (CBAFF).

Freight forwarders can pool product

from multiple exporters into a container

load, for example, and negotiate a

better price and service than each

exporter could alone.

They arrange a mix of land transport,

air and sea freight, knowing the best

routes, carriers and rates to find the

best deal.

Customs brokers, logistics solutions

providers and freight forwarders can

all offer full logistic services. It’s a

matter of checking websites and asking

companies what they do.

The paperwork for banking/finance,

transport and compliance associated

with any export is often completed

electronically but must be appropriate,

accurate and on time. A typical

shipment by sea or air requires eight to

15 documents.

“It’s all very well to understand the

processes but it’s not an exporter’s

core business, so they should use a

professional to help them do the job,”

Dawson advises.

But freight forwarders are not

miracle workers. “There are many

external influences that cause changes

to schedules, such as decisions by

shipping lines and airlines, which we

have little or no influence on.”

Furthermore, reports of Fonterra

and the huge meat industry possibly

sharing shipping space have

implications for little Joe Exporter’s

access to space on ships for his (lower

Freight forwarding de-mystifiedShipping goods to overseas customers requires specialised services and sound knowledge. It’s a job best left to the experts. This guide is designed to de-mystify freight forwarding for the uninitiated.

L anding a precious cargo on the

other side of the world in one

piece and on time is complex and

risky for exporters, but it is the

daily bread of freight forwarders.

Exporters can dial up a freight

forwarder to book transport from their

own door to their customer’s and to

sort out compliance documentation,

insurance and border clearance – or just

a part of the conveyance.

Airlines and shipping lines tend not

to be interested in dealing directly

with exporters and importers unless

these traders have large volumes and/

or regular cargo – so freight forwarders

are the answer, says Rosemarie Dawson,

the executive director of the Customs

Brokers and Freight Forwarders

BY MARY MACKINVEN

> F E AT U R E

EXPORTER 25

value) one container a year.

Looking at the bigger picture, a

general lack of international security

still bubbles around unresolved, and on

the radar is the US possibly requiring

all air cargo to be screened, maybe as

soon as the end of the year. And where

the US goes, the EU will be fairly close

behind, Dawson says.

Two significant and ongoing logistics

developments in New Zealand aimed

to help exporters are the Trade

Single Window electronic sharing of

information between the New Zealand

Customs Service and the Ministry

of Agriculture and Forestry, and the

Productivity Commission’s International

Freight Transport Services Inquiry. The

latter is investigating the effectiveness

of infrastructure and regulatory regimes

in promoting accessibility to, and

efficiency in, international transport

services.

Dawson has written a detailed ‘how

to’ guide to freight forwarding and

customs broking in the New Zealand

Export and Trade Handbook 2011

(published by Adrenalin Publishing,

the new owner of Exporter magazine).

And the CBAFF website lists members

located around New Zealand.

She recommends exporters

write a list of questions or shipping

requirements, then get quotes from

freight forwarding companies to find

one that suits.

Each has different strengths. Larger

freight forwarders might be able to

get better prices on carriers for large

volumes, but smaller forwarders might

provide more personal service. Some

specialise in sea freight, others in air

or mail and courier deliveries, or, in

particular, geographic locations or

product categories. Some also offer

‘urgent services’ at a higher cost.

NO HOLDS BARRED

TNT Express Worldwide (NZ) moves

goods by air and land only, including

documents (for example, where

originals are still needed), parcels and

freight – which can weigh tonnes.

The company offers a range of time

and day definite services globally. For

even faster shipping, TNT’s special

services division is on call 24/7 to

secure the next flight out, charter

or do whatever it takes to meet a

special logistical need (for example,

flying in parts for surgery or urgent

installations).

National sales and marketing

manager Brent Carter weighs up

the benefits of air: “We are more

flexible and fast which increases

speed to market. There is no need for

warehousing with small consignments

and fast turnaround.”

TNT coaches new exporters through

the process to help them find the right

solution.

DB Schenker is available for every

mode of transportation as well as

warehousing. Managing director

Oliver Bohm stresses buyers and

sellers of goods should be aware of

their responsibilities and the rules

in international trade, and should

therefore make themselves familiar with

‘Incoterms 2010’ when signing contracts

with overseas suppliers or customers.

He explains freight forwarders

generally act as a service broker,

dealing on behalf of the shipper/

importer with parties such as shipping

lines, customs brokers, road transport

providers and quarantine officers.

They generally offer exporters two

charging options: a quote for a full

door-to-door rate that includes all

services from pick-up to delivery; or a

detailed list of charges that includes

the freight rate port-to-port, fuel

surcharge, handling at the terminal/port

and customs clearance. detailed list of

detailed list of charges that includes the

freight rate port-to-port, fuel surcharge,

handling at the terminal/port and

customs clearance.

JUST ASK

Hemisphere Freight Services specialises

in packing LCL (Less than a Container

Load) cargo, even just a few pallets

or boxes – and while avoiding empty

space, ships the goods as scheduled

whether the container is full or not. The

company also manages full containers.

Hemisphere Freight Services has

offices in Auckland and Sydney, as well

as alliances with agents worldwide. It

can manage trans-Tasman shipments

with a single transaction for handling at

both ends, says founder/director John

Crook.

He advises exporters to look for a

freight forwarder who can provide

information on the country they are

shipping to.

“Sometimes the importer will cater,

but not if communication between

seller and buyer is less than great.

There’s a raft of information needed

detailed list of charges that includes

the freight rate port-to-port, fuel

surcharge, handling at the terminal/port

and customs clearance. detailed list of

Spare parts for Moffat’s

commercial kitchens are

airfreighted to overseas customers,

and components are imported for

manufacture.

Spare parts manager Tim

Sutherland says it’s simpler and

quicker to use a freight forwarder.

“If we don’t provide [the

necessary information on

documentation] they say ‘this is

missing’. We don’t have to worry

about every step in the process.”

Christchurch-based Moffat sends

four to five international shipments

a day weighing one kilogram or

less, and less frequently, crates of

several hundred kilograms.

“They negotiate the best rates

for us. But you don’t just go for the

best price. Customers don’t mind

paying the price if we can back up

with service. Getting parts there

fast, safely and in one piece is the

main thing for us.

“A good relationship with your

freight forwarder helps, so they will

react quickly to any issues.”

Sutherland advises choosing a

company that has a good presence

in New Zealand to back up its

services. “Even if they are in a

different city it can be a problem.

It helps that ours has an office

in Christchurch. They know our

business and our customers and the

markets we sell to.”

Service trumps price

“A GOOD REPUTABLE FREIGHT

FORWARDER IS TRULY AN

EXTENSION OF YOUR BUSINESS.”

26 EXPORTER

Mary MacKinven is an Auckland-based business writer. Email marymackinven@orcon.net.nz

M A RY M A C K I N V E N / W R I T E R

and that’s one of the main areas we can

help for a smooth transmission.”

Timing is critical in goods movement.

Booking airfreight can be done closer

to departure because turnaround is

faster, but sea freight needs notice for

packing/consolidating and delivery

to port perhaps a day before the ship

comes in.

There is no room for deviation as

shipments must fit in with security

requirements, and documents take time

to prepare.

The client account application will

spell out where the freight forwarder’s

liability ends (for example, for loss or

damage) and the exporter’s begins

– maybe it’s for ‘X’ amount of dollars

per package. The company might do a

credit check and limit its liability until

the exporter proves reliable. Insurance

quotes can be arranged for clients.

A BUSINESS EXTENSION

No cargo is too big or small for

Gateway Cargo Systems to handle, says

director Stephen Kirkham.

“A good reputable freight forwarder

is truly an extension of your business.

Shippers get the benefit of multi-level

shipping options and costs to fit their

business requirements, timeframes

and costs.

“I’m a great believer that shippers

should take control of their supply

chain. If it is handled poorly, even

> Write a list of questions or

shipping requirements, then

get quotes from freight

forwarders to find one that

suits.

> Make yourself familiar with

Incoterms 2010 (International

Commercial Terms) when

signing contracts with

overseas suppliers or

customers.

> Look for a freight forwarder

who can provide information

on the country you are

shipping to.

> Clear and concise

communication with all parties

is paramount.

TAKEAWAYSTAKEAWAYSKEY

though the sale may have been made,

generally the result is lost sales and

revenue.

“We also have the ability to collect

payment from the consignee before

releasing the goods. Most importantly

ensure you are going to be paid!”

A good forwarder will have flexibility,

strong partnerships with their

international agency network and the

shipping companies, airlines and truck,

van and rail operators.

Clear and concise communication

with all parties is paramount. But if

exporters get the paperwork wrong,

Gateway Cargo will tidy it up.

Pengelly’s Group of Companies is a

family firm with offices around New

Zealand as well as five in Australia and

one employee in China (Shanghai).

The bi-lingual Chinese employee

in Shanghai previously worked in

Auckland but by being on the ground

can chase up manufacturers and

organise logistics at the China end, says

Warren Pengelly, son of the founder.

The phone numbers of Warren and

his brother Trevor are the only two

listed for after hours inquiries: “That’s

how personal our service is.”

The full service freight forwarders

cover all cargo except perishables and

personal effects.

All freight forwarders stressed the

need for exporters to be insured.

Douglas Pharmaceuticals relies

on its freight forwarders (one

for small daily parcels and one

for less frequent pallet loads)

for information on the required

documentation in each country,

when investigating a potential

market.

“We know what the Food

and Drug Administration and

Therapeutic Goods Association

require, for example, but not the

importer itself,” says logistics

and procurement manager Karen

Johnson. “We don’t want our

pharmaceuticals stuck in store.

“We might ask them to find out

if we have to pay an export bond

that can be required if you are not

a known supplier,

for example.”

Having goods delivered by a

known freight forwarder in the

export market helps too,

she says.

Douglas Pharmaceuticals

chooses its freight forwarders

through Requests for Proposals

looking for full service providers

and contracts for several years.

Johnson values a provider who

replies fast to collection forms or

emails and keeps her informed on

the movement

of goods.

“It’s great not having to chase

them up when you have urgent

deliveries and people at work

breathing down your neck!”

Total reliance

The book that backs

our export drive...The book that backs The book that backs The book that backs The book that backs The book that backs The book that backs The book that backs The book that backs The book that backs The book that backs The book that backs The book that backs

Digital Version Available Now!

our export drive...our export drive...our export drive...our export drive...our export drive...our export drive...our export drive...our export drive...

Purchase on-line at www.exportandtrade.co.nz/ziniowww.exportandtrade.co.nz

In difficult trading times it is more important than ever to avoid making expensive mistakes. The NZ Export & Trade Handbook continues to provide exporters with a wealth of up-to-date information that is invaluable in making the right decisions to achieve success in overseas markets.

Rom Rudzki, Founder New Zealand School of Export.

Purchase on-line atPurchase on-line at

Newly updated for 2011, the New Zealand Export and Trade Handbook continues to be a vital reference guide for Kiwi exporters

and importers.

For advertising enquires contact Leanne Moss: email leanne@adrenalin.co.nz or phone (09) 477 0368

28 EXPORTER

> F E AT U R E

F rom the time of the ancient

Babylonians, promissory notes

or the ‘promise to pay’ has been

a powerful tool for leveraging

cashflow. New Zealand

exporters can free up vital cashflow

for their business by tapping into

various forms of trade finance tools

offered by the banks and other lending

institutions.

Whether they are letters of credit,

factoring arrangements, export credit

guarantees or trade credit insurance,

an exporter can do well to explore the

range of international trade financing

facilities on offer.

An exporter should always be

mindful not to rush into pricing a

substantial export order without

securing the input of their bankers. This

is to ensure the exporter can have the

benefit of their bank’s expertise to help

mitigate risks associated with pricing

the order.

CASHFLOW CYCLE

One issue often underestimated by

businesses when they begin exporting

is the impact on their cashflow cycle,

according to Gavin Haworth, ANZ New

Zealand’s head of trade and supply

chain.

An extended timeframe for

BY YOKE HAR LEE

delivery, additional costs for

warehousing, shipping and customs;

new relationships with suppliers or

customers and different currencies are

just some of the issues that can cause

an exporter’s existing cashflow cycle to

unravel, he says.

Once the sale has been made, the

fundamental issue for all businesses

– that of either not being paid or not

receiving goods – is exacerbated when

operating internationally, Haworth

adds.

The most secured form of

international trade financing tool used

is the letter of credit (LOC). The LOC

has been used for more than 100 years

and historians believe its origins date as

far back as ancient Egypt.

An exporter with access to a LOC

has a secured form of payment (from

the buyer’s bank). There are various

types of LOC which carry their own

terms and conditions. An irrevocable

LOC gives the best protection – it

means neither the exporter nor the

buyer can alter the terms without prior

agreement.

POWER OF LETTER OF CREDIT

Gary Cross, head of trade and supply

chain at HSBC New Zealand, says the

LOC is as relevant today as it was

100 years ago, allowing an exporter

to manage risk of non-payment by

the buyer, manage political risks and

associated business risks.

The LOC provides a useful trade

finance tool without affecting an

exporter’s risk profile, Cross says,

adding that exporters work with

various pressure points on their

working capital requirements. It costs,

typically, between 0.5 percent to five

percent of the trade to use the LOC

facility.

Some exporters sell their products

or services on an Open Account basis,

meaning their goods are shipped to

the buyers with a 30-, 60- or 90-day

payment cycle.

Open Account trading carries the risk

of payment default. In New Zealand,

exporters selling on Open Account

terms often seek trade credit insurance

to protect against potential payment

defaults. The global financial crisis has

Minimising risk on export payments

Exporters can free up cashflow by tapping into various trade finance tools provided by the banks and other lending institutions.

EXPORTER 29

caused trade insurers to shrink their

appetite for new risks, although this

year has seen trade insurers returning

to the market.

Deputy treasurer at Kiwibank Nigel

Gaudin’s advice is for exporters to

avoid the potential trap of having

goods sitting half way around the other

side of the world with no prospect of

money arriving in

the bank.

“We think exporters should take the

time to understand the end-to-end

process and not be shy about talking

to experts if their knowledge of an

area isn’t that good,” says Gaudin. “The

classic insight ‘any sale is a gift until

you have been paid!’ holds true.”

EXPORT CREDIT OFFICE

The government-run Export Credit

Office is another useful resource for

exporters – they can tap into the ECO’s

various products: pre-credit guarantee,

short-term credit guarantee, contract

bond guarantee and working capital

guarantee.

The ECO has been stepping in to

provide co-cover with private trade

credit insurers when the latter shrunk

back business; or when banks have

reached their risk limits on a certain

client, country or industry.

The ECO’s manager Carmen Moana

says there has been a notable increase

in demand for performance guarantees,

for instance, due to cautious overseas

buyers still experiencing tough

domestic economic conditions.

