Archive for the ‘Exports’ Category
This post started out focusing on the lack of ambition of our businesses and politicians, but noting one honourable exception – the Kiwi IT sector.
That led to BigCake wondering what has become of all this IT ambition. Unfortunately not much, from a national big-picture perspective anyway. For sure, there’s heaps of IT businesses whose results match their ambitions, but I’d guess there’s an equally big heap where reality has fallen short.
That sort of lead to the question: why’s that? Is our IT sector a bunch of dreamers or is something else going on?
And that got me thinking about how the debate regarding what’s holding our exporters back has changed in the last decade or so.
Anyway, as mentioned BigCake has been a bit obsessed by a lack of ambition around the Kiwi shop which just seems at odds with our pioneering past, though the more he thinks about it, not so much.
One group of Kiwis not so inhibited is the IT sector. What’s happened in this sector (with its abundance of dreams, energy and ideas) brings home the magnitude of the problems facing globally ambitious Kiwi companies.
If ambition was sales…
Latest export sales stats show the sector has been going backwards from $1.6 billion in 2006/07 to $1.4 billion in 07/08. Domestic sale increased a bit over that latest period.
As a result, you have to wonder whether our leaders have now given up on IT, and other high-value sectors, because they’re too hard and instead have gone and put most of our eggs back in the agriculture/commodity basket.
It’s the path of least resistance, but it’s also a risky one as the last 50 or so years have shown.
Back in 2003 the ICT taskforce came out with a set of targets for the industry to achieve by 2012, including:
• More than trebling the number of employees to 125,000
• More than doubling the sector’s contribution to gdp to 10%
• A 625% increase in the number of $100m plus IT companies to 116.
To get an idea of how big a leap the last one was, there were only 15 companies in the $50 – $100m bracket at the time. Just 16 had already made it. I think this target was later (sensibly) modified to be less focused on a number of companies and more on the 10% of gdp target.
Anyway, they’re not going to happen.
For the taskforce these targets were not aspirational – the collective wisdom of some of the brightest minds in the ICT sector (Peter Maire, John Blackham, Ian McCrae…) was that it could be done…provided there was a “serious commitment to change”. Which of course never happened.
The NZ Institute’s latest report “A goal is not a strategy” also goes into this issue of our inability to ‘walk the talk’.
It’s interesting to compare what the ICT Taskforce saw as the constraints back in ’03 with what the institute now sees as the problems holding back high-value sectors like IT (acknowledging they’re got different approaches).
BigCake sees the changed diagnoses as a sign of how the export support debate has moved on.
The issues, as the taskforce saw them, were:
1. The shortage of commercialisation skills and experience to go global
2. The supply of appropriately educated graduates. The taskforce was particularly worried about the need to “inspire and engage with tomorrow’s ICT talent”.
3. Celebrating our ICT heroes
4. The regulatory environment.
For sure, they were big problems back in ’03 and in the main, are still so today. However, in today’s debates on how to grow exports, the taskforce’s constraints seem a bit self regarding, internalised and maybe naïve.
Are they really the heaviest anchors on the ICT sector’s ambitions now, or even back then? Would a 2010 taskforce consisting of Rod Drury, Sam Morgan etc produce a completely different the set of constraints?
Dunno. Let me know.
In a “Goal is not a strategy” the NZ Institute has come up with alternative diagnoses for sectors like IT that reflect where BigCake thinks the export growth debate has gone in the last couple of years (or at least gone in his head).
I’ve posted on this shift, or the need for it, before while looking at the work of people like economic geographer Philip McCann.
The guts of what the institute is saying is this: “Much more effort is required by New Zealand to establish the basis for success of wealthy small countries; that is having large exports of differentiated products and services.” (eg. IT ones)
Its list of constraints on achieving this is:
• Size and distance – “Other countries have implemented policies to help domestic businesses overcome the size and distance barrier challenge. New Zealand has not pursued the range of policy initiatives that other countries have, and all of these countries have been more successful in growing differentiated exports.”
The institute has looked at the support countries like Singapore, Korea, Denmark, Australia and Israel give their exporters to overcome their size and distance problems. We give financial support, but not R&D tax credits or exemptions, skill development help and we don’t do industrial park development.
