Archive for the ‘Exports’ Category
Grant Smithies in yesterday’s Sunday Star Times lists Kiwi bands currently performing overseas including:
- The Naked and Famous – UK
- The Phoenix Foundation – UK and France
- Ladi 6 – Germany
- Bachelorette – US.
He notes that they are taking the world stage without pushing the fact that they are from New Zealand.
“These bands are not approaching promoters in Berlin or Bareclona and saying “Please sir, let us play in your venue for we are keepers of the sacred flame that is NZ music”.
They are doing well on their own merits. But they are also doing it hard.
Kiwi bands are like many of our IT companies who find there is no value in even mentioning they are from NZ. In fact they know it can be a turn off. Unlike say, our food and beverage companies, there is no back story that’ll add value when it comes to pitching their wares.
With our food products there’s a trading history and ‘clean and green’ branding to help open doors for any businesses looking to sell globally.
For the international butter buyer there’s no mental disconnect when we turn up with a container of lard. “NZ – butter – no problem.”
Not so much for our musos.
History for our musos? John Rowles? Crowded House? Australian, Split Enz? Mmmm still Australian.
And unlike say Jamaica with reggae, Tennessee with country and western etc there’s no supporting national narrative they can plug into.
So for the international promoter confronted by a Kiwi band it’s “you can’t have much butter in that van”.
Same for IT companies.
Which is why the support act of an international brand matters a whole lot to a range of Kiwi international businesses, ranging from manufacturing to music.
Smithies’ piece was basically in support of NZ Music month. He argues that though its original aims have been achieved, it’s a great opportunity to note how far NZ music has come.
As an on-going reason to hold the Month, this is a bit underwhelming and self regarding.
I still reckon organisers should lift their sights and encourage our musos to grab their guitars and go global – big time.
Let’s create a new narrative.
Should NZ be worried? Walmart in the US says it will double sales of locally sourced produce.
It’s part of what ING says is a revolution in marketing and sales.
And it’s being led by supermarkets which have become defacto regulators of the products on their shelves, across a raft of issues from water use to carbon emissions.
The Walmarts of this world do this because that’s the way they see consumer demand heading. I’m picking Walmart, for one, is not doing this out of any deep-held sustainability principles – they just want to sell more product.
NZ farm leaders grizzle like hell about this, but they are picking a fight they won’t win.
Walmart’s global sustainable agriculture strategy gives you an idea of what in many cases will soon be standard purchasing practices in our food and beverage markets. The supermarket giant will by the end of 2015:
Support farmers and their communities -
• sell $1 billion globally in food sourced directly from small, medium and local farmers;
• provide training to 1 million farmers and farm workers in such areas as crop selection and sustainable farming practices – the company expects half of these farmers to be women; and
• raise the income of farmers it sources from by 10 to 15 percent.
Produce more food with less waste and fewer resources -
• invest $1 billion in its global fresh supply chain to help deliver fresh, quality food with a longer shelf life to its customers
• reduce in-store food waste by 15 percent in our emerging markets and 10 percent in all other markets, using 2009 as the baseline year; and
• develop a Sustainable Produce Assessment for producers in our Global Food Sourcing network; launch pilot in 2011, to better understand energy, water, fertilizer and pesticide use per unit of food produced.
Sustainably source key agricultural products -
• require sustainably sourced palm oil for all Walmart private brand products globally;
• and only source beef from Brazil that does not contribute Amazon deforestation.
Some of this may look a lot like greenwashing, and contradictory, but as they say, “fake it til you make it”.
Our “dirty” farmers should do the same.
Liked this quote from Kiwi of the Year Sir Paul Callaghan:
“It’s dead easy for Kiwis to be a success in New York, London, but it’s bloody hard to be world-class and to take on the world from New Zealand the way Peter Jackson has done.
“I’d like to see that attitude change, but it takes a bit of effort and imagination.”
I think he’s nailed it with his comment about Kiwi individual success in the big wide world. BigCake too has had these almost embarrassing moments, far from these shores, of “how did I get here” (in my small world anyway).
Friends I’m sure have (or have had) similar thoughts. In many cases it just seems too easy, maybe natural.
What ain’t easy (or I think natural) is, as Callaghan says, setting up an export business of international standing in NZ.
How come? There’s the distance thing – physical and psychological – of course, but BigCake’s theory is that there’s a cultural thing going on as well.
I did a series of posts on the Kiwi cultural legacy comparing the founding of the US and European settlement of NZ.
Our dream was not “a city upon a hill” (a centre of learning) but to become “Britain’s farm”.
Back to Sir Paul’s comment – for some reason, individual Kiwis are very good at marketing or selling themselves in places like Melbourne, Sydney, London, New York wherever.