Exporters, she says, should tap into

the ECO’s products as a means to

offer better terms to keenly-contested

projects or products and services.

So far, the ECO has provided funding

of $1.16 billion to local businesses of

which $466.83 million went to export

credit guarantees, and $455.10 million

to short-term trade credit guarantees.

For exporters with large trans-

Tasman business dealings, having a

unified cash management platform to

manage two currencies can be useful.

The ANZ has introduced a web-based

cash management product called ANZ

Transactive. This platform allows an

exporter to transact both the Australian

domiciled and New Zealand domiciled

accounts using a single platform.

According to ANZ’s Gavin Haworth

this product helps simplify and

streamline exporters’ cash payments

and cash management operations.

Around 20 percent of all international

trades from New Zealand are with

Australia, and of those trades, about

80 percent are paid for through open

accounts – that is, the same invoicing

payment system that is used for

domestic accounts, Haworth says.

“One of the most significant

cost-saving features within ANZ

Transactive is the ability to transfer

funds between your Australian

domiciled accounts and New Zealand

domiciled accounts as an account

transfer, rather than as an international

funds transfer. This significantly

reduces the cost associated with

international transfers and makes it

much more cost-effective to maintain

trans-Tasman account balances,”

he adds.

The ANZ Transactive allows exporters

to configure their own approval options

If you are trading with China, pricing your goods in

renmenbi (RMB) or having an RMB account can add a real

competitive edge to your business.

China’s RMB is going through gradual internalisation –

which means it has become more readily tradeable outside

of China.

ANZ New Zealand’s managing director, institutional,

David Green, advises exporters to position themselves to

take advantage of the new opportunities associated with

the RMB’s internationalisation.

There has been a 10-fold increase within six months in

cross border trade settlements between Hong Kong and

China, with trade valued at nearly $20 billion, Green says.

HSBC’s head of trade and supply chain Gary Cross says

within the next five to six years, one third of China’s trade

will be settled in RMB and within the next 12 to 16 years,

the RMB will be a globally relevant reserve currency.

Cross says exporters who are not already having RMB

as a settlement option, should be having discussions with

their buyers in China on doing so. Offering RMB pricing

and payment solutions as an option can help open up new

opportunities.

In New Zealand, local

banks have already been

positioning themselves

as key providers for

exporters of RMB account

services.

ANZ’s Green says exporters should also think about the

expanded opportunities to pro-actively manage their RMB

currency exposure.

“This partial internationalisation of the RMB should help

firms hedge exchange rate risk, and allow importers and

exporters to find ‘natural hedges’ in their balance sheets if

they hold RMB accounts,” he adds.

Kiwibank is also getting an increased number of

enquiries from customers around trade finance receipts in

RMB. The wider global trading environment and what is the

new normal is still being defined after the global financial

crisis and Euro zone issues, says Nigel Gaudin, Kiwibank’s

deputy treasurer. This makes managing country and bank

risks more challenging for exporters, he adds.

Renmenbi: the new international currency

> Never underestimate the

impact an export order can

have on your cashflow.

> A letter of credit facility

gives you the most secure

form of trade.

> The Export Credit Office can

help small- to medium-sized

exporters secure export

credit guarantees.

> When dealing with foreign

currencies, make sure you are

sufficiently hedged.

TAKEAWAYSTAKEAWAYSKEY

30 EXPORTER

Yoke Har Lee is an Auckland-based business writer. Email yokeharlee@yahoo.co.nz

YO K E H A R L E E / W R I T E R

that are aligned with the company’s

processes.

FINANCING OFFSHORE WORK

For most Kiwi companies exporting

their services, raising financing for

their overseas projects remains a huge

challenge.

Ian Mellsop, managing director of

Marinescape, a world leader in large

aquarium concepts, says: “Because

of the small size of the New Zealand

finance market [in global terms]

and our remoteness, getting Kiwi

finance for overseas projects is almost

impossible for small private companies’

projects.

“We were particularly fortunate

in our Thailand project where we

persuaded a very large Singapore

company to join with us and invest in

Thailand. Their banking connections

enabled them to provide the bank

funding.

“In another example, our Malaysian

partners were so impressed with our

service they joined us in Vietnam [in

a project] and got backing from the

Malaysian version of the export credit

scheme,” Mellsop says.

Depending on where you are trying

to raise money, up to five percent of a

project’s cost can be spent on getting

a proposal on the table of a local bank,

Mellsop says, adding that, for example,

Korea and Japan have very high

thresholds for approving financing.

Marinescape was able to gain the

ECO’s credit guarantee to help an

aquarium buyer to raise debt funding

for 17 million Euros (NZD$29.32 million)

to build a 120 metre-long ‘SeaTube’ in

Istanbul, Turkey.

TOOLS TO BACK UP YOUR INTERNATIONAL TRADE

TYPE OF INTERNATIONAL TRADE FINANCE FACILITIES

BENEFITS MORE INFORMATION

Letter of Credit/Documentary Credit

Helps exporter manage risks as payment is secured against a purchase order. Payment made from bank to bank.

Costs can range from 0.5% to 5% of value of trade. Standards set by International Chambers of Commerce.

Open Account Buyer pays for goods shipped with credit terms. Exporters offer either 30-, 60- or 90-day terms.

Risk of non-payment is high unless the value of the trade is insured.

Advance Payments Exporters get paid in advance by buyer. Seller may have to meet buyer requirements.

Export Collection Banks handle and process documents related to the shipment.

Advantage: Documents for access to shipments can be retained by banks until buyer has paid, or has scheduled to pay.

Packing Credit Helps free up working capital by getting credit for manufacturing costs such as raw materials and employee wages, among others.

Provided by banks on per case basis based on existing relationship with an exporter.

Performance Guarantee Bonds Exporters get banks to underwrite a guarantee (sometimes buyer ask for such a guarantee as terms of the contract) to ensure the exporter meets his obligations.

Facility offered by banks. Export Credit Office also has product on offer. Exporters’ bank may refer exporters to ECO once a customer’s risk limit is reached.

Factoring/Invoice Financing Helps exporter frees up vital cashflow. An exporter surrenders his invoice and gets cash upfront.

Provided by Factoring companies or Finance companies. You lose a portion of the value of the invoice as “fees”.

Foreign Currency Accounts Allows exporters to hold foreign currencies in these accounts until they are ready to be converted into NZ dollars. Facilitates receipts/payments of non-NZ dollar trades.

Bank charges apply.

Foreign Currency Hedging/Forward Contracts, Options

Allows exporters to hedge against a currency’s volatility. A forward contract allows exporter/importer to buy or sell a currency at a predetermined timeline based on a predetermined price.

Helps mitigate currency loses in a fluctuating market. Protects the value of an exporter’s receipts based on foreign currencies.

EXPORTER 31

NZECO can assist exporters and banks to: + MITIGATE REPAYMENT RISK

+ SECURE EXPORT SALES

+ ACCESS TRADE FINANCE

The New Zealand Export Credit Office (NZECO) provides financial guarantee products for New Zealand exporters that compliment the private sector. Our products help these exporters manage risk and capitalise on trade opportunities around the globe. NZECO is currently located in the Treasury and obligations to third parties are guaranteed by the New Zealand Government.

www.nzeco.govt.nz+64 4 917 6060

eco@treasury.govt.nz

Declined trade credit insurance?

Contact us for a discussion on how we can support your export trade:

www.nzeco.govt.nz | 04-917-6060

When Tim Lightbourne

co-founded boutique wine

company Invivo in 2008, he was

so excited about exporting, he

forgot about the risk of foreign

exchange losses.

“Our first order to the US was

in 2008 – as a new exporter, we

were just happy to get an order.

We sold in US dollars. When the

payment came, I think it was 90

days later, we had lost about 20

percent on the exchange rate,”

Lightbourne says.

And, as a young company,

Invivo found it difficult to

gain backing for trade credit

insurance. The company could

not get the Export Credit Office

to back its deals as it had not

built up any trading history as a

wine company.

Lucky for Lightbourne, the

company had a business mentor

who hooked it up with the

National Bank. The bank took up

the company’s case with a private

trade credit insurer.

“The National Bank introduced

us to trade credit insurance,

which for us is one of the most

important trade credit finance

tools. Today nine out of 10 of our

international trade customers and

about 85 percent of our orders

are insured, so we are covered if

payment falls over.”

Wine company savours trade credit insurance

Chris and Tom were friends at Uni, now they’re business partners. They’re a good team, one is the

ideas guy and the other gets things done, although it’s hard to tell which is which. They both do

both. Chris might have the word ‘Doctor’ in front of his name but it was Tom who started thinking

about how much energy (and money) could be saved if people changed lightbulbs, from old-fashioned

energy-sapping incandescent bulbs to modern energy-effi cient ones. As well as coming up with the

big creative idea, Energy Mad is now behind the manufacturing of the energy effi cient eco-bulbs – yes,

the ones you probably have in your home. So what started as a bright idea is rapidly turning into a

dazzling Kiwi business success story.

We could see this was one creative company defi nitely worth backing. That’s what made us their

perfect banking partner. While Energy Mad is helping people save money on their power, Kiwibank is

busy coming up with clever ideas to help Energy Mad save money on their business banking. “They get

quite creative” says Chris “and they’ve got great relationships with international banks.” Something

he’s rather grateful for as they spread their business wings across nine new countries. Energy Mad is

out to save the world one light bulb at a time. And we’re right there with them. Because nobody knows

what a Kiwi business needs, better than a Kiwi business.

If there’s a bit of Chris and Tom in you, then there’ll be a bit of Kiwibank too. Call one of our Business Banking Specialists today on 0800 601 601 or visit www.kiwibank.co.nz/business-banking to hear more from Chris and Tom.

Ogilvy/KB1247/EM

DittoWe put our creative caps on and had an idea to help Kiwis save money

Chris and Tom were friends at Uni, now they’re business partners. They’re a good team, one is the

ideas guy and the other gets things done, although it’s hard to tell which is which. They both do

both. Chris might have the word ‘Doctor’ in front of his name but it was Tom who started thinking

We put our creative caps on and had an idea to help Kiwis save money

Kiwibank Limited.

KB1247 Exporter - Energy Mad 18.indd 1 6/09/11 3:01 PM

Chris and Tom were friends at Uni, now they’re business partners. They’re a good team, one is the

ideas guy and the other gets things done, although it’s hard to tell which is which. They both do

both. Chris might have the word ‘Doctor’ in front of his name but it was Tom who started thinking

about how much energy (and money) could be saved if people changed lightbulbs, from old-fashioned

energy-sapping incandescent bulbs to modern energy-effi cient ones. As well as coming up with the

big creative idea, Energy Mad is now behind the manufacturing of the energy effi cient eco-bulbs – yes,

the ones you probably have in your home. So what started as a bright idea is rapidly turning into a

dazzling Kiwi business success story.

We could see this was one creative company defi nitely worth backing. That’s what made us their

perfect banking partner. While Energy Mad is helping people save money on their power, Kiwibank is

busy coming up with clever ideas to help Energy Mad save money on their business banking. “They get

quite creative” says Chris “and they’ve got great relationships with international banks.” Something

he’s rather grateful for as they spread their business wings across nine new countries. Energy Mad is

out to save the world one light bulb at a time. And we’re right there with them. Because nobody knows

what a Kiwi business needs, better than a Kiwi business.

If there’s a bit of Chris and Tom in you, then there’ll be a bit of Kiwibank too. Call one of our Business Banking Specialists today on 0800 601 601 or visit www.kiwibank.co.nz/business-banking to hear more from Chris and Tom.

Ogilvy/KB1247/EM

DittoWe put our creative caps on and had an idea to help Kiwis save money

Chris and Tom were friends at Uni, now they’re business partners. They’re a good team, one is the

ideas guy and the other gets things done, although it’s hard to tell which is which. They both do

both. Chris might have the word ‘Doctor’ in front of his name but it was Tom who started thinking

We put our creative caps on and had an idea to help Kiwis save money

Kiwibank Limited.

KB1247 Exporter - Energy Mad 18.indd 1 6/09/11 3:01 PM

34 EXPORTER

> M A R K E T I N T E L L I G E N C E

to Indonesia broke the billion-dollar

mark.

When you drill down into the

detail it becomes clear that our trade

with Indonesia is predominantly

commodity driven. Currently, our

top five Indonesian export sectors

include milk powder, frozen beef,

malt extract, butter and chemical

wood pulp.

Although these industries are not

the sexiest, the hard work that has

gone into building the Indonesian

export market from these sectors

should not be forgotten as it is

thanks to these sectors that we have

earned a reputation for producing

safe, quality products that offer real

value for money. It is these industries

that have set the stage for New

Zealand suppliers of innovative value-

added products and services that will

Indonesia: the end justifies the meansThe challenges of growing your business in the Indonesian market are many, but the opportunities truly warrant making the investment.

N ew Zealand export statistics

with Indonesia tell a tale

of success and speak of

future opportunities for

our exporters. In the four

years between December 2006 and

December 2010 New Zealand exports

to Indonesia increased significantly

from NZ$613.2 million to NZ$930.4

million. We hit a peak in the

December 2008 year when exports

BY CAMERON GORDON

EXPORTER 35

enter the market at a critical point in

the development of the Indonesian

economy and its consumer base.

If you have spent time in the

capital Jakarta you will be all too

familiar with the city’s horrendous

traffic and hazy sky. But if you

are business-minded you will also

recognise that the shiny European

cars that occupy the quieter

toll roads carry wealthy young

professionals back and forth from

their offices where business is

conducted on a global scale.

When they are not working hard

in their day jobs, wealthy young

consumers spend their leisure hours

in magnificent shopping malls

where luxury brands, restaurants

and wine bars offer relief from the

oppressive heat and chaos outside.

A Friday night out uncovers

well-heeled 20-somethings dancing

the night away in trendy nightclubs.

Despite the gridlocks, Jakarta truly is

a global city.

JAKARTA THE HUB

Indonesia’s thirst for international

goods is immense and Jakarta is the

cornerstone of its international trade

links. The city’s busy trade ports

redistribute imported goods to the

> If you are a food and

beverage exporter, once

you have signed a deal

with a buyer, it can take

approximately three to

six months to register

your product with the

Indonesian authorities.

> Indonesian importers and

distributers are open to

partnering with suppliers

of quality international

products. There is no

reason why New Zealand

can’t take advantage of

this demand.

> An FTA with Indonesia

should be further incentive

for New Zealand exporters

to acknowledge the

significant opportunity that

Indonesia presents.

TAKEAWAYSTAKEAWAYSKEY

LIBERAL USE

OF RED TAPE

BY THE BORDER

AUTHORITIES

MEANS THAT PROCESSES

SUCH AS PRODUCT

REGISTRATION AND

CLEARANCE OF GOODS

ACROSS THE BORDER CAN

TAKE A CONSIDERABLE

AMOUNT OF TIME, AND

PATIENCE.”

36 EXPORTER

other major centres in Indonesia such

as Surabaya, Bandung, Medan and Bali.

High-end supermarkets are lined

with foreign delicacies that cater to

expats and locals alike. And yet, with

all this activity very few companies

are flying the New Zealand flag in

Indonesia.

As a country we produce some of

the world’s best food and beverage

products. However, it seems as

if many of us are discounting

the opportunities in Indonesia

in favour of markets that are far

more congested with domestic and

international competitors.

Granted, entering the market in

Indonesia is challenging. Liberal use

of red tape by the border authorities

means that processes such as

product registration and clearance

of goods across the border can take

a considerable amount of time,

and patience.

To give you some indication, if you

are a food and beverage exporter,

once you have signed a deal with

Cameron Gordon is Asia market manager at Incite, an international trade services firm based in market in Asia that connects New Zealand food and beverage suppliers with partners in the high growth markets of South East Asia and Taiwan. For more information visit www.exportincite.com

C A M E R O N G O R D O N / W R I T E R

a buyer, it can take approximately

three to six months to register

your product with the Indonesian

authorities, with the support of your

local buyer. All imported products

require a registration code (ML

Number) and to obtain the ML

number detailed documentation

needs to be provided to The Food

and Drug Monitoring Agency

(BPOM), which is the body that

administers the registration process.

Many imported food and beverage

products also require a lab test that is

valid for six months. If, for whatever

reason, there is a delay during the

registration process, your lab test

can expire and you need to start the

whole process again.

THE RIGHT PARTNER

The critical success factor when

doing business in Indonesia is to

find the right partner. Given the

challenges involved in getting goods

registered and across the border,

your partner needs to act in strict

compliance with the large number of

import regulations that exist, as well

as have the relationships to be able

to deal with challenges swiftly as

they arise.

On the bright side, those that

persevere with Indonesian regulatory

compliance are rewarded with a

very large and rapidly expanding

consumer base of wealthy

individuals with appetites for quality

international products. According

to David Taylor, New Zealand

ambassador to Indonesia and

ASEAN, “Indonesia is a market of

250 million people. The middle class

(those with living standards akin

to New Zealand) is thought to be

around 25 million and growing; the

economy grows at 6.5 percent per

year and by 2014 will be bigger than

South Korea”.

Furthermore, the Indonesian

INDONESIAN IMPORTERS AND

DISTRIBUTERS ARE OPEN TO

PARTNERING WITH SUPPLIERS OF

QUALITY INTERNATIONAL PRODUCTS AND

THERE IS NO REASON WHY NEW ZEALAND

CAN’T TAKE ADVANTAGE OF THIS DEMAND.”

market is not yet completely

saturated with competing

international brands. Indonesian

importers and distributers are open

to partnering with suppliers of

quality international products and

there is no reason why New Zealand

can’t take advantage of this demand.

FTA STILL ON THE CARDS

In January 2010, the ASEAN-

Australia-New Zealand Free Trade

Agreement (AANZFTA) entered into

force. Indonesia is the only country

out of the other AANZFTA partner

countries – which include Australia,

Brunei Darussalam, Cambodia, Laos,

Malaysia, Myanmar, New Zealand,

Philippines, Singapore, Thailand

and Vietnam, that has yet to ratify

this FTA. Although commercial and

industry sources in Indonesia have

expressed hesitation about the

AANZFTA (resulting from what they

regard as commercial downsides

from the Free Trade Agreement that

was entered into between ASEAN

and China in January 2010), the New

Zealand Government is confident

that Indonesia will ratify AANZFTA

shortly.

An FTA with Indonesia in the

form of AANZFTA should be further

incentive for New Zealand exporters

to acknowledge the significant

opportunity that Indonesia presents.

This FTA will not only reduce the

tariffs payable on the importation of

New Zealand goods into Indonesia,

thus making us more competitive,

but it will also provide macro-level

Indonesian support for confirming

New Zealand as a great partner to do

business with.

The challenges in growing your

business in the Indonesian market

are clear and, in some cases more

worryingly, unclear. But if you are

willing to invest in ticking the boxes

to make entry into the market

a possibility, the opportunities

available truly warrant the

investment.

EXPORTER 37

> M A R K E T I N T E L L I G E N C E

A Anne Cao knows firsthand how

different the New Zealand and

Chinese cultures are, and how

those differences can be major

roadblocks for Kiwi businesses

seeking to develop new business in

China.

Cao was born and raised in China. As

a 15 year old she played professional

basketball in Beijing, and later went on

to work in the capital, most notably as a

journalist for a large newsgroup, and as

a sales, marketing and project manager

for a publicly listed Chinese technology

company.

Cao also has extensive experience

of New Zealand culture. She originally

settled in Invercargill to learn English

where she quickly became closely

involved in local voluntary community

work, teaching and basketball coaching,

joined the Southland Multicultural

Council and, later, after moving to

Auckland, joined the New Zealand

Federation of Multicultural Councils. To

ingrain herself even further into the Kiwi

psyche, she has been vice-president of

public relations at her local Toastmasters,

is currently a committee member for

Massey University’s Auckland alumni

chapter (she holds a Masters degree in

International Business) and a mentor

with Business Mentors New Zealand.

Bilingual in both Mandarin and

English and with business experience

in both New Zealand and China, Cao

is in a unique position to understand

where businesses let themselves down

in trying to forge relationships with

Chinese companies. She also has good

connections in China and knows how

to build relationships with Chinese

government agencies, as well as

consumers.

BY GLENN BAKER

“It’s important to carry out thorough

marketing research before you do

business in China. Relationships and

trust must come first,” she says. “When

you meet with a potential Chinese

business partner or client, they may ask

general questions about you which you

may think is not business related. For

example, ‘How many people are there in

your family? How many children do you

have? What did you do before starting

your business?

“They simply want to get to know you,

and when the trust has been built, the

Chinese will start to talk business.”

Finding the right agent, distributor or

partner in China is essential, advises Cao.

“But you need to be very patient. Doing

business with Chinese takes longer than

you think.”

The language and cultural barrier can

be a major problem for New Zealand

exporters.

“Although Chinese companies can

have staff who speak English, the cultural

difference means they may interpret

words differently.

“It’s easier for New Zealand exporters

to have their own Chinese person who

understands business on the phone to

communicate with China-based buyers

and distributors. Use your own translator,

who will work better on your behalf

– do not use the Chinese buyer’s or

distributor’s translator.”

Cao knows of at least one project

between the two countries that

was forced to cease operation due

to the language issue – the two

companies concerned simply could not

communicate with each other.

Thorough research and planning is

necessary in order to save a lot of time

and frustration entering the

China market.

“You need so much information.

Where in China will your product sell the

best? What volumes should you plan for?

Who are the best people to talk to? Who

are your competitors?

“You must have a thorough market

strategy so you know exactly what

you’re aiming for in China, and to help

you with your research it really is an

advantage to have someone proficient in

both languages working with you,”

says Cao.

“Above all, be patient. Establishing

yourself in the China market will take

time, but you will find your efforts are

well rewarded in the end.”

Cao believes the NZ-China Free Trade

Agreement has made a significant

difference to the relationship between

the two countries.

“Trust has been built up at government

level. There is a lot of cross-promotion

going on, and so many Chinese

companies are now keen to do business

with New Zealand.

“Thanks to the FTA, tariffs in various

areas will decrease every year – which

gives New Zealand exporters price

advantages in the market.

“The FTA also means more young

Chinese have the opportunity to visit

New Zealand for travel or study, and they

will take a lot of positive feedback on

Kiwis back home.”

Anne Cao helps Kiwi companies

build good relationships with China

business partners, She specializes in

market research, communication

and negotiation.

Email anne@redbridgeconsulting.co.nz

Anne Cao is a Chinese New Zealander using her extensive language and business skills to help Kiwi companies better communicate with partners in China.

China: no longer lost in translation

38 EXPORTER

C hina and its protectorate

states Hong Kong and Macau

are increasingly important

markets for New Zealand

exporters. The recent free

trade agreement between New

Zealand and China has drastically

improved access for New Zealand

businesses to the Chinese market. In

addition, Chinese consumers’ hunger

for quality products and safe food

is increasing the demand for our

exports.

Developing a Chinese script

trade mark is an important part of

doing business in that region of

the world, and this requires careful

consideration.

First, think about where you will

use the trade mark. Cantonese and

Mandarin are dialects of the Chinese

language. They share the same

base alphabet, being represented

through identical symbols. However,

Cantonese and Mandarin differ

as spoken languages and are not

BY DAVID MACASKILL

interchangeable. Different regions

speak either Cantonese or Mandarin.

Mandarin is the official language of

China and is spoken throughout most

of the country. In contrast, Cantonese

is spoken in Hong Kong, Macau,

and Guangdong Province, although

Mandarin is gradually gaining the

upper hand.

Therefore it is important to consider

where you will use the trade mark.

You can then address the translation

and phonetic issues appropriate to

your customers’ dialect (discussed

below).

WHICH SYMBOLS TO CHOOSE

A trade mark is generally formed

from a combination of symbols.

Most businesses have an existing

trade mark and want to convert

that mark into a Chinese script.

Some businesses are developing a

new mark specifically for a Chinese

speaking market. Either way, the

important issue is deciding on which

symbols to choose.

There is an unlimited combination

of symbols in the Chinese alphabet

for use in translating an English

language mark into Chinese script.

Each symbol in the Chinese

alphabet has an intrinsic meaning.

The meanings of the symbols in your

trade mark will be your customers’

first impression of your business.

Therefore, the symbols you choose

need to convey the core aspects of

your business.

However, to function as a trade

mark the symbols must distinguish

you from your competitors. For

example, if you choose a trade

mark for a health supplement,

being the characters for tasty,

beautiful appearance, and long

life, then you are very likely to end

up with a problem. Words of this

type are likely to already be in use

by various existing Chinese herbal

remedy manufacturers. Regardless

of infringement problems, it would

Developing a Chinese script trade mark is an important part of doing business in China and other Asian countries. However, there are issues to consider and mistakes to avoid.

> M A R K E T I N T E L L I G E N C E

Chinese script trade marks

version of a trade mark. This

allows you to have consistency in

pronunciation across several markets.

In addition, it is important that the

mark can be easily pronounced by

your customers. Therefore feedback

from both a native Mandarin and a

Cantonese speaker is important to

help identify any issues.

The sheer number of Chinese script

symbols also affects pronunciation

as you can achieve a desired

sound through a whole range of

appropriately chosen symbols.

Therefore, selecting symbols to

form your Chinese script trade mark

involves balancing several different

considerations.

CLEARANCE SEARCHES ESSENTIAL

It is important to ensure that a

Chinese script trade mark is available

for use. Accordingly, clearance

searches need to be selected of the

trade mark registers in the countries

in which you will use your trade mark.

There is no one trade mark register

which covers all Chinese speaking

countries. Hong Kong is a Chinese

protectorate but it maintains its

own trade mark register. Taiwan also

maintains its own trade mark register.

Accordingly, separate searches may

need to be completed of several

different trade mark registers.

Each search should be designed

to disclose registrations or prior

applications: for trade marks that are

phonetically, visually or conceptually

similar to your proposed mark, and;

that cover goods and/or services

which are similar to your own.

Searching needs to be completed

as soon as possible, and preferably

before committing to use of a mark

through developing advertising

materials or packaging.

PROTECTING YOUR IP RIGHTS

IN CHINA

China has a reputation for

disregarding intellectual property

rights. However, that is fast

changing. The implementation of

EXPORTER 39

be very difficult to stop a competitor

using a very similar combination, as

your mark is effectively a description

of what your product achieves.

Therefore, although you may want

your trade mark to relate to the

desirable features of your product,

choosing characters which are

commonly used in your field will stop

you from being able to distinguish

your products from your competitors.

PRONUNCIATION OF YOUR

TRADE MARK

Your Chinese script trade mark will

determine how people pronounce

your trade mark. Accordingly, the

pronunciation of the symbols in the

trade mark should be considered. This

is referred to as ‘transliteration’.

For example, the transliteration of the

symbols forming the mark

is GU DE HUAI.

It can be important for there to

be phonetic similarities between

the English version and the Chinese

Free Trade Agreements and World

Trade Organisation negotiations

are increasing the appreciation

of, and therefore enforceability of,

intellectual property rights in China.

It would be short-sighted and naive

to simply disregard the importance of

protecting your intellectual property

rights in that country.

China places importance on being

first to file on the trade mark register

and does not recognise rights

acquired through use. This means that

an early filing date is very important.

OPPORTUNTIES FOR KIWI

BUSINESSES

The Chinese speaking markets hold

exciting potential for New Zealand

businesses. There are massive

opportunities for our goods and

services due to substantial demand.

However, it is important to take

a strategic approach to identify

any problems, and to protect your

business against competitors.

Consideration of the issues discussed

above should put you in a good

position to succeed.

David Macaskill is an associate of

James & Wells Intellectual Property

(www.jaws.co.nz). Email davidm@

jaws.co.nz or phone 07 928 4470.

IT WOULD BE SHORT-SIGHTED AND NAIVE

TO SIMPLY DISREGARD THE IMPORTANCE OF

PROTECTING YOUR INTELLECTUAL PROPERTY

RIGHTS IN THAT COUNTRY.”

40 EXPORTER

> M A R K E T I N T E L L I G E N C E

S imon Walsh nibbles on

Whittaker’s chocolate in his

air-conditioned slice of Kiwi-

land in sticky Seoul. US soldiers

from the nearby military base

stroll past the window in search of

their mid-morning caffeine fix.

To Walsh, it’s just business as usual.

His two companies Tiwi Trade and

Tiwi Trade Corp are the eyes and ears

of Kiwi companies back home. While

they import and trade in their own

right, they also do business contract

negotiations for Kiwi companies.

Unlike other market entry firms, they

work entirely on commission for this,

carrying all the costs until the Korean

and Kiwi partners sign a deal. They

get paid when product leaves New

Zealand shores.

Walsh has teamed up with

RUTH LE PLA

It’s not easy to get a toehold in the booming South Korean market. But two New Zealand companies are pushing open doors for other Kiwis in very different ways. Ruth Le Pla filed this report from Seoul.

ROK

On!Korea-born business partner Sunny

Myung. Their imaginary ‘tiwi’ is a

hybrid tiger-kiwi: the national animals

of South Korea and New Zealand.

They run the two companies in

tandem. Tiwi Trade manages alcohol

imports while Tiwi Trade Corp handles

the non-alcoholic stuff.

So far, they’ve fixed their sights on

food and beverages, ensuring Kiwi

produce is munched and sipped in

Seoul’s top international hotel chains

and high-end restaurants.