• Infrastructure – “New Zealand scores relatively poorly on measures of infrastructure development, placing 35th in the world with the quality of roads, railways, and electricity ranking worse than the OECD average.”
• Exchange rate policy – while a floating exchange rate provides commodity exporters with a natural hedge, it is not so good for sector like IT. “Exports are usually priced in the currency of the destination market so the consequence of the exchange rate rising and falling for non-commodity exporters is that earnings fluctuate.”
• Picking winners – encouraging the development of the kinds of economic activity that are regarded as more valuable including sub-sectors and individual businesses.
• Supporting cluster development.
Yeah, so things have moved. The perceived problems now are more external or structural and as such much more difficult to resolve, in part because we haven’t really acknowledged how big the issue is.
Most of the above get a mention in the taskforce report, but don’t make it to the list of top-line issues.
So if you were on a 2010 ICT taskforce, what would be your top three problems and the related fix?
BigCake’s four big themes have been:
1. Economically we are in a hole
2. We need to recognise we are in a hole
3. We can extricate ourselves if we get our act together
4. NZ is still a pretty sh!t hot place, so while climbing out of the hole, we need to protect what’s great about living here.
Regarding numbers 1 and 3, the NZ Institute thinktank has been a major influence.
Following up on yesterday’s post. Below I’ve cherry picked facts from the institute’s latest paper, A goal is not a strategy, to show that NZ is in a hole. Many challenge the way we like to think of ourselves:
Innovation and education
• New Zealand has the highest proportion in the OECD (equal with Ireland) of highly skilled people living in other OECD countries.
• None of the 10 MBA programmes offered around the country focuses on developing the skills needed for international business success.
• In New Zealand innovation is often confused with inventiveness. As a result there is a tendency to think that if R&D output is increased then innovation will increase. Unfortunately for New Zealand, which is quite good at inventiveness, innovation also depends on successful commercialisation of the new way of doing things, and New Zealanders are not so good at this.
• New Zealand’s innovation and business sophistication score is low relative to the scores for many other advanced economies indicating there is great potential to improve innovation, and that doing so would lift economic performance substantially.
Agriculture
• In 1990 New Zealand had around five hectares of agriculture and forestry land per person; today it has less than three hectares per person. Population growth will reduce that further.
• Productivity per hour worked in agriculture is not very different between New Zealand (NZ$40) and Denmark (NZ$50). But in New Zealand the productivity of agriculture is around 83% of the average for the whole economy (NZ$48) whereas Denmark’s agricultural productivity is only around 47% of Denmark’s overall average productivity (NZ$106). Despite outperforming New Zealand in agriculture, agriculture is not the powerhouse of the Danish economy.
• Denmark and New Zealand have almost identical food and agriculture, beverages and tobacco exports per capita. However, New Zealand uses a greater share of its total workforce (6.8%) than Denmark (2.6%) to achieve the same result.
Entrepreneurship
• Two-thirds of New Zealand entrepreneurs are home based and tend to be ‘solo’ operators with few employees. Many of these people are satisfying their desire for independence, to be their own boss. These small independent businesses are likely to have quite low productivity. The relative abundance of these small businesses is therefore likely to be contributing to low overall relative productivity.
• New Zealand has too few highly skilled entrepreneurs targeting international business success. The shortage means the product of New Zealand’s inventiveness – large research output, inventions, and new business opportunities – is not being converted into international business success.
Exporting
• New Zealand’s exports have grown much more slowly than the OECD average partly because global trade in commodities (where New Zealand exports are concentrated) has grown more slowly than trade in differentiated goods and services.
• New Zealand’s most important sectors for exports are tourism, agriculture, and manufacturing. All three have average or lower than average productivity so simply growing these activities without also substantially lifting productivity would not lift GDP per capita materially.
• Commodities are well known for their cycles, and reliance on them would mean New Zealand would continue to be exposed to volatility and price shocks.
General
• New Zealand and Denmark have similar small populations yet the institute calculates that Denmark’s GDP per worker (NZ$170,386) is more than twice New Zealand’s GDP per worker (NZ$83,842).