But get them to market a NZ business in these places…not so much.
BTW – Sir Paul’s idea of a shift to a weightless, knowledge economy (from the commodity one we’ve got at the moment), raises the bar for international success. Commodity exports come naturally.
Love this description of what we export – “agricultural integrity”.
For the Kiwi food and beverage industry, this is both the biggest and most basic value add available.
The quote is from chef Robert Oliver, who was based in the US where he created a number of restaurant ventures including Mandalay Bay in Las Vegas one of the largest restaurants in the US. He now works out of the New Zealand business centre in downtown Shanghai.
The centre includes a demonstration kitchen and bar area for food and beverage promotions and a multi-purpose function and event space. Oliver is also working in a number of other China cities including Beijing, Guangzhou and Shenzhen.
Anyway in his blog The prodigal chef he says, “I know that the New Zealand ‘story’ is that of a small nation of producers with agricultural integrity, and I saw quickly here in Shanghai that this is also what we exporting.
“New Zealand offers not only fine product, but a sense of trust. A small producer nation, a good environment, products with genuine integrity.
“In short, everything that bigger nations do not.”
A couple of months ago I posted on a similar theme with Geoff Ross saying: “Provenance matters in brands more than ever”.
The founder of 42 Below, who has now also gone into the beer business with Moa, says: “In two weeks time I will be in the US selling Natural Home Fragrance and Bath products. I can tell you, in doing this, I am glad I am from NZ and not China or India. NZ’s environment gives us an advantage. It’s time to make this advantage bigger.”
A Ministry of Economic Development report makes a strong plug for the farm over pharm path to our economic salvation.
Ummm…unless the pharmaceutical ingredients come from the farm. (Using pharm as a term to describe the knowledge economy path).
The report, done by Coriolis consulting, makes the case that we need to add more value and processing to our food and beverage exports, building on our competitive advantages in growing and breeding stuff.
BigCake has in recent times (ie once he got out of the grip of the Knowledge Wave, memorably described by Vincent Heeringa as being similar to a Youth for Christ rally) favoured the farm path. While obviously not an either or situation, NZ has have limited science dollars so we need to aim where we’ll get our biggest bangs for bucks.
And that I’m afraid is concentrating on leveraging off our natural and human competitive advantages in things like the life sciences and food and beverage value add.
And the Coriolis report claims there is a lot of slack in our F&B performance. On a export per capita basis we do okay, but we perform poorly when it comes to F&B exports per square kilometer – “…we would appear to have ‘spare capacity’ to export more.”
Denmark achieves around $600,000 of export dollars per sq kilometre; we manage around one tenth of that.
Less available farm land and falling overall animal numbers, Coriolis says strongly suggest that the path to exporting more F&B in the future is not just ‘more of the same’.”
And there’s been a bit of that going on.
Coriolis says that “despite sending meat to the U.K. for over 120 years, we own no major in-market processors.
“In many traditional sectors, New Zealand has failed to forward integrate along the value chain, as this example from the meat industry shows.”
BTW – The impact of the Knowledge Wave with its focus on a weightless economy has been pretty dismal, at least in terms of changing the makeup of our exports. According to Corialis, food & beverages as a percent of New Zealand’s total export value rose between 2000 and 2009 from 44% to 53%. (In 1940 they were 67%).
Coriolis also makes the point that F&B is the only way we are going to get the scale needed to hit our target of matching Australia’s income by 2025. To get there we need to at least double our exports per capita and that means adding another US$40.1 billion in export sales by 2025 at an annual growth rate of at least 6.2% per year (more than the past 15 years – 4.9% – but less than historical rates).
“We don’t need to invent an industry from scratch. Processed foods are happening. They are a trend achieving solid double digit export growth over a long timeframe (i.e. they are not a fly-by-night fad).
“There is currently a shift underway towards more value-added processed foods.
“Processed foods exports to Australia are not just large, they are also growing rapidly; interestingly, our Australia processed food exports took-off in around 1999.
In general, New Zealand processed foods are growing faster in Australia than elsewhere; many of these categories represent huge potential opportunities for New Zealand if we can “crack the case”.
Build it and they will come is a common fallacy among NZ businesses.
How come?
Owen Scott from technology marketing company Concentrate says in a look at Energy Mad and their low-energy light bulbs: “If being brilliant at making bulbs was all [they] could do, it wouldn‘t have been enough to so comprehensively defeat huge companies such as Philips in the NZ market”.
Scott’s Dom Post piece says Energy Mad have grasped the “elusive marketing truth that business success is not about what you produce, but what you deliver for the customer.
“More Mad Men of this ilk … are what NZ needs to prosper as an exporter of smart products.”
But why’s this truth so ‘elusive’?
BigCake’s theory is that there’s a cultural thing going on.
A while back I did a series of posts on the Kiwi cultural legacy comparing the founding of the US and European settlement of NZ.
The Pilgrim’s first ship, The Mayflower’s short manifest included tailors, a merchant, a doctor, printer and people of learning.
One of the early Pilgrims wanted to create a colony “as a city upon a hill”. New England went on to become a centre of learning, commerce and trade.
So we come to New Zealand – who are our immigrants and what’s their cultural legacy?
Famously our dream was not “a city upon a hill” but to become “Britain’s farm”.
BTW – there is evidence that by international standards we are not very good at marketing.
The World Economic Forum’s Business Sophistication index (2008-09) which looks at the sophistication of marketing tools and techniques of various countries ranks us 21st in world with a score of 5.3 versus a mean of 4.2. (Australia scored 5.5.).
Geoff Ross has once again nailed the importance of ‘clean and green’ to the branding of NZ products and services. Over in the other corner, mixed messages again from the farmers.
“Provenance matters in brands more than ever,” the founder of 42 Below says in yesterday’s Dominion Post.
“In 2 weeks time I will be in the US selling Natural Home Fragrance and Bath products [nice product placement Geoff]. I can tell you, in doing this, I am glad I am from NZ and not China or India. NZ’s environment gives us an advantage. It’s time to make this advantage bigger.”
In the same piece, which looks at Department of Conservation head Al Morrison’s call for a wider measure of our country’s progress than just gdp, Fonterra’s group director of external relations, Kelvin Wickham describes farmers as “caretakers of the land for generations”.
Now caretaker is a good word. It implies the farmers are only temporarily in charge of the land and have a responsibility to look after it for those who follow.
Most farmers are great at this, but what are they seeking to pass on? – It’s the farm as a profitable business.
Like Morrison said – “Creating an environmental mess is good for gdp.”
Or like the other Morrison – Jim – wrote more poetically:
What have they done to the earth?
What have they done to our fair sister?
Ravaged and plundered and ripped her and bit her
Stuck her with knives in the side of the dawn
And tied her with fences and dragged her down
[When the Music’s Over]
Okay, a bit extreme but I saw the result of this attitude to the land when I recently drove from Wellington to Turangi and saw the massive scars from slips on farmland. Farmers had been sacrificing the land for the extra dollar.
Some brands don’t implode because of a big cock up like BPs, they die a slow death of a thousand cuts which is what NZ’s clean green image is in danger of doing.
And the farm leadership, well Federated Farmers anyway, doesn’t get this – not really, like deep down. They say they do, but judge them by their actions.
The Fed’s President Don Nicholson for one appears antagonistic towards clean and green.
Given the opportunity to ask PM John Key any question he liked, Nicolson came up with:
“Do you categorically know if our assumed ‘clean and green’ and ‘sustainable’ brand is a primary reason why consumers in the growing markets of Asia, the Middle East and Africa buy New Zealand food products and if not, why not?”
Key gave a pretty much standard (and correct) answer about ignoring environmental concerns of customers at our peril, citing the UK, US and Europe, then saying the customers in the markets Nicolson mentions will eventually have similar concerns.
To be fair, not all farm leaders see the world in same way as Nicholson. Fonterra CEO Andrew Ferrier predicated his question on the need for an international consensus on how to increase economically and environmentally sustainable production. He asked how can we do both?
Which is a much better question.
It’s a question that a few great minds have pondered: why are we so good at international sport but not so good at international business?
Our sports people regularly punch above their weight in international events (for example rugby, rowing, sailing, triathlon); our exporting businesses not so much.
Individual export companies manage the trick, but it’s not something you can say of the export sector in general.
As mentioned in yesterday’s post on the Southland rugby team’s success, our international sports people face the same basic difficulties as our exporters:
• Lack of size and
• Distance.
A couple of years back I did a piece for the Business Herald looking at this puzzle, which as I wrote, has produced a rich vein of discussion, like Saatchi and Saatchi boss and rugby fan Kevin Roberts mining of the All Black’s success in search of lessons for businesses.
In my interviews, ambition was identified an a big factor to explain the different levels of performance. It was felt a lot of business underperformance came down to differences in aspiration. In sport we are very focused on success. We plan and invest to be the best in the world. Business? Again not so much.
As was pointed out by former NZ Institute head David Skilling, there’s nothing about our dna that makes us fantastic rugby players or netballers.
But sports and businesses and surrounded by very different ecosystems. Our passion for sport has created a hot house for sporting achievement. Business? Again not so much.
