07 August 2019
Andrew Ferrier / Chair of the Board
I always find it fascinating to see how commentators – particularly economists and financial journalists – describe a country’s financial success.
For a while there, New Zealand was the world’s “rockstar economy”. We were given that title by the chief economist for HSBC bank in 2014, and he was still arguing that was the case in April this year.
But in another recent article, Bloomberg called us a “canary”, along with Australia. The argument was that our small, trade-dependent economies and open capital markets mean that we often display the first signs of trouble for the rest of the world (as the canary is used to warn of polluted air in a mine).
How are we really tracking, and should we be content or worried? The latest statistics show that our growth has slowed from the high rates recorded in 2015 and 2016 to around 2.5%. The Organisation for Economic Cooperation and Development (OECD), in New Zealand recently to present its bi-annual survey, said there were two reasons to be worried: soaring house prices, and global trade tensions.
On the latter point, OECD Deputy Secretary-General Ulrik Vestergaard Knudsen pointed out that international trade grew about 5.5% in 2017 but the latest figures show that it's slowed to less than 1.5%.
At New Zealand Trade & Enterprise, we know all about trade tensions. Our job is help New Zealand’s export companies to succeed overseas - that way, our nation’s prosperity benefits everyone. But with rising tensions between the US and China, the Brexit debacle, and a sense worldwide that the benefits of rules-based global trade are not valued as much as they were only a few years ago, it’s simply getting tougher and tougher for our exporters.
Incredibly, that doesn’t seem to deter them. This country is blessed with some of the smartest, most practical and determined businesspeople you could ever wish to meet. What’s so special about the Kiwi exporter is that they take their inevitable knocks, and come back stronger, especially when it comes to understanding that they need to solve someone’s problem. It’s not enough to say I have a great product, you should just buy it; consumers around the world are spoilt for choice, so it’s our job to explain to them why New Zealand products and services really are the best.
We also encourage them to be positive and spend the time developing a clear story about the value they bring. As Prime Minister Jacinda Ardern heard first-hand in Australia last week, the investment community there knows that Kiwis have great ideas, but we’re not very good at selling them.
Call it a lack of confidence, call it humility – either way, it’s up to us to be great story-tellers.
NZTE has around half of its team of 600 people based overseas, across 40 offices. Many of them are locals, hired by New Zealand because of their knowledge of particular sectors, and how best to succeed in these markets. It’s a constant conversation – understanding the needs of the local consumer, adapting the product, building relationships with distributors, retailers, e-commerce platforms, hiring staff, checking contracts. Don’t let anyone tell you that exporting is easy, but thankfully we live in a country where the culture is to help each other.
The reality is, though, that we can only take this approach so far - that is, working with individual companies and, on occasion, groups of companies working as coalitions. And that’s why we are fully supportive of the Government’s decision to adopt a sector approach and develop Industry Transformation Plans. We need to utilise all the levers in our economy in a co-ordinated way, whether that’s funding for research and development, or the way we tell a collective story about New Zealand overseas.
We need to know that we are doing our best to create a truly competitive local economy. This is not easy given our small size, which tends to result in very few competitors in any one sector. After all, success in a competitive local market is usually a precursor to success internationally.
We need to be identifying and supporting the right companies as they move into high growth, we need to keep emphasising that we want them to sell premium, high-value products, and we need to help them target the right markets, which includes diversification across the world so we are not dependent on the health of any one economy or region.
We are also highly supportive of the Government’s regional approach. NZTE demonstrated - with tech hackathon run in Gisborne over the past two years, in association with Datacom – that regional centres are perfectly suited to attract and develop highly skilled workers in the digital economy. Why sit in Auckland traffic when you can live by the beach that sees the sun first, and without the need for a massive mortgage!
These same regions are vital in unlocking the massive potential of Māori and the Māori economy, which is why our Hack Tairāwhiti had such a strong indigenous focus.
I know there are many who focus on the dark clouds on the global economic horizon, but I’m not one of them. Perhaps that’s because I, and the rest of our Board, have the privilege to work with a great organisation supporting inspirational Kiwis. They will never stop being rock stars of the business world.
*An abridged version of this article first appeared on the Stuff website: