Jon Mayson, Chairman New Zealand Trade and Enterprise
Submission to Select Committee April 2009
Where we’ve come from and why
NZTE’s establishment in 2003 combined the resources and networks of TradeNZ, Industry New Zealand and Investment New Zealand, to help meet the challenge of lifting our economic performance.
Very early on NZTE realised that if New Zealand was to achieve the growth needed to lift our per capita GDP, New Zealand companies needed to have a greater engagement in international markets.
We needed more New Zealand companies competing successfully on the world stage.
We also needed more businesses exporting and the businesses already exporting to export more.
That is still very much the case.
The role of NZTE
NZTE needs to work with the right businesses, at the right time in their life cycle and in the best ways possible.
This focus has moulded our evolution – from offering traditional trade promotion assistance - to becoming an international award-winning agency that enters into partnerships with firms to provide services throughout their life.
In the last five years NZTE has learned a lot about the needs of businesses and has trialed a number of different ways to provide support.
We exist to de-risk the experience New Zealand companies have in doing business internationally, and to build the pipeline of companies that are willing and able to successfully export and grow their international business.
The biggest challenge we see is not a lack of international opportunities; it is the capability of New Zealand businesses to grow the critical mass and experience necessary to compete successfully in international markets.
For that reason NZTE does not try to support all businesses equally. We have developed a targeted and segmented approach that we believe delivers the right mix of services to firms in support of our economic development mandate.
This means focusing explicitly on those most firms likely to succeed in the short to medium term.
A difficult trading environment
The last year has been a particularly difficult international trading environment for these businesses.
While the media has been concentrating on the global financial crisis, NZTE has been looking at the implications for New Zealand exporters.
NZTE has been keeping close tabs on what is happening in our major trading markets, and has been using our international network to gather intelligence that we can share with businesses, with Ministers and with the policy agencies shaping the Government’s response to the crisis.
It would be fair to say that the outlook has been quite mixed, with some markets and industry sectors doing better than others.
There is no doubt that the economic crisis is hitting a number of our most important markets very hard.
But overall, the outlook for New Zealand exporters, and in-particular the clients that NZTE deals with, has remained fairly positive.
Impact on New Zealand business
Managing in an economic downturn is hard, many firms are struggling and some are already looking to withdraw from markets.
New Zealand businesses however, do not appear to be as badly affected as their competitors.
In fact we note that export prospects continue to be viewed positively by New Zealand businesses.
- The lower New Zealand dollar is making New Zealand products more competitive in overseas markets.
- NZTE clients tend to be among the most resilient New Zealand firms, and are already positioning themselves to take advantage of new opportunities.
- New Zealand’s export product mix may be naturally more resilient to shifts in consumer demand than some economies.
- The current situation may have shaken out key markets, removing weaker players and reducing competition for New Zealand firms.
However, there is no room for complacency.
We are seeing slightly less interest in opening up new markets, and quite a lot of pressure on businesses that are trying to maintain market positions. Keeping a presence in market is expensive, and businesses are trying to economise across the board.
The strongest New Zealand firms are looking carefully at their customers, and the strength of their positions. They are addressing which of their business lines are profitable, and which are most consistent with the core value proposition of the company. They are also using the recession as a pause in growth, to focus on profitability, strategy, and their future direction.
NZTE’s role during the recession
NZTE has a pivotal role to play in helping businesses to survive the current environment and ensuring they are positioned to take advantage when growth returns.
Despite the difficult trading environment New Zealand still needs to grow the number and size of successful exporting and highly productive companies if we are to achieve the economic growth objectives to which we aspire.
Our strategy hasn’t changed – we want to focus on working with those businesses which can deliver the best returns for New Zealand.
The focus for NZTE is still very much on encouraging New Zealand businesses to look outwards and succeed, or prepare to succeed, in overseas markets.
In this environment, that means helping businesses build resilience, retain their presence and relationships in international markets and be in the best position to grow out of the recession.
What is NZTE doing to support businesses in the recession?
We carried out research in January into the strategies that multinational companies have used to successfully survive global recessions. There are some important lessons in here for New Zealand businesses – we will be looking at our own support for businesses with these strategies in mind.
We contributed to the small business package announced by Government in February, specifically through training, the helpline, and health checks.
For the smaller business, we have made a major shift to the direction of our Enterprise Training Programme. The training courses are now focusing on survival, understanding cost-control, and how to ride-out the down-turn, while retaining a focus on strategies for growth and success during the recovery.
We have funded Biz New Zealand, and members of the Committee may have seen the current advertising campaign offering free support and mentoring services to business.
NZTE has also been involved in the development of new products being offered by the Export Credit Office.
We contributed to the Prime Minister’s Jobs Summit in late February and I am delighted that our suggestions around firm equity are being taken up.
We are joining with Export New Zealand to run a series of CEO forums in the regions. These are designed to allow businesses to share with each other the challenges and solutions.
We will generally be focusing on products and services that encourage productivity – Lean Business and Better by Design are good examples of this.
At the same time, NZTE’s overseas network is doing everything it can to help New Zealand companies in market. We are supporting whole-of-New Zealand promotional activity, and increasing the flow of market intelligence information to New Zealand businesses. We are also working directly with businesses in market to resolve payment issues, and to facilitate contacts and business linkages.
Our Beachheads programme remains active, and we are continuing to add services in Asia as part of our North Asia strategy.
NZTE has also revamped its website. www.nzte.govt.nz is intended to provide a first stop for any business contemplating exporting, as well as for experienced companies looking for new opportunities or new thinking that may help them take the next step in their business journey.
2008/09 highlights
Generally the last year was a busy one for NZTE, and I will mention a few highlights.
We were very heartened during the course of this year to have had MED undertake a review of the Growth Services Range – an evaluation that looks at the services provided to what NZTE classifies as High Growth Potential Clients.
This review for the first time provides solid empirical evidence that the suite of services provided by NZTE to its clients achieves a demonstrable positive return on investment.
We have continued to develop our strategic initiatives. These are multi-year activities that seek to address systemic barriers to growth within or across sectors, and to capture sector or cross-sector global opportunities. We see these initiatives as the ‘research and development’ function of NZTE. They enable us to trial products and services that we can then use more broadly in our work with companies.
These initiatives are derived from the work that MED and ourselves are continuing to do around New Zealand’s areas of comparative advantage, and I am confident that we are going to achieve real progress as a result of these work programmes.
NZTE started the year with a focus on Asia, particularly on China, following from the FTA, and in commencing preparation for Shanghai Expo 2010.
We opened the Shanghai Concept Centre, and are now focusing on helping firms to sort out their strategies in-market, and to work as hard as possible to help companies maintain their market share.
In the past year we have increased our focus on Australia, and as a result of the economic crisis, NZTE Board and management have agreed that Australia will receive still further focus, both as a springboard for established exporters, but also as a destination for SMEs that are looking to broaden their market opportunities beyond New Zealand.
With the economic crisis looming, inward investment interest has flattened off, and Investment New Zealand has, with the agreement of the Board turned its focus to ‘after-care’ - working very hard with clients, both in New Zealand and overseas, who either already have investments in New Zealand, or who may have previously expressed active interest in our market.
For a small country dependent on FDI such as New Zealand, visibility is very important, and we are working to maintain a strong presence among potential investors.
Looking to the future
We will maintain the momentum in the next year.
However, in the context of the Government’s priorities, the challenging environment for business and our own budget restrictions, we will ensure our approach is tightly focused, our activities targeted and our programmes tailored to give maximum benefit to companies doing business internationally.
We are focusing our effort where we can make the biggest difference to the New Zealand economy. This means making things happen that wouldn’t otherwise happen, or happen faster, bigger, with greater likelihood of success or more sustained success.
In the future we want to be much more flexible with our products and services and to offer businesses solutions tailored to the level of their international business engagement.
In the short term we want NZTE clients to grow faster and perform better than other similar firms.
We want NZTE clients to demonstrate improved capability – particularly to successfully export.
We want businesses to respect the quality of NZTE’s expertise and advice, rather than just seeing NZTE as a source of funds.
In the long term we expect to see NZTE clients well represented in export growth statistics.
We expect to see NZTE clients modelling the productivity improvements that we need to improve GDP Per Capita growth rates.
We have several high profile opportunities to look plan for in coming years, including our presence at the Shanghai Expo 2010 in China and the Rugby World Cup 2011 here in New Zealand.
Our role in preparing and supporting businesses to take advantage of these events, and the opportunities they present, will be significant.
Closing
The current turmoil on global markets doesn’t hide the need for more New Zealand companies to internationalise, to help grow the business, the economy and improve the living standards of all New Zealanders.
After reviewing the long-standing Export Awards last year we have revamped and launched the International Business Awards in the last month and are delighted that applications are coming in steadily.
Now more than ever we need to acknowledge and grow exporters’ contribution to New Zealand’s economy. Now more than ever we need to help them analyse their performance and build their skills to build their presence in international markets when growth returns.
As an organisation we are in a very strong position to do this.
We received a favourable follow-up audit report from the Office of the Auditor General in 2008.
We are also making significant advances in implementing our new Performance Measurement Framework.
Last year we achieved our vision to be seen as one of the world’s leading economic development agencies, with recognition at the World Trade Promotion Awards in the Hague as the ‘Best of the Best’ economic development agencies.
Our challenge is to continue our advances as an organisation and for our clients, in a changing global economy.
We are on track to achieve this in partnership with New Zealand businesses.