But I also spoke to New Zealand Rowing chairman and businessman Bill Falconer who warned against making too much of comparisons between the international performances of our businesses and sporting people and organisations.
Falconer doesn’t believe the sports-business comparisons are totally fair. “To be successful in business requires a much broader agenda. You need greater resources in business to export, for example the huge capital investment involved.
“And it is hard to benchmark in business. In sport it is a little easier than in business – it is easier to measure, to see if you are up to it.”
Another thing that is different between business and sport is age. Sportspeople are young so it’s easier to make the high level of commitment needed for success on the international stage - they don’t have to worry about a mortgage or time away from a family.
The majority of managers of exporting companies don’t have that freedom, but like sportspeople have to spend large chunks of their time offshore.
An old BigCake idea is that our co-ops are a handbrake on our economy, particularly in the agriculture sector where co-ops dominate.
Mostly the evidence around this is circumstantial, though you could say Fonterra’s sluggish financial performance is strong pointer.
I think NZ Herald columnist Brian Gaynor is in this camp, but in today’s NZ Herald he also points out that farm companies listed on the NZX are crap generators of wealth too.
At the back of BigCake’s mind is that something is fundamentally wrong with the Kiwi agricultural business model. A pessimistic/fatalistic view would be that poor financial performance is unavoidable because it’s just the way the world is – it’s the price you pay for being caught in the commodity trap.
Okay this makes doing business tougher, but I figure it’s more than that. For some reason our farming sector seems largely incapable of taking advantage of the opportunities the world offers.
The best export businesses are outward looking – they see and deal with the world as it is, not the way they want it to be.
Most of the time farm businesses, farm leaders and farmers just don’t get this.
As a consequence, their business ventures (including farms) stumble along with long periods of crisis broken up by short periods of respite following acts of god such as commodity booms or falling exchange rates. Some just fall over.
Gaynor highlights the high attrition rate of NZ ag companies on the NZ Stock Exchange and their recent sh!t performance.
He points out that there are only four main board-listed agriculture companies:
• Affco
• Allied Farmers
• NZ Farming Systems Uruguay and
• PGW Wrightson.
They have a combined market value of just $850 million (1.5 per cent of total sharemarket capitalisation) compared with agriculture’s 40% export earnings.
The quartet have had an “average negative return of 58.3 per cent over the past two years, even though agriculture commodity prices have boomed and the benchmark NZX 50 Gross Index was down only 0.01 per cent over the same period.
“The average sharemarket return for the four listed agriculture companies over the past few years has been a negative 46.9 per cent. This excludes NZ Farming Systems Uruguay, because it didn’t list until December 2007.”
Gaynor points out that 30 years ago there were 23 listed agriculture companies. “Most of these companies have disappeared because they were unable to develop a successful business model and their profitability and sharemarket performance was poor.”
Another agriculture company that is about to disappear from sharemarket listings is Tasman Farms (the old Tasman Ag).
What are the biggest obstacles facing NZ business? Red tape, tax, not enough capital, labour laws…
At the moment I’d like to add broadband, which around here is down to dial-up speed.
Anyway, these are the usual barriers trotted out, but I liked the answer given by Jim Robertson of Tuapeka Gold Print, a central Otago company with “NZ’s largest range of promotional products and business gifts”.
Jim says: “The biggest obstacle is usually ourselves. We need to keep focused an enthusiastic, even when we don’t feel like it. You have to work through it and look forward to the days when it goes right and you feel like you are flying.”
The whole headspace thing in business too often gets overlooked.
By world standards it’s pretty easy to start up and run a business in NZ, as shown by the large number of people who actually do it.
Too many businesses complain about regulations – they’re often a lazy focus for bad businesses.
The good ones, like Tuapeka Gold, just get on with it. Being based in the middle of a (stunningly beautiful) nowhere, hasn’t stopped the Lawrence-based company being named the best NZ supplier in the promotional products category at last month’s Australasian Promotional Products Association awards.
The company employs about 70 people, which is almost one-fifth of Lawrence’s population.
A couple of years ago NZ Trade and Enterprise did some research (This way up) on the human factors (eg. aspiration and attitude) in exporting. It identified some underlying factors influencing an organisation’s propensity to export:
| Non exporter |
Exporter |
| Not confident |
Confident |
| Risk averse |
Risk taker |
| It won’t work |
Can do |
| Avoid failure |
Achieve |
| Seek certainty |
Seek challenge |
| Planner |
Opportunist |
Back to regulations though, I think they do have a psychological effect, particularly on small businesses who don’t have the resources to deal with them. When times are tough they just hate them even more.
Hat Tip – The Dominion Post Small Business Focus