National Office NZ needs to rekindle the fire to export THE EXPORTER OCTOBER 2007 - The Exporter/The Independent Financial Review,/strong>
Jon Mayson
The days of “she’ll be right” for New Zealand are over. Globalisation has seen to that. We can’t continue to justify our poor export performance by claiming the quality of life in New Zealand is our most important attribute.
Too often we take the view that earning foreign exchange, improving NZ’s trading position, investing in R&D or, more importantly, facing the assumed daunting spectacle of exporting are someone else’s issue.
According to research by David Skilling of the NZ Institute, despite our strong economic growth in the past 15 years, all we have achieved is a halt in our relative income decline compared with other OECD countries.
We are now 21 out of 30, about 90% of the OECD average. Yet New Zealanders work harder than most. Hours worked per capita come in at 112% of the OECD average. As Skilling notes, we are just not as productive as workers in other countries.
In simple terms, the value produced for each hour worked is 78% of the OECD average.
About two-thirds of New Zealand’s economic growth since 1990 is a result of growth in hours worked as unemployment has reduced and labour force participation has risen, Skilling found.
Our growth rate of 1% in the past 15 years is in the bottom quartile of OECD countries.
Add New Zealand’s isolation and we find that our exports-to-GDP ratio of 28% falls way behind the small OECD country average of 54%.
Foreign direct investment lags at 10% of GDP compared with the developed country ratio of 27%.
There has been little change in New Zealand’s export composition in the past 20 years: milk, meat and merino. There have been some innovative startups and diversifications and great success stories – just not enough.
To put it in perspective, 151 firms are responsible for 78% of our exports. Fonterra alone counts for 20% and the majority of its export volume is milk powder, cheddar cheese, anhydrous milk fat and butter, as it was 20 years ago. Only 590 firms in New Zealand export more than $5 million annually and only 17% of all NZ businesses had export sales in the last financial year.
Somehow, New Zealand needs to regenerate the urgency and commitment that we had as a nation in the 1970s when “export was king”.
It behoves all NZ businesses that are not exporting to seriously examine whether the opportunities are there to consider markets offshore.
It is often felt exporting is too difficult; there are issues related to foreign exchange and lack of understanding of foreign markets, but these issues can be easily resolved. Help is at hand.
New Zealand Trade & Enterprise was specifically set up to assist NZ businesses reach global markets. A potential exporter’s first step may be to set up an appointment with NZTE.
I would recommend Export NZ as one of the early ports of call; not just because I am national president. It is a national organisation represented and driven regionally specifically to serve exporters’ needs through membership of exporters and support services. That membership offers a wealth of experience, seminars and events to aide new exporters. Our focus is to work alongside NZT&E to enhance that environment.
No time will ever be ideal. We can’t continue to make the excuse that exporting will become an option when the exchange rate moves in our favour.
We need to shift New Zealand from complacency to passion for export, but for that to happen, we all must recognise we have a part to play.
If New Zealand is going to properly meet the challenge to compete globally, then we all must recognise the innovation we pour into the NZ market can potentially find a lucrative niche offshore.
Every year, when I attend the Export Awards around the country, I never cease to be amazed at the variety of world-beating firms out there. But how many more are waiting for someone to pull back the curtain?
The opportunities are there. What we need is a can-do attitude and a belief we can make a real difference. That’s the challenge we face. It’s up to us to take up the challenge – for New Zealand.
Jon Mayson is president of Export New Zealand