• New Zealand’s manufacturing labour productivity is the same as that of agriculture, at NZ$40 per hour worked. In comparison, Denmark’s manufacturing labour productivity is almost 90% higher than New Zealand’s, at NZ$75 per hour worked.
• Despite strong doses of economic liberalisation, New Zealand’s GDP per capita remains lower than the OECD average and much lower than Australia’s. New Zealand’s private economy labour productivity is 57% of Australia’s.
• New Zealand scores relatively poorly on measures of infrastructure development, placing 35th in the world with the quality of roads, railways, and electricity ranking worse than the OECD average.
It’s a pretty big hole, but it’s one that we can get out of if enough of us accept we are in a hole. We also need to accept that something more needs to be done to get us out our hole than we are seeing at the moment.
In A goal is not a strategy, which everyone interested in the above issues should read, the Institute again sets out the case for change and the bare bones of an economic growth strategy. It says New Zealand needs to:
• Focus on the internationalisation of high value,differentiated export sectors
• Prioritise labour productivity improvement efforts on these sectors, and
• Reallocate resources from low to high productivity sectors.
[Photo credit - horslips5 via Flickr]
The NZ Institute’s latest discussion paper – “A goal is not a strategy – focusing efforts to improve NZ’s prosperity” – touches on one of BigCake’s observations about how this country attacks its economic growth issues.
We’re playing “bloody tiddlywinks” while countries, even of a similar size, play big boys’ games.
Tens of millions of dollar there, millions here ain’t going to make much difference.
As the NZ Institute says if a goal is important, then resources should be poured in to match. “Competing small countries are committing hundreds of millions of dollars to efforts they regard as strategically important.”
The Herald’s Brian Fallow has commented on the sizeable discrepancy between what NZ will fork out for its national broadband network (calculated to be $5-8 billion) and Australia’s A$43 billion.
“Canberra’s estimate is the equivalent of $2400 per Australian, eight times the per capita outlay of public money our Government is talking about.”
Fallow was making the point that “this does not, as they used to say, compute.” Someone is going to lose – the taxpayer and/or the consumer.
BigCake’s point is the difference in ambition – geographical and population differences aside.
A couple of years ago I wrote about how the then Labour Government was, under the heading of economic transformation, going to spend $3.6 billion over four years on infrastructure skills and R&D.
At the same time Ireland’s National Development Plan projected expenditure of NZ$105 billion on infrastructure alone over six years.
Whether either happened is not really the point – it’s just the gap in ambition (and the money backing it) that hits you between the eyes.
You see the small thinking in the current Government’s tens of millions approach to agriculture R&D.
As usual the NZ Institute’s work is packed with good grunty stuff on what’s wrong with our economy and what we can do to fix it.
“A goal is not a strategy” is focused on boosting the non-commodity side of the economy – “exports of differentiated goods and services, and helping firms overcome the barriers to internationalisation.
“New Zealand’s exports have grown much more slowly than the OECD average partly because global trade in commodities (where New Zealand exports are concentrated) has grown more slowly than trade in differentiated goods and services.
“New Zealand’s most important sectors for exports are tourism, agriculture, and manufacturing. All three sectors have average or lower than average productivity so simply growing these activities without also substantially lifting productivity would not lift GDP per capita materially.
“Other small countries are becoming prosperous by exporting differentiated goods and services and New Zealand must find a way to join them or find another strategy for success.”
A post on the performance of our ICT sector has been banging around my head for a while. The above looks like good context for a post.
Okay, if our businesses are not good at selling, how do we fix this? [The final in the ‘slow sell nation’ series…for now]
Going back to my first post on this subject – what would have changed the head space of the Kiwi manufacturer that pitched up on foreign soil, blind to everything but the sales opportunity it already had in the bag?
BTW – I’m using the word selling to capture the whole shebang of identifying a market, making something that matches what the market wants, getting the price right, promoting it, advertising, marketing and selling.
First up Kiwi businesses need to recognise there’s a problem. Too much good Kiwi ingenuity and invention goes down the drain because businesses don’t have the skills to sell their products and services properly.
Sorry, one step back – some simply don’t see the need.
Kiwi businesses are inclined to be all trousers and no talk – and proud of it.