Luxury yachts are on their horizon.

They reason that South Korea’s

blossoming economy is ripe for New

Zealand’s leisure culture and its

boatbuilding expertise.

Certainly, luxury is in the air in the

capital of the Republic of Korea [ROK]

where Maserati showrooms nestle up

against Ferrari, where Rolls-Royce and

Mercedes-Benz limos hurtle through

the streets, and Prada handbags and

Chanel suits jostle on the pavements.

Walsh’s relaxed manner belies the

nitpicking attention to detail needed

to set up shop in Korea. Because he’s

licenced to trade alcohol, for example,

his office had to be of a certain

size and at a certain distance from

the road, which had to be a certain

number of lanes wide.

No matter that he outsources

distribution and doesn’t physically

handle the stock on these premises,

his offices had to be in a basement or

on the first floor [which means ground

floor in New Zealand]. A second floor

option was out. He could have been on

a third or fourth floor but only if the

building had an industrial elevator.

To Kiwi ears, it sounds fiendishly

bureaucratic. But there’s method

in the authorities’ madness. Seoul’s

regulations stymie cowboy companies

whose back-room businesses literally

block the paths of commerce for

others. The underlying message: if you

want to do business here, you’d better

play by the rules.

The Tiwi Trade business model

means Walsh and Myung pick their

contract negotiation partners very

carefully. They’ve already aligned

Sanitarium and Hubbards with some of

Korea’s largest distribution networks

and, when I visited, had just signed

Sanitarium with CJ O Shopping,

Korea’s largest home shopping

network.

In essence, Tiwi Trade Corp acts as

the companies’ brand managers in

Korea.

“Rather than them signing up with

a Korean company over here, seeing

their stock disappear overseas on a

ship and not knowing what happens

PHOTOS BY RUTH LE PLA.

EXPORTER 41

to it, we report back on what’s going

on in the market, where their product

ends up, how it’s being marketed, and,

if there’s dual marketing, what it is

being marketed with,” says Walsh.

As a native Korean, Myung can also

tease out the full meaning behind the

statements that some local companies

make in English.

“Sometimes the English

department’s vocabulary might be

limited,” says Walsh, “and it tends to

be limited to very positive words.

“They may say ‘yes’ or ‘no’ in English

when ‘maybe’ comes out in Korean,”

he says. “It’s very hard for them to say,

‘We’re thinking about it’, ‘We could do

something’, or ‘There are some boxes

we need to tick first’.”

PLAY THE GAME LONG

If Walsh and Myung make a good

team in Korea, then pay heed to Kiwi

Lewis Patterson who first visited the

country back in 1999, fell in love with

the language and has been enamoured

with it ever since.

Now impressively fluent in Korean,

Patterson provides in-market

representation to a number of

Kiwi companies through his own

organisation, Latitude 45.

For Patterson – and therefore for his

clients who include the New Zealand

Berryfruit Group, Berryfruit Export NZ

Ltd and the New Zealand Buttercup

Squash Council – business home base

is now on the 21st floor of a tower

block in Seoul’s central Jongno-gu

district.

Patterson can look out across the

city to the Seoul Tower and the hills

beyond. One window serves as a

see-through whiteboard.

If the Tiwi Trade companies are the

eyes and ears of Kiwi companies back

home, Latitude 45 is their very own

walking-talking branch arm.

Patterson’s driving motivation is a

desire to help fix some of the most

frustratingly common problems

that Kiwi companies face in-market.

Unaware of the complexities of the

local market, they often leap at the

first offer they receive from Korean

agents, ship off their goods and wait…

and... wait.

Patterson knows that, even with

the best will in the world, import

agents must juggle demands from

competing suppliers and focus on

price. Patterson’s objective as an

in-market rep is to present and nurture

a long-lasting premium brand for the

Kiwi firm.

“New Zealand companies,” he says,

“have a great history of trading but

not necessarily of building brands.”

He’s built up his own market nous

through a series of posts, including

time with Zespri and a stint in Korea’s

tough and traditional oriental medicine

sector where he once fronted up to

an accuser after receiving threats that

Ruth Le Pla is an Auckland based freelance writer. Email ruth.lepla@xtra.co.nz

R U T H L E P L A / W R I T E R

he’d end up floating in the harbour.

Patterson has seen several Kiwi

companies ditch their smaller

in-market contacts when more

muscular players offer them a deal.

When the big opportunity runs cold,

the initial contacts refuse to pick up

the pieces and the Kiwi company is

left high and dry.

Patterson urges Kiwi companies to

play a long game. Business in this part

of the world, he says, is as much about

taking time to hook up with the right

partner as it is to actually work with

that person or group in-market.

“So, in a sense, anyone can be the

right partner if you work closely with

them and give them the support

they need.”

Ruth Le Pla travelled to the Republic

of Korea on an Asia New Zealand

Foundation Media Advisory Grant.

A Korean kind of miracle

The Republic of Korea [ROK]

has undergone an economic

transformation in the space of

a generation – maybe two, if

you’re a fast breeder.

• When Dr Jong Nam Oh was

a student in 1973, like the rest

of his generation he dreamt of

being able to afford three meals

a day.

• Now Dr Oh is a senior

adviser to top Korean law firm

Kim & Chang. Like many others

of his generation, sometimes

these days he restricts himself to

two meals a day just to keep his

weight down.

• In 1960, life expectancy in

Korea was 52. Now it’s 81.

• In Korea, you’ll hear people

refer to the global financial crisis

[GFC] as the IMF.

• Only about 40 kilometres

separates downtown Seoul from

the border with North Korea.

That’s about the same distance

as downtown Manhattan to John

F Kennedy International Airport.

Simon Walsh and Sunny Myung

Lewis Patterson

42 EXPORTER

Established 17 years ago as a showcase for Kiwi exporters, The New Zealand Trade Centre has been revitalised into a world-class facility just in time for the Rugby World Cup. Exporter magazine caught up with MD Alister Gates just prior to the reopening.

J ust like the ‘Makeover’ shows

on TV, if you compared the

‘before’ and ‘after’ photos of

the New Zealand Trade Centre’s

refurbishment, you’d wonder

if you’re looking at the same place.

Located in Auckland’s Albert Street by

the Stamford Plaza hotel, the primary

focus of the centre over the years has

been to match local exporters with

potential agents, distributors and

importers offshore.

Alister Gates had been steadily

developing the websites for the

business when an opportunity came

up in January 2011 to purchase the

Centre with a couple of business

partners.

“The Trade Centre had become a

bit tired over the past decade and

was in desperate need of an upgrade

to attract new visitors,” says Gates.

“And with the Rugby World Cup

on our doorstep it is an amazing

opportunity to demonstrate some

great Kiwi products to the world.

“Our vision for the New Zealand Trade

Centre is for it to become a world-

class facility showcasing the best of

New Zealand products. As well as the

showroom we will also have a large

conference room in which to meet

trade delegations and make available

BY GLENN BAKER

to trade associations for meetings.

“The other half of our floor has

been converted into a business centre

aptly named the Ingenuity Business

Centre where exporters can rent

desk-space for a day, week or month.

It allows them to establish a presence

in Auckland at a moderate cost and to

meet clients.”

Gates is clearly excited about the

potential of the new-look Trade Centre

and its impact on New Zealand’s

export drive.

“Our passion is to grow export

business from the grass roots up. We

work with every kind of exporter from

small home businesses right up to

large multinationals.

Extreme makeover, export edition

N Z T R A D E C E N T R E

Wendy Mo and Frank Li, directors of the NZTrade Centre.

EXPORTER 43

“We build strong networks

matching up the right people using

our extensive database of overseas

contacts and New Zealanders. We

utilise all the latest new marketing

methods including our websites,

Facebook, Twitter and LinkedIn,”

explains Gates. “We are a private

organisation rolling up our sleeves to

make this country’s export business

happen.”

Gates says that as a private

organisation the Centre is funded

by its members to market their

companies and products.

“We work on an annual subscription

basis and undertake specific export

consultancy services.”

Gates also knows through personal

experience how incredibly difficult

More than destiny

Destiny Bay Wines’ association

with the New Zealand Trade

Centre began through an enquiry

from a Chinese distributor which

the Centre had passed on to the

director of global distribution,

Brett Taylor.

“We then realised that a display

booth at the Centre, which we

took up about a year ago, was a

good way to promote our wine to

overseas markets, without leaving

the country,” says Taylor. “And since

Alister, Wendy and Frank took over

the Centre earlier this year, business

through the Centre has increased

substantially – we’ve had more

business generated in the past two

months than the entire year through

the New Zealand Trade Centre!”

Taylor says the leads generated

through the Trade Centre are

genuine, qualified leads that have

been thoroughly vetted by the

Centre’s staff.

“They know our brand and

product very well. The whole

team has visited our vineyard and

winery, and they take a real interest

in promoting our wine to overseas

importers,” says Taylor. “It’s like

having an extended sales team

working for you.”

He says there is an even greater

Asian market focus with the

Centre’s new owners, particularly

with China, a prime target market

for the high end wines Destiny

Bay produces.

Taylor appreciates the Centre

for the extra business and contacts

it generates – plus the assistance

on services such as translation,

promotions and advertising.

“The New Zealand Trade

Centres’ sales and marketing service

represents very good value when

compared to other advertising

mediums.”

As a concept, Taylor believes the

Trade Centre is a “fantastic idea”,

especially for smaller exporters

that are often off the radar of

Government support agencies.

“It’s a private entity, so its

focus is naturally on the smaller

guys, and it’s a great direct link

between suppliers and distributors,

marketers and buyers.

“I’ve seen the Centre’s

refurbishment plans, and the office

and meeting facilities are a fantastic

idea for business people wanting to

set up meetings in the CBD.

With Destiny Bay Winery located

on Waiheke Island, I plan to make

full use of those facilities too.”

it can be to establish footholds

in overseas export markets.

“My background is in exporting

technology and I well remember

the challenges we faced sitting in

New Zealand with the best piece of

software in the world, but having no

idea how to take on the big global

market. It’s hard just knowing where

to start and how to go about finding

the right leads.

“In the end our success came down

to meeting the right people and

leveraging the networks of industry

specialists. My father was diplomat

and I spent half my young life growing

up overseas where he promoted

our country. It was a great lesson in

humbleness and the understanding of

cultures different to ours.”

DISPLAY PLUS

Gates is keen to dispel misconceptions

about the Trade Centre – perhaps the

biggest one being that they only do

trade displays.

“We are much more than an export

trade display centre. We actively

promote our exporters through all

our marketing channels. Our success

is when an exporter gets an order

through a lead we have created.

“And the best way to tap into our

services is to come and meet us at

the Centre or start with a visit to our

website, www.newzealandtradecentre.

com.

“Our ultimate goal is to become

a centre of excellence for exporters,

offering full marketing, country

consulting and training services –

a one stop shop for any organisation

looking for new markets,” says Gates.

“We are also in negotiation with

partners in Malaysia, China and Korea

to open the New Zealand Trade

Centre up in other countries with a

retail/wholesale operation. We hope

to open five overseas operations by

the end of 2012.”

OUR ULTIMATE

GOAL IS TO

BECOME A CENTRE

OF EXCELLENCE

FOR EXPORTERS,

OFFERING FULL MARKETING,

COUNTRY CONSULTING AND

TRAINING SERVICES – A ONE STOP

SHOP FOR ANY ORGANISATION

LOOKING FOR NEW MARKETS.”

Alister Gates welcomes guests to the reopening.

44 EXPORTER

> R E G I O N A L FO C U S

It’s about relationships

Dunedin’s export sector is alive and well and thriving. Claire Grant explores the common factors within three very different export success stories.

T he key to successful exporting

is successful relationships,

keeping communication open

and good market intelligence,

no matter where you are from

or what you are exporting.

Building quality relationships in

overseas markets from the southern

reaches of New Zealand is no more

difficult than from any other part of

the country.

In fact, setting up shop in Dunedin

has some distinct advantages; the

city is small enough to make logistics

and liaison easy, and it has a stable

workforce and supportive business

community. Dunedin is a thriving

commercial centre of mainly small to

medium enterprises, and the range of

products and services it is exporting

is quite diverse.

Each exporter and each market

has its own challenges and rewards,

but the common factor amongst the

Dunedin businesses securing overseas

markets is definitely having the right

person on the ground in the export

country, and keeping them onside.

And that doesn’t necessarily mean a

BY CLAIRE GRANT

big budget for overseas trips, as some

of the smaller exporters from Dunedin

know. The key is the quality of the

dialogue and being crystal clear

about objectives, so the agents feel

supported in distribution and market

development.

It’s all about the relationships.

ADAPTING TO MARKET NEEDS

One Dunedin business that has

cracked the export barrier is Escea

(www.escea.com), a producer of

luxury gas fires. Director Nigel

Bamford was quick to realise that

going global was essential in such a

niche market.

“We’re such a specialist industry, if

we didn’t export we’d be just another

cottage industry,” he says.

Bamford always had the goal

of selling internationally. In reality

he found it much harder than

anticipated.

“We thought we could just go to a

particular region, spend some time

there and work out the market’s

needs. It didn’t really work that way.

“What Escea found was that a few

weeks spent in a new market were

insufficient to gain the enormous

depth of market awareness that you

need to truly succeed in a different

country. It is really only after several

years of time spent actually trading

in a new market that an exporter

can gain their stripes and claim to

really understand the needs of that

particular market,” he says.

“In the end we learnt by creating a

product, releasing it, listening to the

feedback and customising.”

This process has resulted in

products which are continually

adapting to suit market needs specific

to the country, he says.

Expanding into different countries

each with their own needs was

primarily about diversifying risk. New

products into new markets meant that

if one market was flat, others might

be more buoyant.

Escea luxury gas fires have become

increasingly sort-after in the last

couple of years, despite the recession,

with the company currently exporting

to Australia, the UK, US and Canada.

Its strategy of consistently seeking

EXPORTER 45

Although the business is not large,

it has cornered its market very

successfully across many different

countries since its inception in 1974.

Director Martin Perreaux says the only

way to be successful was by working

smart.

“It’s impossible to visit all the

countries we trade in, but because

we sell through distributors, having

the right person in the job is vital.

We could be doing everything right

and find the market is not working

simply because the distributor is not

motivated.”

Perreaux’s answer to maintaining

existing markets is high quality

communication. The Internet gives

him the freedom to connect to

distributors individually and across

all clients in different time zones.

The resulting feedback from clients

and distributors is then valuable in

influencing product development.

“We’re reasonably experienced

in understanding our market

requirements, the real test for a

new product in target markets is

discussion with key distributors,”

says Perreaux.

new markets for products has

resulted in a rapid expansion and a

brand new factory at their Dunedin

base. Escea currently employs 43

staff and is looking to expand their

product range further in 2012.