For the last week of so I’ve been chatting to Ambrose Blowfield from specialist sales and marketing training company, the Marketing Company, which has worked with thousands of Kiwi companies over the years.
Ambrose says he’s:
a) “constantly impressed with both the passion and the technical nous of most business owners in whatever field in which they operate.” and
b) “…repeatedly disappointed to find out how few business owners in NZ have an active marketing plan to refer to in their business. In fact over 95% of the businesses we have met around NZ do not have an active marketing plan.”
As I say all trousers, no talk.
Kiwi businesses seem to be happy to invest in staff and innovation so they can create better and smarter products and services, or increase production, but not in anyone who can help get all this stuff out the door.
If you look at Government immigration and economic development policies, there looks to be a similar bias.
BigCake figures there’s no easy fix here. We’re dealing with powerful historical and cultural forces including:
o Immigration – our immigration history has left a cultural legacy that’s not well disposed towards selling. Famously our dream was to become “Britain’s farm”. Wave after wave of immigration was to fulfil this ideal.
o The DIY tradition – partly this arises out of our small businesses not having enough cash to do selling properly, but also it’s another part of our cultural heritage where we fancy as ourselves as all rounders, and experts and specialists are disdained .
o The No8 wire tradition – ‘it doesn’t matter how it looks as long as it works’. That’s okay for a farm gate made from wire and wooden battens, as long as you don’t try to sell one.
o ‘She’ll be right’ – errrr no.
o Lack of ambition – selling may mean getting out of your c0mfort zone. It takes a lot of planning and investment and at the end of it all there may be rejection. To do it properly you have got to want success bad.
So what can be done?
Ambrose says addressing the general apathy and fear of marketing among SMEs is a challenge.
He believes “we should use the sheep mentality theory to improve the situation in NZ. That is we simply need to target those businesses who are keen to make more money and are open to change first.
“Once we have many success stories as a country to see, then others will follow. Once the ‘need’ has been created, the challenge will then be for New Zealand to get large numbers of businesses through the marketing planning process.”
Another CEO of a largish international business BigCake spoke to makes a similar point: “I suspect a solution will look more like a gradual transformation.
“As firms succeed, others learn from – and emulate – those processes and attitudes that generated success.”
BigCake has got a couple of ideas too.
Firstly there’s the option of importing skills we don’t have to help build up a national sales culture.
We have been doing that off and on since World War II. We’ve shifted away from supporting “Britain’s farm” to creating a more urban, industrial future. The 1990s saw the start of a wave of Asian immigrants with commercial skills.
Policies like the Skilled Migrants Category, Migrant Investor and Entrepreneur Category have also given a commercial edge to selecting who is given NZ residence.
But BigCake’s not sure selling/marketing features as a targeted skill set. The Department of Labour’s long-term skill shortage list doesn’t mention these skills.
But it does include engineers, scientists, IT workers and trades people, people who make more stuff.
This is not a problem with the immigration service, but with businesses figuring out that having some selling skills on board could make a difference.
As one businessperson told BigCake: “Our businesses don’t see marketing as an investment, so much as a cost. As a design firm, we find cost-cutting mentality constantly preventing firms from taking up smarter, deeper, multi-channel approaches.”
These blinkers also appear to apply when it comes to demand for training.
In the NZ skill training market, it’s not clear whether training is demand or supply led, but a 2009 government review of management training programmes showed that none of 1000 or so management capability programmes had marketing or sales as their primary focus.
That’s not true as at least the Marketing Company is in there. So, not sure what was going on with that stocktake.
As I’ve said before, I think we need to keep the ‘slow sell’ problem in perspective – in terms of our laggard economic growth it’s not this that is killing us.
But BigCake figures it is hurting us a lot because being as bad (or good) at selling as other countries ain’t good enough. As a small nation at the bottom of the world, we’ve got to be that much better than everyone else.
And not enough people are acknowledging this.
So it’s a subject I’d like to return to.
The previous ‘slow sell’ posts are:
• Good makers, poor marketers
• “Britain’s farm”, not “a city upon a hill”
• What we need is sales promoters
• Research shows ‘slow sell’ not holding us back much, but…
[Photo courtesy Flickr]
Only just got around to reading the Sunday papers.
Amid the usual crap that makes BigCake want to cancel his subscription (‘cept for sport, ummm well actually not always) was a very angry piece by columnist Rod Oram which mirrored the frustration BigCake feels about the short sightedness and lack of ambition among many in the Kiwi business community.
Rod, a polite logical chap, rips into what he calls the “strategic ineptitude of NZ businesses. They are happy with a few crumbs from selling a bit of stuff to the real players.
“They are incapable of becoming big, long-term value creators themselves.”
Exactly.
A couple of weeks ago I did a post on how I’d mindlessly started tapping out something along the lines of there being a lot of examples of Kiwi companies who’d invested heavily in R&D, and as a result, were doing nicely in various international marketplaces.
True – there are heaps of little businesses that fit the bill, but as I asked: Name more than a couple that are household names?
Hamilton Jet and Fisher & Paykel Appliances maybe. The Gallagher Group? F&P Healthcare?
The thing is, the largest of these innovation-led, exporting businesses is under the radar resin maker Nuplex which comes in as NZ’s 21st largest business (by revenue). Then comes F&P Appliances (24th ).
The rest are nowhere.
As Oram says, the handful of big companies we do have – Fonterra, Fletcher Building – are legacies of earlier eras.
“Where are the next generation’s?
“…if we don’t figure out some way of turning this around “we don’t stand a hope in hell of building a prosperous, resilient economy”.
So how much is the ‘slow sell’ problem – that is our cultural blind spot regarding selling, salesmanship, marketing etc – actually putting a brake on our overall economic growth aspirations?
Unlike other serious issues we face, such as our low R&D spend and poor venture capital availability, it’s hard to get numbers to nail down how big a deal this really is.
However, World Economic Form research can give us a bit of a handle on where ‘slow sell’ fits among the economic problems that hold us back.
The forum’s Business Sophistication index (2008-09) looks at the sophistication of marketing tools and techniques of various countries.
It ranks us 21st in world with a score of 5.3 versus a mean of 4.2. (Australia scored 5.5.)
So our marketing ranking is not out of kilter with our wealth ranking. Putting a positive spin on it, our marketing/selling skills are not dragging us down.
It’s not this that’s killing us, though you could say selling matters more to us than most other countries because selling products and services from a distant small nation is relatively hard.
There are much more ugly comparisons in other WEF rankings such as R&D spend.
So we should keep the ‘slow sell’ problem in perspective.
All the same it still looks as though marketing/selling doesn’t to get much attention at all in business and policy discussions.
These instead appear fixated on making more stuff more efficiently.
Umm and then …What about selling it?
BTW – I’m using the word selling to capture the whole shebang of identifying a market, making something that matches what the market wants, getting the price right, promoting it, advertising, marketing and selling. And as business text books say, everyone in the organisation needs get this.
I’ve started to have a look at how to fix the ‘slow sell’ problem.
Previous ‘slow sell’ posts are:
• Good makers, poor marketers
• “Britain’s farm”, not “a city upon a hill”
• What we need is sales promoters
I’ve got some support from the field – that is Kiwi businesses – for my theory that as a nation we were at the back of the queue when it came to an ability to sell.
This has left us with a “cultural legacy” that’s out of place in modern international markets that reward commercial nous, skill in spotting business opportunities, professional marketing and salesmanship.
We have a variable record when it comes to these qualities, says one businessperson BigCake contacted.
Why?
The businessperson, who works for an international retail services company, says we’re generally resistive to sales pitches – on both sides of the counter.
“Look at the selling pressure on customers in markets, shops etc in most Asian countries. My market is retail – contrast the Asian approach where stores have generally young, female enthusiastic ‘promoters’ (this is their job title) as opposed to the cashiers who take the money.
“These promoters will do their very best to sell to you – the Kiwi psyche finds this annoying, intrusive and an invasion of personal space, especially in comparison with the disinterested ‘can I help you’ from behind the average Kiwi retail counter.”
And perhaps because of this ‘slow sell’ grounding, many Kiwis who go into business are like fish out of water when they pitch into international market places.