SUCCESS IN NICHES

Meanwhile, Dunedin-based Scott

Technology CEO Chris Hopkins says

being so far away from the rest of the

world and in a different time zone

presents challenges daily, particularly

with currency fluctuations. Exporters,

therefore, must excel at what they

do and how they get it out there. He

believes in finding success in niches

rather than commodity markets.

“It’s all very well saying you

produce the best widget in the world,

but you have to be able to get it in

front of the people that matter, and

stay there. You have to have appeal.

“People forget you and your

product very quickly if you don’t

physically get out there. You have

to be prepared to wear out the shoe

leather; don’t sit back and take

anything for granted.”

Scott Technology Limited

(www.scott.co.nz) is a publicly-held

engineering company with its head

office in Dunedin, specialising in the

design and manufacture of automated

production and process machinery. It

is recognised as a world-class builder

of advanced automation systems by

customers in more than 90 countries,

including all the major appliance

builders in the US and internationally.

Scott Technology’s vision is to be the

global innovator in automation.

The company is well established

internationally, with offices in

Australia, the US and Italy, and has

agents in many other countries.

Its success in capturing markets

across so many countries is due to

perseverance, and the sum of doing

many small things well.

Obviously doing the homework

is vital to developing a new market,

researching the market and the

competition thoroughly. Exporters

have to be aware of how to work

within different cultures, even in

Australia, and adjust to suit. Good

relationships are vital when your

production is so far away from your

consumers. And the company has to

be well funded to get into the market

and to be able to stay there for the

long haul.

WORKING SMART

A much smaller company that

successfully exports to more than

30 countries around the world from

Dunedin is Perreaux Ltd (www.

perreaux.com), which produces high-

end audio amplifiers for domestic use.

Almost all of Perreaux’s products

are exported, and while this industry

is a mature one, it has found its niche

by very successfully focusing on the

high quality end of the global market.

“THE KEY IS THE QUALITY OF THE

DIALOGUE AND BEING CRYSTAL CLEAR

ABOUT OBJECTIVES, SO THE AGENTS

FEEL SUPPORTED IN DISTRIBUTION

AND MARKET DEVELOPMENT.”

Escea’s Nigel Bamford

Claire Grant is a Dunedin-based communications advisor. Email: claire@clairewords.co.nz

C L A I R E G R A N T / W R I T E R

46 EXPORTER

> T E C H S PAC E

However, the moment you start using

the Galaxy Tab, you quickly notice

Android is not as polished as the iPad

operating system.

Having a few rough edges wouldn’t

matter if the better quality non-Apple

tablets were priced significantly below

the iPad. They’re not.

Rivals typically start by pricing their

tablets at the same or slightly above

Apple’s level – a basic iPad costs $800

in New Zealand. HP’s fire sale showed

there is a pent-up demand for cheaper

tablets – its TouchPads went on sale in

New Zealand at $140 and they sold out

almost immediately.

CHEAPER TABLETS

There are cheaper tablets but they fall

well short of the iPad. For example

Telecom offers a $400 V9 Tablet. It

has a smaller screen than the iPad with

fewer pixels – which means blocky

images. The processor is slower, so the

tablet feels sluggish. It uses an older

version of Android which was never

intended to be used in anything other

than a phone. It doesn’t cope with

tablets as well as the newer version.

Another compromise is the

touchscreen technology. The V9 Tablet

has a resistive touchscreen – the iPad’s

touchscreen is capacitive. In practice

this makes the V9 less responsive – you

have to press much harder and it’s a

tad more hit and miss.

That’s not to say the V9 is worthless.

It’s a great tool for some basic tasks.

SONY

Apple’s latest challenger is Sony. The

company has announced two distinctly

different Android tablets. Sony’s Tablet

is aimed mainly at consumers, it’s an

entertainment device allowing users to

play PlayStation games and use Sony’s

music and video service.

The foldable Tablet P will just about

fit in a pocket. It has two screens, which

means it would be a good device for

reading electronic books. A nice touch

is that one of the two screens can act

as a keyboard, which means the Tablet

P can be used as a small lightweight

laptop.

Local prices aren’t fixed at the

time of writing, but indications from

Australia are they will initially cost more

than iPads.

Bill Bennett is an Auckland -based technology writer. Email bill@billbennett.co.nz

B I L L B E N N E T T / W R I T E R

Tablets gain tractionApple’s iPad has been ruling the tablet market – but more recently has come up against stiffer competition. Bill Bennett compares the options.

Tablets have been a hot ticket

item since Apple launched

the iPad early last year. The

company’s second generation

iPad hit the streets in March and

was so popular New Zealand outlets

had waiting lists. It took until June to

catch up with demand.

To date no rival has come close to

matching the iPad’s popularity. Many

technology companies have tried and

failed to gain traction.

Hewlett-Packard’s ill-fated TouchPad

was the most spectacular miss. HP is

the world’s largest computer maker.

While it is the leading brand with

government and corporate IT buyers,

it badly misjudged its entry into the

tablet market. The reception was so

bad the company threw in the towel

just 49 days after launch, dumping its

stock in a global fire sale.

So far Samsung has been the most

successful tablet challenger. Apple

paid the Korean company the ultimate

complement of blocking the Samsung

Galaxy Tab 10.1 from going on sale in

Australia with a federal court action.

The company claims Samsung’s

Galaxy Tab 10.1 is a copycat and says

the device infringes Apple patents.

The legal battle continues.

ANDROID

Like most non-Apple tablets,

Samsung’s Galaxy Tab 10.1 uses a

redesigned version of Google’s Android

operating system. The same software

powers many smartphones.

Samsung’s hardware is impressive

– physically the Galaxy Tab 10.1 is one

of the few tablets to match the iPad.

You pick it up and it feels promising.

EXPORTER 47

A new class of laptopEarlier this year Intel announced a

new category of ultraportable laptops

under the heading of ‘Ultrabooks’

that are designed to deliver longer

battery life, slim profiles of less than

0.8 inches, and attractive price points.

At the Computex 2011 launch, the

company said the Ultrabooks merge

the performance capabilities of modern

laptops with “tablet-like features such

as instant-on functionality”.

Powered by Intel’s second-

generation Intel Core processor family

– the Ultrabooks are also in line to

be upgraded to the third-generation

processors, codenamed ‘Ivy Bridge’,

due for shipping next year. The

third-generation processors will improve

the performance of the laptops even

further in a number of areas, such as

power consumption, resume times from

hibernate or sleep modes, and advanced

security and graphical capabilities.

Then, in 2013, Intel will release its

‘Haswell’ 22nm processors, which it says

will offer “more than a 20x reduction in

connected standby power”.

In the US the Asus UX21 is expected

to lead the Ultrabook charge out – but

as Exporter went to print, there was no

definitive arrival time for the new class

of laptops to arrive on these shores.

Hopefully it’ll be before Christmas.

And now for some light readingFor business travellers reading has

taken another step forward with Sony’s

new Reader WiFi Touch, which it bills

as the world’s lightest six-inch eBook

reader.

The device is no bigger than a

paperback book – at 8.9mm thin

and weighing just 168 grams, it’s

comfortable to hold. Its gentle curving

profile fits naturally in the hand.

With a battery life of over one month

(up to three weeks with wireless on) and

the capacity to hold about 1200 eBooks

via the internal memory (expandable to

32GB with an optional microSD card),

users should find the Reader WiFi Touch

more than up to the task.

The glare-free Dual Touch screen and

E-Ink Pearl electronic paper delivers

a high-contrast image that is easy to

read for hours, even in direct sunlight.

Readers can also ‘write’ notes on the

page or highlight text with a finger or

the supplied stylus.

Using the advanced touch screen,

book lovers can choose a book, swipe a

finger to turn the page, zoom in and out

by pinching fingers together or apart

and tap on a word and hold to find

its meaning from two built-in English

dictionaries. Connect to a wireless

Internet connection and find extra

information on words or phrases with

in-text access to Google and Wikipedia.

The Reader WiFi Touch handles a

wide range of digital formats including

the popular ePub eBook standard. It’s

available from late October with an SRP

of $229.95.

Get ready to open Windows 8 With more than 470 million copies

of Windows 7 sold to date, Microsoft

must now transition its desktop

operating system to the emerging

world of tablets and slates. More

than two thirds of the world’s PCs

today are mobile devices – so it’s

not surprising that with Windows

8, Microsoft is going for a complete

redesign of the Windows interface

to cater for touch screens. Due for

release in 2012, Windows 8 will have

a similar look and feel to Microsoft’s

mobile phone operating system,

Phone 7, but users will be able to

switch back and forth to the classic

Windows interface if they want.

With Windows 8, Microsoft is

promising richer security features,

faster start-up times and longer

battery life – and it will run on a wider

choice of devices and chipsets.

> T E C H S PAC E

> FA I R FO C U S

Where buyers meet sellersInternational trade fairs have long been a popular way to market goods to a worldwide audience. Exporter talks to Robert Laing, whose company represents most of the German-based expos.

Robert Laing is a happy man.

His company, Messe Reps &

Travel has recently taken over

the representation of Messe

Frankfurt in New Zealand –

which now means there is one point of

contact in New Zealand for the leading

trade show companies in the world’s

leading trade show market – Germany.

Messe Reps & Travel (www.

messereps.co.nz) now assists Kiwi

exporters and importers to exhibit at,

or visit, all the trade fairs in the cities

of Dusseldorf, Frankfurt, Cologne and

Munich – as well as the cities around the

world in which the relevant organisers

stage regional fairs.

Acquiring the Frankfurt

representation is significant for Laing –

with 448.3 million euros in sales, Messe

Frankfurt is one of the world’s largest

trade fair organisers. In 2010, Messe

Frankfurt organised 87 trade fairs, of

which 51 took place outside Germany.

“It also has extremely high

international participation in its events,”

says Laing. “Seventy-two percent of

exhibitors are from outside Germany; as

are 47 percent of visitors.

“Most importantly, it is one of the

most profitable trade fair organisers.

With its worldwide brand strategy of

taking events where Messe Frankfurt

has competence and leadership in

Germany, and holding related industry

events around the world in different

markets, Messe Frankfurt offers a

consistent international business

platform to New Zealand exporters.

“Kiwi exporters know they can rely on

Messe Frankfurt as a fair organiser with

consistently high quality standards at all

their events,” he says.

With his many years’ experience in

sending business people to trade fairs,

what does Laing regard as the major

benefits of these events? Are they still

as popular? And has there been any

impact from the GFC?

“Trade fair participation will always

remain a part of the marketing mix,

but like anything this mix is changing,”

he says. “With the increase in Internet

marketing, especially social media, in

recent years some more traditional

aspects of marketing have reduced

in importance. But the fundamental

aspect of an international trade show

in Germany, where companies present

themselves to a worldwide buying

audience who compare them with their

direct competitors often located on the

stand right next door, still remains.

“No other environment offers this

possibility – with everyone in the

industry, buyers and sellers, under one

roof at one time.

“The leading international shows

in Germany have not really suffered

from the GFC. There are many smaller

events around the world that have

disappeared, but the ‘brand leaders’

in their respective industries, such as

Automechanika (automotive industry)

in Frankfurt or bauma (construction

industry) in Munich have, in fact,

increased in size during the past few

years,” says Laing.

Also, in recent years, the leading

German trade fair organisers have set

up subsidiaries in Asia and India to tap

into rapidly emerging markets.

“What is different about the shows in

Asia, China and India especially, is the

shows are primarily for those markets.

These are significant markets all by

themselves and have great potential.

They attract exhibitors looking to sell

into that market including the leading

multi-nationals in the respective

industries. They also attract exhibitors

from the market or region who may not

participate in the international event in

Germany. Visitors get to see the multi-

nationals as well as the local exhibitors

they would not see anywhere else,”

says Laing.

The shows in China and India

organised by the German companies

and their local subsidiaries offer the

same quality of organisation and

event management as in Germany, he

adds. Importantly, they offer the same

international exposure through their

network of representatives worldwide.

ADVICE FOR ATTENDEES

Early planning is the key to making a

trip to these events successful, says

Laing, and the individual trade fair home

pages are an increasingly important

source of knowledge.

“These portals are no longer just an

information source of what you will see

at the fair – although, of course, they

certainly still contain this information.

They are a ‘window to the industry’

as they contain news from exhibitors

regarding forthcoming new product

releases and news on industry trends

and developments. These updates are

occurring daily in the build up to a fair

and give people here the chance to be

completely up to date with industry

developments.

“Increasingly, social media is another

platform for contact and updates on

these fairs,” he says.

48 EXPORTER

EXPORTER 49

ON THE RADAR:A selection of upcoming international trade fairs.

11-14 January 2012 Heimtextil – International Trade Fair for Home and Contract Textiles – Frankfurt.

www.heimtextil.messefrankfurt.com

16-22 January 2012 imm – The international furnishing show – Cologne.

www.imm-cologne.com

21-29 January 2012 Boot Düsseldorf – International Boat Show – Düsseldorf.

www.boat-duesseldorf.com

27-31 January 2012 Christmasworld – The World of Event Decoration – Frankfurt.

www.christmasworld.messefrankfurt.com

29 Jan -01 February 2012 ISM – International Sweets and Biscuits Fair – Cologne.

www.ism-cologne.com

01-06 February 2012 Spielwarenmesse – International Toy Fair – Nürnberg.

www.spielwarenmesse.de

04-07 February 2012 Reed Gift Fairs – Melbourne Convention & Exhibition Centre.

www.reedgiftfairs.com.au

25-29 February 2012 Reed Gift Fairs – Sydney Convention & Exhibition Centre.

www.reedgiftfairs.com.au

04-06 March 2012 ProWein – International Trade Fair Wines and Spirits – Düsseldorf.

www.prowein.com

06-10 March 2012 CeBIT – Heart of the digital world – Hannover.

www.cebit.de

07-11 March 2012 ITB – The World’s leading Travel Trade Show – Berlin.

www.itb-berlin.de

11-13 March 2012 Fine Food & Hospitality Queensland – Brisbane Convention & Exhibition Centre.

www.finefoodqueensland.com.au

26-30 March 2012 Wire – International Wire and Cable Trade Fair – Düsseldorf.

www.wire.de

27-30 March 2012 Anuga FoodTec – International trade fair for food and drink Technology Cologne.

www.anugafoodtec.com

15-20 April 2012 Light + Building – Trade fair for architecture and technology – Frankfurt.

www.light-building.messefrankfurt.com

17-20 April 2012 PaintExpo – Trade Fair for Industrial Coating Technology – Karlsruhe, Germany.

www.paintexpo.com

23-27 April 2012 Hannover Messe – The whole World of Technology at one Place – Hannover.

www.hannovermesse.de

> FA I R FO C U S

50 EXPORTER

> F E AT U R E

successful exporters: they need to

add value, make the most of good

relationships and they must find a

niche.

Operating in such a niche sector,

Gowans knew from the outset that his

company would have to look offshore.

“Like any business in New Zealand, to

be successful we knew we would have

to look for bigger markets. But there

are some big advantages to starting in

a smaller market like New Zealand,”

he says.

“Being small and agile leads to great

customer service. Customers get a

different level of attention than they

would from large multinationals from,

say, Europe. This can pay big dividends

for smaller companies.

“We had a unique advantage when

we went overseas. Starting off in New

Zealand we had to provide an end-to-

end solution – we weren’t just a small

part in the chain.”

That gave Energy Intellect an edge

offshore, according to Gowans, because

Finding your niche in the world

W ellington-based Energy

Intellect is a leader in

the energy management

solutions sector both in

New Zealand and overseas.

The company provides advanced

energy management, energy

measurement and energy control

applications to business organisations

including utilities, grid operators,

energy retailers and commercial

energy users. It has exported electronic

hardware and software services for

measuring and monitoring energy

for well over a decade and export

markets make up a large portion of the

company’s revenue.

Founded in Wellington in the

mid-90s, Ei (Energy Intellect) has

grown from a small start-up in a self

service office on Wellington’s Courtenay

Place to an international market leader

in energy and environmental monitoring

and control technology.

Ei designs and builds large-end user

metering and energy control systems

and then uses its cloud based software

to process the information it gathers. It

helps major electricity users make the

most efficient use of electricity.

The company processes about 85

percent of New Zealand’s energy

information for large commercial and

industrial electricity users in New

Zealand, has a well-established business

in Australia and clients and projects

across South Africa and Asia.

Co-founder Dean Gowans believes

there are three things New Zealand

companies need in order to be

there weren’t many other companies

out there that could offer both the

hardware to measure electricity

usage and the software services to go

alongside that.

“Our other advantage was that

like other successful New Zealand

technology companies such as Tait

Radio Communications, we have

added value in New Zealand. The

hardware and software is all designed

and built here. We’re adding the value

here through stitching it together,

testing it and shipping it off. All of the

components are assembled in Lower

Hutt.”

FIRST FORAY

The company’s first foray into exporting

came very early on in the piece: “We

put a proposal in to a company in

South Africa to design a component

product for them – a remote terminal

and display. That happened within six

months of being in business,” recalls

Gowans.

Alice Taylor reports on a Wellington company that relishes being a small, agile player in a global niche market.

time Bangladesh – as part of a cluster

of Wellington-based energy companies

led by Abbey Systems.

Energy Intellect‘s real-time energy

management, control and reporting

technology will be deployed across 34

substations in Bangladesh as part of a

$6.5 million dollar deal.

“Bangladesh is a unique opportunity

for us,” says Gowans. “We’re operating

as part of a cluster of five companies

that are all incredibly knowledgeable.

It was a cluster formed by people who

knew each other and each other’s

strengths. The product is now due to be

shipped over to Bangladesh.”

This year, Energy Intellect posted

record results. But the company knows

it cannot be complacent. It sees some

great opportunities ahead, particularly

in the field of Green Tech. With

energy shortages and environmental

The company dipped in and out of

a few other opportunities in Australia

and Asia in the following years, which

helped it to prepare for its first big

export opportunity.

“When we formed Total Metering –

the forerunner to Ei – the focus at that

stage was in the New Zealand market.

But then we got an opportunity for our

first export. It was a million dollar deal

for one of the first independent power

companies in Malaysia. We’ve now had

them as a customer for more than 10

years.”

While Malaysia was a successful step

for Energy Intellect, it was its move

into Australia that transformed the

company.

“Going into Australia has been the

best thing that’s ever happened to

us. We’ve done well over there,” says

Gowans. The market across the Tasman

now makes up 40 percent of the

company’s revenue.

Energy Intellect’s latest big move has

seen the company return to Asia – this

EXPORTER 51

CUSTOMERS GET A

DIFFERENT LEVEL

OF ATTENTION

THAN THEY

WOULD FROM

LARGE MULTINATIONALS FROM,

SAY, EUROPE. THIS CAN PAY

BIG DIVIDENDS FOR SMALLER

COMPANIES.”

concerns growing, Energy Intellect is

transforming its business to supply

energy and environmental monitoring

and control services.

This will lead Energy Intellect into

new areas: measuring temperature,

flow and other metrics that relate to

the efficient use of energy and other

valuable resources like water and gas.

Ei is hoping to leverage off these

developments to help it launch into the

United States, where energy issues are

high on the agenda. But Gowans admits

the US will be the company’s biggest

export challenge yet.

“We do see the US as the next logical

market. The opportunity there is at least

200 times the size of the New Zealand

market. But it’s a hard nut to crack. It’s

going to take courage and conviction to

get there.”

www.energyintellect.com

To discuss advertising opportunities call Leanne Moss on 09 477 0368 E leanne@exportermagazine.co.nz

Coming up in the Nov/Dec issue of Exporter:

• INTELLECTUAL PROPERTY

A special feature that examines exporter-

specific intellectual property issues. Exporter

will present the viewpoint of New Zealand’s

leading IP experts on the rules, regulations and

laws governing intellectual property – including

the issue of brand protection in your target

markets. A must-read for exporters keen to

protect, exploit and enforce the full portfolio

of IP rights.

• INSURING YOUR EXPORTS

Insurance for export consignments during

transit is vital and often a condition in a sale

agreement or letter of credit. This special

feature explains the insurance categories and

options for cargo and transportation insurance.

It shows how exporters can get the best value

for their insurance dollar and minimise the risk

of goods being damaged in transit.

52 EXPORTER

Scullys Home & Body ProductsSCULLYS HOME & BODY PRODUCTS manufactures

quality New Zealand made, hand finished bath, body

and home products, distributed throughout New

Zealand and the world. The product range includes

soaps, creams, shower gels, massage oils, talcum

powder, lotions, waxes, handwash, candles, room

sprays, bath salts, bath fizz, bath milk and gift packs

to suit any budget. All available in a range

of fragrances.

In 2012 Scullys Products will be celebrating 20

years of 100 percent New Zealand made, high quality

body, bath and home products. Gerry and Judy

Scully founded the company in 1992 after a visit to

the Yuulong Estate, a commercial lavender farm in

Australia, provided the inspiration to set up their

own venture. They planted their first seeds on the

family farm, now known as Raumai Grange Lavender

Farm, situated five kilometres from Bulls.

After much hard work and a lot of old-fashioned

can-do attitude the Lavender Farm turned into

a blossoming business. The essential oil distilled

from the two hectares of English Lavender

(LavendulaAngustifolia) was used to make their

own brand of lavender products including mustard,

vinegar, lip balm and hand cream.

The company has grown from the old farm

woolshed to a factory in Bulls, now concentrating on

bath, body and home products. Judy is the creative

director and Gerry manages the business end.

Scullys are a local icon (‘scent-a-bull’) with the

gift shop in town and the company supports local

kindergarten, schools and businesses.

Scullys Products has continued to grow. Other

fragrance ranges developed include Bulgarian Rose,

Lime & Basil, White Gardenia, Scullywags (baby),

Perfection (facial care), the Chefs range, Gardeners

Therapy and Moonlit jasmine with fresh mint.

The company employs five sales reps visiting 350

stockists nationwide, and distributes to Australia,

Japan and England.

Gerry and Judy’s products are made as naturally

as possible using the finest ingredients available

– including 100 percent pure essential oils, cold

pressed oils and hand picked flowers and foliage.

The hand-finished products are never tested on

animals and no animal products are used in the

manufacturing process (except beeswax).

FOR MORE INFORMATION VISIT WWW.SCULLYS.NET.NZ

I F Y O U H A V E A N I N N O V A T I V E P R O D U C T Y O U W A N T T O T A K E T O T H E W O R L D , E M A I L E D I T O R @ E X P O R T E R M A G A Z I N E . C O . N Z

EXPORTER LOOKS AT INNOVATIVE NZ PRODUCTS SEEKING A WORLDWIDE AUDIENCE

GLOBAL STAGE

52 EXPORTER

ENZO NutraceuticalsENZO Nutraceuticals Ltd produces

and markets Enzogenol pine bark

extract as an ingredient and in

finished product formulations.

Enzogenol is a 100 percent

natural extract from the bark of

New Zealand grown Radiata pine

trees; a broad-spectrum polyphenol

extract, high in OPCs, with

exceptional antioxidant and natural

anti-inflammatory properties.

ENZO uses an internationally

patented pure-water extraction

procedure that is environmentally

friendly and delivers the broadest

range of healthy polyphenolic

compounds from the bark in their

unaltered, most active form.

ENZO is committed to providing

its customers with solid scientific

research on Enzogenol and to

secure intellectual property around

novel uses of the product.

In collaboration with New

Zealand and international research

institutes, ENZO has carried out

extensive research on Enzogenol

including chemical studies, animal

trials and four human clinical trials.

Positive outcomes of these trials

have been published in scientific

journals, two New Zealand patents

for Enzogenol have been granted

and other patent applications

are pending.

ENZO Nutraceuticals Ltd

has a strong commitment to

New Zealand and its pristine

environment, since this is where the

company sources its raw material

from. The company is also strongly

committed to continuing the

scientific research on Enzogenol.

These commitments are reflected

in the company motto “Fusing

science and nature for better

health”.

FOR MORE INFORMATION VISIT WWW.ENZOGENOL.COM

OR WWW.ENZOPROFESSIONAL.COM

AquaceuticalsAQUACEUTICALS NZ LIMITED is a

New Zealand registered company

focused on “Healthy Choice

Beverages”. Its sales and marketing

strategies cover both local and

international markets.

Aquaceuticals is a major

shareholder in one of New Zealand’s

largest premium water companies.

Water is drawn from the Otakiri

Aquifer source in the Bay of Plenty,

one of the world’s deepest, oldest

and most remarkable artesian water

sources which has been carbon

dated at 1800 years old.

The water has a naturally high

silica content which has been

shown to have significant health

benefits. It’s naturally low dissolved

solids content means it is one of

the softest waters in the world and

it contributes to its taste profile,

which consumers remember and

look for again.

Aquaceuticals utilise custom

designed bottles and boxes for

both the local and export markets.

Products include 10-litre and 5-litre

Water in a Box, UNZ 1.5-litre plastic

bottled water and UNZ 500ml

plastic bottled water.

The products are currently

featured in New Zealand’s largest

supermarket chain.

FOR MORE INFORMATION VISIT WWW.AQUACEUTICALS.CO.NZ

EXPORTER 53

54 EXPORTER

Encouraging bright sparks would

seem an obvious idea but how

do you take that spark and ignite

it when it comes to encouraging

exporting ventures?

Geoff Whitcher, the founder of

entrepreneurial training programme

‘Spark’ and the Auckland University

Business School commercial director,

believes it requires ideas, mentoring

and money. He says that without this

combination each will come to nothing.

Geoff has, with business incubator

ICEHOUSE and venture capitalist ICE

Angels, united business with students

and academics by bringing companies to

the Auckland Business School with real-

life issues that students can help to solve.

The companies get the benefit of sharp,

fresh minds and the students get real-

time, real-life problems to consider.

Spark consists of two challenges – the

$100k Challenge and the Ideas Challenge

(www.spark.auckland.ac.nz/)

The Spark Challenge, which is in its

ninth year, is New Zealand’s premier

business planning competition. It is a

launch pad for students and staff from all

disciplines to transform their ideas into

real businesses.

If entrants make it to the top 12 they

are selected to develop business plans

to be presented to judges, followed by

a Dragon’s Den style pitching session to

test their communications skills, before

waiting to see if they have won a share

of the $80,000 cash and prizes up for

grabs. Part of the prize is a six month

residency with The ICEHOUSE.

Each year Spark has fostered the

creation of more than 75 start-up

companies which have raised more than

$50 million-plus in funding, creating

around 230 jobs and between them

selling products in 22 countries.

“It isn’t enough just to come up with

> V I E W P O I N T

Harnessing the entrepreneurial spiritCatherine Beard celebrates the new entrepreneurial eco-system in this country that is helping to raise the exporters of tomorrow.

a business idea. You need to tap into

what we now call ‘angel’ funding,” Geoff

explains. “You develop ideas and the

people behind them need to know how

to attract money.”

A range of people who have been

through Spark have gone on to start

companies with great potential. Power

by Proxi, for example, and online

bookseller Fishpond came out of the

Auckland University business incubator.

One of the students is working on a new

procedure for wound healing and is in

the second stage of testing in the US.

Geoff told me that what is particularly

noticeable coming through the Business

School is the crossing of the bridge

from the desire for a knowledge-based

economy, to making connections

between science knowledge/ideas and

money. He says this takes time and some

countries have taken 40 years to get to

where we are now after ten years.

The Technology and Innovation

network (TIN) Index clearly illustrates

the growth in this area. Back in 2005 as

a new network there were 50 companies

involved in the technology and

innovation area of exporting and now it

has 200 companies.

Datacom, for example, is now a

$700 million company. Home-grown

technology businesses are mushrooming.

Companies like the Gallagher Group,

and Fisher and Paykel Healthcare are

bringing a new dimension to the New

Zealand economy.

It is cutting edge ‘clever’

manufacturing that is starting to give

a good return and this return leads

to more growth, more ideas, more

exporting and, hopefully, more money to

invest in other companies.

In terms of nurturing potential

exporters, I’d like to see Spark taken

up in other Universities because

entrepreneurs are the business leaders

of the future and we need more of them.

Programmes like Spark give potential

entrepreneurs the courage and support

to take that leap of faith and help make

those important connections with other

business people.

Imagine how much New Zealand’s

fortunes would improve and how much

more money would be reinvested in New

Zealand if we could produce more Sam

Morgans, Peter Jacksons, and Jeremy

Moons? Sure, New Zealand’s exports

are underpinned by our agricultural

and commodity exports and that will

hopefully be enduring. But with only

about 200 companies producing around

80 percent of our exports, we clearly

need to spread our risk and develop a

more diverse exporting base.

New Zealander’s are known to be

innovative and have great ideas; but

NZTE research has also indicated we are

not so good at commercialising our ideas

and we are pretty risk averse. Imagine

all the talent we could unleash if we

empowered young people to consider

the entrepreneurial path, with the right,

support and mentoring right through the

education system.

New Zealand now has incubator

investors, business schools and ‘Dragon’s

Den’ type competitions emerging,

including a secondary schools robotics

competition. Bring it on! In a globally

competitive marketplace we need

to be innovative to stay ahead of the

competition. Entrepreneurs are good

at spotting opportunities and very

focused on solving their customer’s next

biggest problem, sometimes before the

customer. The entrepreneur eco-system

is a hub for future growth and where our

new successful exporters will emerge.