A second businessperson, observing Kiwi exporters in Southeast Asia, commented to BigCake “we’re quite good storekeepers of our own produce. We’ll happily sell when someone wanders past our farm gate. We just can’t be arsed properly going to market and seriously selling our wares.
“…its highly reactive and the exporters have no real control on the price they take, the brand, the sales channels etc”
Back to business person number 1: “As a nation we don’t embrace the showmanship in selling that is expected in markets like the US. This is not necessarily a bad thing, but it means we often under-sell ourselves,” says the businessperson.
Do the Flight of the Conchords’ tourism posters in Murray Hewitt’s office – “New Zealand – Why not?” and “Don’t expect too much – You’ll love it” – set the standard here?
Businessperson #1 asks whether this is a self-confidence issue. “Many Kiwis are very poor public speakers and this is probably worse in the technology sector, where a ‘brilliant geek’ ends up having to front a sale for a technical product.
“Also Kiwi sales people are often very poor at meeting commitments and following up. Maybe it’s the ‘she’ll be right’ attitude ? I’d hate to think it was laziness.
“When establishing our business I was very clear that although we were tiny and competing against major international brands, we could behave like a big brand. This meant clear branding, professional documentation, well-crafted letters and sales collateral that made us look professional and credible in the eyes of our potential clients.”
Plan to squeeze at least one more post out of this thread.
Check out the others:
The things you write without thinking.
I’d tapped out something along the lines of there being a lot of examples of Kiwi companies who’d invested heavily in research and development and as a result were doing nicely in various international marketplaces.
Okay, it’s true because there are heaps of little businesses that fit the bill, but try to name more than a couple that are household names.
Hamilton Jet and Fisher & Paykel Appliances maybe. The Gallagher Group? F&P Healthcare?
The thing is, the largest of these innovation-led, exporting businesses is under the radar resin maker Nuplex which comes in as NZ’s 21st largest business (by revenue). Then comes F&P Appliances (24th ).
The rest are nowhere though F&P Healthcare is steaming up the rankings.
If you have a look at these Kiwi companies’ counterparts in other small countries we get:
o Israel – Teva Pharmaceuticals #1
o Finland – Nokia #1
o Denmark – (drug company) Lundbeck # 3
o Ireland – (technology focused food group) Kerry Group #6
Australia’s list is full of finance and mining companies, but you get the picture.
If Kerry is there as an innovation-led exporter, why not Fonterra for NZ?
Well here’s Kerry describes itself:
“…a leader in the global food industry. We develop, manufacture and deliver technology based ingredients flavours and solutions for the food and beverage industry worldwide.”
Technology is all over the Kerry’s market positioning.
And Fonterra:
“Dairy is our life’s work and our strategy is to lead in dairy. We’ve built strong partnerships with other leading global dairy companies and we are co-operatively owned by 11,000 New Zealand dairy farmers.”
Mmmm.
I’ve posted before on Fonterra’s lack of commitment to research and development.
This is not pushing the idea that we need a multi-billion dollar high-tech exporter to match the size of Fonterra – a big bunch of companies doing $100 – $200 million will do just as well, and this is more feasible.
But these comparisons show how far NZ has got to go for the economy to escape the clutches of a commodity-focused export sector.
What type of activities do we spend our research and development cash on?
This is the last question (I think) in my R&D series looking at who are NZ’s big R&D spenders (the little guys) and international comparisons (not good but with a hint of promise).
So where’s the money being spent? I can’t find any real nailed-down evidence of this, but according to a couple of people who keep their eye on this type of question, most of our R&D dollars still go on increasing agricultural production.
According to Ministry of Research Science and Technology 2007 figures, about $100 million a year was invested in food and beverage research. (That’s not all the agricuture- based research.)
The Ministry says about a third of this money is targeted at innovative food products and technology.
How appropriate is this now?
Our scientists focusing on increasing production – extracting more from a finite land resource – served us fine when we could lay claim to being one of the world’s most efficient agricultural producers and had a reasonable expectation that this would continue for sometime. Obviously we did well in part because our science was so sh!t hot at making the most of the country’s already hefty advantages in growing conditions.
But that was then, this is now and aiming to remain a low-cost commodity producer is not the best way to get the most out of our natural competitive advantages.
As BigCake has written a number of times before, we’re going to get smashed by producers from China, Russia, Chile, Brazil and Argentina if we continue to try to play the low-cost game because they can produce food more cheaply than us.
Maybe we are already getting smashed. Fed Farmers head John Nicolson says he’s only made the average wage three times in the last 30 years.
That’s not to say food commodities have no place in the export mix, but they need to have a much smaller place.
Our opportunity is at the high-value end of the market, building on our established reputation as a producer of high quality and innovative food and beverages. And on our clean green image.
There have been small steps taken on the science path to back this up, for example the Nutrigenomics project looking at diet-gene interactions in the gut.
But at the moment sales of high-value food and beverage products are tiny compared to the commodity big boys. However the high-value segment is an incredibly vibrant space with huge numbers of small innovative export-orientated companies having a go.
Bizarrely, unlike most OECD countries, these companies didn’t have access to facilities in New Zealand to help with product development and testing.
The $21 million Food Innovation Network is designed to close that gap, opening up better access to R&D services for these little guys.
Adjusting to this new world will require a shift in what we spend our R&D money on. It will also require a change of mindset away from serving the trader mentality to one where the whole food and beverage sector thinks about what the world wants and how it is going to give it to them.
Following up on my previous post – the perils of 100% Kiwi-owned – NZ amphibious boat-maker Sealegs has made a strong case for more overseas ownership on its share register.
This is in contrast to the 100% Kiwi route chosen by Hulme Supercars which BigCake predicts will have dire consequences.
Sealegs CEO David McKee Wright says a further $6.2 million investment in the company by Mauritius-based private equity company, Avenport Investment Corporation, would bring an international focus to Sealegs. (Avenport already owns around 20% of Sealegs).
The new capital would fund international marketing, sales initiatives and the development of new models.
The Avenport offer is to go to Sealegs shareholders for approval. One to watch.
McKee Wright’s statement is an interesting contrast to the attitude of Hulme Supercars which is restricting its $2m plus capital raising efforts to NZ.
If you are thinking of donating, read on.
Both Sealegs and Hulme have global market aspirations – which would you back?
As previously mentioned Hulme Supercars, thanks to its 100% Kiwi policy, is destined to be underfunded, undermarketed and underbuilt – it will go nowhere – the fate of hundreds of other 100% Kiwi-owed businesses with global potential.
BigCake has found evidence that it’s already shaping up this way.
A Drive South story compares the Hulme CanAm Supercar with the McLaren MP4-12C – seemingly “racers of equal quality”.
Both sport famous Kiwi motorsport names, cost more than $500,000 apiece and will come into production in 2011.
But there it ends.
Drive South says “realistically only the Surrey-based McLaren operation, that already has a healthy pedigree of handcrafted, ultra-high quality low-volume road car production, is a safe bet.
“This, after all, is still the story of a minnow and a mammoth.
“Ability, experience, infrastructure, money, and a surfeit of championship-dominating Formula 1 boffinery and competition engineering to draw on, give McLaren Automotive every little thing it needs to realise its latest road-car dream.”
To be fair, Hulme Supercars don’t see the McLaren supercar as a direct competitor – they want to be more exclusive than that, instead aiming at the Pagani Zonda-buyer (ie. Producing about 10 cars a year).
Here’s another interesting comparison (and problem). While Hulme Supercar is starting from near scratch, and casting around for a few thousand dollars here and there to get its car on the road, Pagani is an 18-year-old specialist carbon fibre company that has worked with Lamborghini and Daimler.
But over at Hulme Supercars, the CanAm “in current form is a more rudimentary car than [even] the McLaren,” says Drive South.
“Although also mainly built out of carbon fibre, the Hulme uses fewer exotic materials overall, eschews almost all modern driver aids and the intended production powerplant, the 7.0-litre GM-sourced LS7 V8, is definitely ‘old school’ compared with McLaren’s self-designed engine.”
There’s a whiff of another perennial Kiwi international market deal killer, DIY, about McLaren that also doesn’t bode well.
Don’t plan to fail guys – get your sh!t together and listen to what Sealegs is saying.