Catherine Beard is executive director

of Export NZ. www.exportnz.org.nz

Q1: How do I develop the right

strategy for entering the US

market? I know the strategy I used

to establish myself in New Zealand

won’t be applicable there.

A : From Bridget Liddell, North

America Beachhead chair and

general partner Fahrenheit

Wellness Fund.

EXPORTER 55

From the Beachheads

It’s certainly important to customise

your strategy, but much depends on

your product or service and the area

of the US you are focusing on. For

example, in the Pacific Northwest, less

adjustment may be required than in

other areas of the country.

A key aspect of your strategy

is your choice of business model.

Strategies that focus on building a

full business, rather than relying on

revenue models, typically yield much

higher returns. Companies that use a

distributor as their primary interface

are vulnerable if there is a change in

that relationship. Loss of a distributor

leaves the company with no

embedded knowledge of the market

and no deep relationships with local

customers or consumers.

But companies that have built a

team here and established those

relationships have a more robust,

sustainable and value-enhancing

model. It takes longer to establish,

and is more resource-intensive, but

should at least be properly evaluated

at the outset.

Your strategy has to address the

size and sophistication of the market

and, critically, the people resources

required. New Zealand’s most

successful companies in the US rely

on local people with experience in the

industry and overlay good leadership

from New Zealand. They transfer the

New Zealand culture to the US to

retain the company’s unique spirit

but access enormous networks by

recruiting in-market people.

Your reference points for

developing your strategy should be

other New Zealand companies that

have succeeded and the support

> V I E W P O I N T

New Zealand Trade and Enterprise’s Beachheads programme is a global public-private partnership designed for high-growth New Zealand businesses looking to succeed internationally. The programme connects participants with expert advisors who have the knowledge and networks to help them achieve international growth. Beachheads advisors are successful private sector executives who are committed to sharing their knowledge and experience by offering pragmatic advice and insights into the realities of doing business internationally. Below, three Beachheads advisors answer questions on doing business in the US, South America and India.

56 EXPORTER

available from the likes of Beachheads

advisors and New Zealand Trade and

Enterprise. New Zealanders tend to

go it alone, without referencing the

people who have gone before them

and the networks available to support

them. They can waste time, money

and opportunities, as well as incur

greater risk than is necessary.

Q2: What are some of the best

investment opportunities

in India that you think New Zealand

companies are well placed to become

involved in? How should they explore

these further?

A : From Peter Hassan, India

Beachhead advisor, Hon Consul

General for the Russian Federation

in Hyderabad and consultant on

Government Relations

Prime Minister John Key’s visit to

India in June 2011 set a wonderful

roadmap for New Zealand business

people to follow. The response from

his Indian counterpart has been

equally overwhelming, positive and

focused. New Zealand can play a

role in every conceivable aspect of

India including aviation, automotive,

animal husbandry, banking, hotel and

transport, dairy, drugs, science and IT

industries.

You need to choose an opportunity

where you feel most comfortable

and then “date India”. Find the right

partner, make a commitment, make

your presence felt and then follow

up. Treat India like you play rugby

– economic aggression will take

everyone towards the goals. You need

tenacity and willpower. Suspicion,

apprehension and indecisiveness need

to be overcome.

India’s rules and regulations can

surely be addressed and understood.

Use the connections of the India

Beachhead and the fantastic oppor-

tunities New Zealand Trade and

Enterprise presents. They should be

fully utilised.

The structure of New Zealand

companies gives hope and promise

but many companies need more

aggression, speed, focus and deci-

sion-making ability. You can’t dot

every ‘i’ and cross every ‘t’ in India

– it’s not possible, the country is

moving too quickly. It is growing at

almost nine percent per annum.

Sharing the same language allows

us to know where we both stand and

where we should stand. Both Prime

Ministers want us to treble trade. That

means more jobs, higher incomes and

better opportunity. I will be telling my

contacts in India that New Zealand is

here to stay.

Q3: My company has been

exporting to Australia for

a number of years and we now feel

we have the scope to broaden our

expertise to new markets. We are

looking at South America. How

should we go about it?

A : From Martin Cartwright, South

America Beachhead advisor

The market potential can be very

large but you should take gradual

steps to enter successfully. Travel to

the countries you would like to target,

and then choose one of them to start

with.

The challenges are great and

the language barriers and cultural

differences are marked. All

precautions should be taken care

of, such as looking for advice from

trustworthy sources.

Look for possible partners or locals

with good knowledge of how things

are done in New Zealand and how

business should be done locally.

It is essential that you have a good

and comprehensive business plan.

This is the fundamental building

block of what your company wants to

achieve, how you will achieve it and

when it should be achieved by. The

company’s strategy is then set out.

You must be in it for the long

haul, weather the ups and downs of

the entry stages and be prepared

for surprises and some instability.

You must also have the funds and

resources – not many things in life

are free!

It is ‘a must’ to have a comprehen-

sive knowledge of the market and

how it works. For example, if a local

tells you, “We will meet up in five

minutes”, that can usually mean one

hour or more.

The use of local knowledge and

business networks are of great

importance. Relationship building,

and the building up of trust, will be

critical. In Latin America, it is such an

important aspect of doing business.

Never sign any binding contracts

without the once-over of a trusted

and knowledgeable lawyer.

The market is there – it is a question

of doing it right.

For more information about NZTE’s

Beachheads programme visit

www.nzte.govt.nz/beachheads

STRATEGIES THAT FOCUS ON BUILDING A

FULL BUSINESS, RATHER THAN RELYING ON

REVENUE MODELS, TYPICALLY YIELD MUCH

HIGHER RETURNS.”

EXPORTER 57

In part one of a two-part article Andrew Sayers outlines the

migration of opportunities from Australia to Asia and the help

available to exporters wanting to establish a presence in Hong

Kong or Mainland China.

A

is for Asia

TThe global financial crisis

(GFC) has had a significant

impact on New Zealand. Many

sectors have been on

the receiving end of this

economic slowdown. Spending

patterns have changed drastically,

and commentators are predicting

that these new behaviors are ‘the new

normal’ for our economy.

With the New Zealand market

producing reduced revenue for a

significant number of businesses,

many are looking for ways to fill

the shortfall, or grow their existing

operations. We are fielding an

increased number of enquiries about

export markets and opportunities,

with the view to either export to

these markets or to establish a

presence offshore.

While New Zealanders tend to view

themselves as savvy exporters, it is

interesting to note that we actually

export less as a percentage of GDP

than most other OECD countries. And

while our largest export market

is Australia for a number of good

reasons, it will come as no surprise

that we are seeing a significant

increase in interest in relation to the

Asian markets.

Over the past few years, we

have assisted many New Zealand

businesses establish themselves in

Australia, which is great destination

for a company to commence its

international expansion. Kiwis

know how similar Australia is to

New Zealand: it has few barriers to

entry, a familiar legal and corporate

framework, and similar customer

demands. It is also the closest

geographic market, meaning

that getting there is easy, and

transportation of products between

the two countries is quick (although

often not that cheap).

However, there is a lot of

competition to most of our exports

from Australian manufacturers,

growers and service providers. The

latest economic data has shown a

recent slowdown and Australians

are a parochial bunch and generally

prefer to support the Australian

suppliers. For these reasons, Australia

may not be suited to some Kiwi

exporters and business owners

going forward.

We have also worked alongside

many businesses exporting to or

setting up in the Asian markets – in

particular Hong Kong, Mainland

China and Singapore. These countries

are perceived as more difficult

markets to enter by many New

Zealand business owners for all the

reasons that Australia is easy. There

is the language barrier, the cultural

differences, the different legislative

and commercial environment and the

geographical distance.

But are these fears justified and do

they really provide an impediment

to doing business? After all, many

Asian economies have experienced

consistently strong growth

> V I E W P O I N T

58 EXPORTER

throughout the GFC, the market is

enormous and many economies have

a natural love for New Zealand’s

produce and our clean, green image.

China, in particular, represents the

second largest export market for New

Zealand, taking over NZ$4 billion of

products for the year ended 30 June

2010. Dairy and wood make up half of

those exports, and food and beverage

are seen as large growth markets.

Many commentators are predicting

that on current growth rates (in

conjunction with the dismal US

economic outlook), China will become

the world’s largest economy within

this decade.

HELP IS AVAILABLE

So once a New Zealand entrepreneur

determines that Asia offers a market

for his or her product/service, what

next? For the purposes of illustration

I’ll focus on Hong Kong/China, but the

principles can apply to any market.

It is imperative that if you want

to establish a presence in the Hong

Kong and China markets you don’t

try to do it alone. There are too many

obstacles and differences between

the cultures, and the ‘she’ll be right

attitude’ will most likely not work in

Asia. Furthermore, it is not necessary

to reinvent the wheel.

There are a large number of trade

organizations and existing businesses

with enormous experience operating

in this space. Here are just a few of

the ones I/my clients have used.

A starting point is New Zealand

Trade and Enterprise (NZTE) (www.

nzte.govt.nz). Whether considering

exporting, entering new export

markets or internationalising a

business, NZTE offers a range of

programmes to help you succeed,

and are well established across Asia.

Their offices in central Auckland

have well informed and helpful staff,

many of whom have had commercial

experience in particular markets. Their

training courses (I have attended

the China one) are both relevant and

practical.

NZTE has offices throughout

Asia. I have visited their teams in

Hong Kong, Shanghai, Guangzhou

and Shenzhen. Each office houses

a trade commissioner or consulate-

general who can assist with advice

from ‘inside’ the market. I have

worked alongside some of these

trade officials and can attest

to the significant expertise and

knowledge they have about their local

markets. Not only do they understand

how business is done in the market,

they also have strong industry

knowledge and can provide market

intelligence to gauge the market

potential of your product/service.

I also recommend you consider

joining local business councils

and associations to network with

like minded business owners,

professionals, bankers, brokers etc.

These associations are passionate

and knowledgeable about the

opportunities. For example, I am on

the executive of the Hong Kong New

Zealand Business Association (www.

hongkong.org.nz). This Association

holds numerous networking functions

annually, organises training and

trade seminars, and provides direct

access to the relevant Hong Kong

Government agencies that facilitate

trade. The New Zealand China Trade

Association www.nzcta.co.nz) also

allows you a similar experience, for

direct access into China.

Whilst there are too many agencies

to list, a good example of a Hong

Kong Government agency is The

Hong Kong Economic and Trade

Office (www.hketosydney.gov.hk).

The HKETO in Sydney is the

representative office of the

Government of the Hong Kong

Special Administrative Region,

and was established to strengthen

economic ties with Australia and

New Zealand.

If your target market is Hong Kong,

you can start your exploratory journey

by meeting the HKETO staff in their

Sydney office (or connect with them

here as they often travel to New

Zealand). They will arrange meetings

for you on your visit to Hong Kong,

and assist with establishing an office

there, or connecting you with the

relevant people. These services are

free and easy to access.

Another Hong Kong Government

Agency, the Hong Kong Trade

Development Council (HKTDC) can

connect you with reputable suppliers

across Hong Kong and China, and

again, in many instances their services

are free.

Here I have listed a few of the

dozens of organizations that I have

used to assist my clients to conduct

business in Asia. However, there

will be dozens, if not hundreds, of

others throughout Asia that offer

similar products and services. I hope

I’ve illustrated the enormous body

of knowledge that is available to

Kiwi exporters and I recommend

you utilise them fully to assist with

strategy and direction, and de-risk

your offshore trading opportunities.

In the next issue, I’ll focus on

trading structures available to

exporters once it is determined the

Hong Kong/Chinese market is right

for their offering, and they want to

create a legal presence there.

Andrew Sayers is head of Asian

Business and principal – tax

consulting at WHK. Email andrew.

sayers@whk.co.nz

WHETHER

CONSIDERING

EXPORTING, ENTERING

NEW EXPORT MARKETS

OR INTERNATIONALISING A

BUSINESS, NZTE OFFERS A

RANGE OF PROGRAMMES TO HELP

YOU SUCCEED, AND ARE WELL

ESTABLISHED ACROSS ASIA.”

EXPORTER 59

Grumpy growth pains

> M A R K E T WATC H

WITH ANZ’S CAMERON BAGRIE

Recent global events are a timely reminder that the recovery from the 2008 financial crisis was always going to be a long journey. New Zealand looks better

placed than most but welcome to the post-GFC world of grumpy growth.

It has been a brutal few weeks for

the global economy. We have seen

equities drowning in a sea of red ink,

commodity prices retreat, measures

of risk capitulate, and growing fears

of another financial crisis around the

corner. Markets have performed more

somersaults than a gymnast.

If there has been a silver lining it’s

been the decline in the NZDUSD, though

it remains expensive on our fair value

metrics.

On some levels, we are hardly

surprised by global developments. Why?

• Our sovereign risk analysis had been

warning of further problems, especially

for some big nations such as Italy.

• Deleveraging (debt reduction) has

always been a precondition to the global

economy returning to a sustainable

recovery path. However, there is now

more debt in the global economy than

prior to the 2008 event, with lower

private sector debt offset by a massive

rise in government debt.

• Markets are notorious for ‘tipping’.

Throw together the combination of

slowing US growth, a credit downgrade

for the US, and worrying European

sovereign debt concerns that go well

beyond Greece, and we seem to have

simply ‘tipped’.

• Our ‘bathtub with waves’-shaped

economic cycle analogy to depict

the post-financial crisis economic

environment (a long journey with a few

ups and downs) still applies. We have

never been uber-bullish regarding the

global economy.

• We are putting some of the volatility

down to the market finally ‘getting it’.

The post-financial-crisis trend rate of

growth for a host of Western nations

must by necessity be lower than

seen previously. That’s the reality of a

deleveraging environment. A different

trend growth rate means a different

secular outlook for earnings and asset

prices in general.

That said, there are some disconcerting

signs:

• Policymakers’ arsenals have been

seriously depleted over the past few years.

• There are signs of stress in money

markets (though not dislocation such

as in 2008).

• Political gridlock is not helping things.

Markets are looking for solutions. The

US Federal Reserve has already stepped

up to the plate, promising to keep the

Fed Funds Rate low until the middle of

2013. Most now seem to be waiting for

the ECB to do its part as well and expand

its balance sheet further. This is both

logical and illogical. It’s logical because

it seems inevitable. The cupboard looks

pretty bare otherwise. It is illogical

because central banks should not be

expected to bail out fiscal irresponsibility,

which is effectively what is happening in

huge parts of Western society at present

(though to be fair, a host of governments

have had to ‘socialise’ debts associated

with the 2008 financial crisis).

Getting the correct balance between

the two arguments is one reason we

are seeing a game of chicken play

out around the globe. Markets are

demanding solutions. Central banks

know they need to act. But it is not their

job to bow to market demands, nor to

support fiscal profligacy. Pump priming

is hardly the ‘structural’ solution to

ensure sustained economic recovery; it

has been done in various forms since the

1990s. All it seems to have achieved is to

lead to increasing indebtedness in both

the private and public sectors, and a

larger problem to eventually confront.

We now need to see decisive

leadership as opposed to populism. We

are sure the phones have been running

hot in central banks, treasuries and in

political circles. Liquidity stresses in the

market can be solved. Policymakers have

the tools. However, it is the solvency

aspect to various nations’ fiscal positions

that ultimately need to be addressed.

And you do not address such challenges

by minor tinkering and bowing to

populism.

Of course, not every economy is facing

the same challenges. China, for example,

continues to see strong growth, as does

much of Asia.

Exporters must focus on the big

picture. It is imperative that the New

Zealand economy rebalances and we

focus on earning more and keep our

spending aspiration in check until we

unlock the income story. Pricing signals

(the secular trend in commodity prices,

the tax system, attitudes to saving, the

NZDAUD, etc) are progressively moving

into place, though not all are assisting

with the NZDUSD – the key frustration.

We are witnessing not just a cyclical

downturn across the global economy

but also massive structural changes.

Western society is facing a decade of

penance and will underperform. Asia

will outperform, though we need to be

prepared for the odd bad year: emerging

market economies will not expand at

exponential rates.

The NZD is presenting some

challenges. It will continue to do so.

However, the long-term pecking order

for currencies is simple. Asia is top and

their currencies will face continued

pressure to rise. The commodity bloc is

next, courtesy of direct linkages to Asia.

The USD is third and the Euro last.

These are the secular trends. The rest

is noise.

Cameron Bagrie is the chief economist

at ANZ New Zealand.

This years’ election can deliver

a change in our economic

framework and address an

already significant debt problem.

Elections over the past couple

of decades have tended to be contests

of who can give the largest handouts

rather than a legitimate policy contest.

This one must be different.

A debt blowout caused by the

Canterbury earthquakes, combined with

uncertainty over the debt positions of

a number of European nations and the

US, make policy decisions made now

vital to our economic future. There is

still the potential for another Lehman

Brothers sort of collapse if one of the

European countries defaults on debt

payments, and even excluding that

possibility, markets in the northern

economies are likely to be depressed for

a considerable time yet.

More borrowing means more upward

pressure on the exchange rate and

a reduced return for export activity;

that means less ability to pay back our

debts.

There has been no significant reaction

to the recession, the earthquakes or

global risks in terms of measures to

address our debt problem. Politically

difficult issues such as the entitlement

age for national superannuation, and

any meaningful monetary, fiscal or

welfare reform have been conspicuous

by their absence. Simply increasing debt

is unsustainable and hoping for growth

to save us is very risky.

The optimistic debt path built into

the last budget depends on significant

growth in the face of a long run

contraction in the real economy, and as

shown in the following table, Treasury’s

growth predictions have been far from

reliable. A more conservative debt path

is needed to accommodate the likely

setbacks as the global crisis plays out.

> V I E W P O I N T

Policy change, not handoutsWith the election looming, John Walley has been looking for policy change from the parties that could help lift the export sector.

CHANGING THE BALANCE

In spite of a changing world, a lot of

rhetoric about rebalancing the economy,

and some helpful advice from working

groups, we have seen little policy

change from Government in this term.

When looking at policy change

it is useful to think about what sort

of activity in the real economy New

Zealand needs.

The table below shows there are

differences in the impact of different

activities. It also shows the resource

dependence, and obvious expansion

limitations of primary production – jobs

and growth beyond that constraint

depends on the ability of our economy

to add value to what we have, be it

primary production or a good idea.

Draw your own conclusions, but

jobs flow mostly from the ‘added

value’ sector – to get more of that

activity requires more investment. The

contraction of this sector of the economy

since 2004 demonstrates a long run

disinvestment. To reverse this rundown

in the real economy, policy should be

targeted at a realistic and stable exchange

rate (one we earn, not borrow).

The solution is not one single thing,

but monetary policy reform targeted

at controlling inflation in the domestic

economy and lower borrowing is the start

of the reform process.

Other countries are taking action to

control their exchange rate whether

through quantitative easing in the US and

the UK, capital controls in Canada and

Brazil or direct currency management in

China and Singapore.

While our policy makers ignore this

problem the export sector will continue

to suffer.

We have already seen some movement

from political parties with Labour

proposing changes to the tax system and

making a commitment to rewriting the

Reserve Bank Act. We look forward to

further announcements.

John Walley is Chief Executive of

the NZ Manufacturers and Exporters

Association.

60 EXPORTER

General Manufacture

Dairy FarmSoftwareCompany

Sales $10,000,000 $850,000 $1,500,000

Capital Employed $3,000,000 $4,500,000 $50,000

R&D Spend $1,000,000 $0 $300,000

Jobs 80 2.6 6

Associated Jobs 5 times 5 times Not many

Exports 50% - 90% 90% + 95%

Natural Hedge 20% - 50% Some Little

Volume Growth 2011 10% 2.6% 17%

Revenue Growth Negative ~18%* 7%

Footprint 500m2 1,350,000m2 100m2

Ron Scott warns company directors not to be complacent about their responsibilities.

Governance responsibility: are you up for it?

EXPORTER 61

> V I E W P O I N T

On more than one occasion I’ve heard

directors of small companies comment

that they are protected by limited

liability and not concerned should their

company be sued. The argument is that

the company has no or limited assets

and will simply go into liquidation.

It is clear that many directors are not

aware of their responsibilities or indeed

their liabilities.

WHO IS A DIRECTOR?

One does not have to be called the

director to be one! According to section

126 of the Companies Act 1993 a person

is a director simply if they act like a

director “by whatever name called”. So if

you have cheekily asked your spouse to

be the director while effectively running

the show yourself then you might not be

in the clear.

WHAT DOES A DIRECTOR DO?

The board of a company (which

might be just one director) “has all

the powers necessary for managing,

and for directing and supervising the

management of, the business and affairs

of the company.” (Section 128)

If you delegate decisions to an

employee you must remember that you

are still responsible.

If you delegate you must have very

clear evidence that it was reasonable for

you to expect that person to be capable

of doing the job.

If the company does anything wrong

(for example, builds a leaky home) then

the director is liable. The director must

act in good faith. The fact that I heard

the comments about how they would

use the limited liability provisions might

be evidence that those directors were

not acting in good faith.

You must take due care as a director.

This includes keeping on top of what

you need to know as a director. You

must be able to act as a reasonable

director should. Therefore:

• Do you read trade news about

your industry?

• Do you attend networking

opportunities to keep aware of external

developments?

• Do you take the opportunity to

attend seminars on changes in policy?

• Do you read the company accounts

properly and ask questions on things

you don’t understand?

The Act says that the measurement

is what the director knows or ought

to know. Just because you didn’t get

around to reading the accounts doesn’t

mean you’re off the hook.

A competent builder might be

expected to follow the installation

instructions for a product to avoid

leaky homes.

There is a raft of regulations and laws

with which any business must comply.

There are some general legislative

requirements and many industry

specific rules.

TAXATION

A company is a taxpayer and therefore

is treated like any other taxpayer. Where

a company acts in such a way that it

cannot meet its tax liabilities the IRD

may be able to collect those taxes

directly from directors.

You are responsible for making

sure that the company pays taxes

including PAYE, GST, FBT, provisional

tax, withholding taxes and so on.

In practice, this means that you will

probably employ an accountant. Notice

their statements which let them off the

hook! If the accountant does not accept

responsibility then who must? The board

of directors!

The IRD is able to recover taxes from a

director when:

• The company has entered an

arrangement resulting in the company

not being able to meet its tax liabilities,

and

• The director knew or should have

known that a tax liability could have

existed.

Each director is jointly and severally

liable. In other words, if the other

directors can’t pay but you can, then

you will be deemed liable for the whole

liability. If you are invited to join a board

then you might want to check the

arrangements the other directors have

made to protect their assets – and do

likewise yourself.

So a director has major

responsibilities. The liability for getting

it wrong can be steep. Here are some

examples of penalties:

• The directors who vote in favour

of a distribution must sign a certificate

saying that immediately after the

distribution the company will still be

solvent. Maximum penalty for not doing

so? $5,000.

• Forming a cartel. Maximum penalty

$500,000 (per director).

• Making a false statement about

the company or its ability to trade.

Maximum $50,000 or up to two years

imprisonment.

Being a company director, even

in your own family business, has

significant responsibilities. A limited

liability company largely protects

against business risk – but only if you do

everything to the letter of the law. Hand

on heart – who does that?

Ron Scott is MD of Stellaris Limited,

specialists in business education and

management training. Email rscott@

stellaris.co.nz or visit www.stellaris.co.nz

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EXPORTER 63

Stephen N. Anderson offers a broad-based viewpoint on how to best approach new export markets.

New market entry strategy: not for the inflexible

> WO R L D V I E W

I t is a seductive logic that plants

the seed of replicating successful,

current business practices into

the plan for entering a new

market. It seems to make sense.

Why tamper with success?

One good reason for challenging

this logic is to reduce the risk of

expensive failure and eroding the

three “Cs” - Confidence, Cash and

Customers.

A new market entry consideration

should start with a blank page and

ask - What is the opportunity? How

large is the market? Who are the

competitors? Do we have the right

product?

How much time to success?

Determining the opportunity is, of

course, the first step, and it requires

solid data and some analysis.

Let’s consider, for example, what

is the opportunity for supplying

oilfield equipment or raw cotton

or automobiles to China. Zepol

Corporation, an industry research

organization, provides a data based

window into a variety of sectors.

China exported $1.1 billion in oilfield

equipment to the US in Q3-2008, a

high point, followed by two quarters

of similarly high levels. For anyone

watching this market growth starting

in 2007 when it was $608 million

in Q1 of that year, the run up would

have drawn a lot of attention and

looked like an opportunity for a

supplier of replacement parts,

services, or transportation for Chinese

manufactured oil equipment. Today,

however, it has declined over several

quarters to

$175 million.

Down markets are also

opportunities.

Raw cotton exports from the US

to China grew from $466 million in

Q3-2008 to $1.2 billion in Q1-2011.

Passenger cars, new and used,

exported from the US to China grew

from $277 million in Q3-2008 to $1.2

billion in Q1-2011. There is opportunity

in analyzing facts like these in

preparation of anyone developing a

new market entry strategy.

64 EXPORTER

THE FOUNDATION OF A STRATEGY FOR A

NEW MARKET STARTS WITH UNDERSTANDING

AND MATCHING YOUR BUSINESS TO THE

OPPORTUNITIES IN THE MARKET.”CASES IN RETAIL: PAYING CLOSE

ATTENTION TO CUSTOMERS

Retail is a business highly sensitive to

market nuances that are more easily

and quickly recognized than in other

sectors, and it therefore provides

good examples of new market entry

experiences.

The history of British retailer

failures in the US stands out because

it is counterintuitive. On the face of

it, the business and social cultural

issues between the two countries

are minimized. It should be a “piece

of cake”, but it is not. Common

language and similar cultures, with

“similar” being the operative word

here, is the problem. Most companies

entering a country where the

language and culture are different pay

closer attention to, and respect, the

differences.

US retailers entering the UK find it is

more competitive than expected and

costs, including commercial rents, are

higher. Those facts should not be a

surprise.

Carrefour, the French foodmarket

retailer that today has 9,000 stores

worldwide, tried to enter Japan a

decade ago and made it known that

it would revolutionize retail in that

country. They did not succeed in

achieving their proclamation and as

of September 2011 does not have a

presence in Japan. Japan is recognized

as a particularly hard market for

retailers.

Carrefour has been successful

in many other foreign markets by

reinventing the range on offer at its

local stores. Ten years ago, Carrefour

was convinced that the Japanese

would love a French shopping

experience. Japanese shoppers,

however, wanted a broad range of

fresh produce that they could buy in

daily consumption quantities.

Acquisition generally has been

considered as a risk reduction, fool-

proof way to enter new markets.

Walmart’s acquisition of Asda has

been successful primarily, it is thought,

due to the fact that local management

was kept in decision making positions.

WHAT TO LOOK FOR IN

COMPETITION

The foundation of a strategy for a

new market starts with understanding

and matching your business to the

opportunities in the market. The top

three topics are:

• Internal Capabilities: What are the

core strengths and weaknesses of your

product and services.

• Competitor Financial Health:

How healthy is the competition?

• Market Information: What are

the size, growth, names, products

purchased, their customers, their

suppliers?

Most companies are skilled at doing

their own SWOT analysis on ‘Internal

Capabilities’. ‘Obtaining Market

Information’, depending on the size of

an organization, is accomplished by a

combination of professional research

conducted by firms familiar with the

market and first-hand information

gathered by the Company itself.

‘Competitors’ Financial Health’ is

elusive if it is not a public company, or

is a division of a public company.

Rapid Ratings International Inc. is

an independent source for corporate

financial health. It has a blue-chip

list of customers who rely on its

analysis of their suppliers’, customers’

and competitors’ financial health.

Their reports are current and offer

more advanced insight than Dun &

Bradstreet or Standard & Poors.

(Rapid Ratings was founded in New

Zealand in 1997 and developed there

by economist Dr. Patrick Caragata,

executive vice chairman. The business

was bought by Dr. Caragata and a

New York City based professional

financial group. HQ is now in the US

with technology remaining in New

Zealand, R&D in Australia and Quality

Assurance in India.)

If a competitor’s financial health

is good, and they are in a new

product or geographic market under

consideration, that information must

be included in a new market strategy

for two basic reasons: (1) they have

sustainability in the new market,

and (2) if the market opportunity

information looks positive, the

new market may contribute to the

competitor’s financial health.

If a competitor’s financial health is

not good, according to the analysis

by Rapid Ratings, it has limited

resources and sustainability in the new

market. That needs to be put into the

new market strategy planning and

questions added to market research

such as: How long has the competitor

been in that market? What is the

approximate market penetration?

What is wrong with their strategy,

according to their customers?

When a competitors’ financial health

in a market under consideration is

not good, it suggests that the market

may not be good and more needs to

be known about what they have done

in the market; size of the market; and

what were the product or strategy

faults according to their customers.

While every industry and every

business regards itself as unique,

there are more commonalities than

differences between companies and

industries than anyone cares to admit.

When entering a new country or

market my advice is to think like a

startup. There are limited or no sales,

no organizational infrastructure

experience and most important, little

knowledge of the market.

Stephen N. Anderson is managing

partner of the Marquis Advisory

Group LLC, based in San Francisco,

California. Email steve.anderson@

marquisadvisory.com

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