Happy Horizons

ship

Exporting has been a crucial part of New Zealand’s economy since colonisation. It was our whale oil that lit the lamps of 18th century Paris and our lamb served at the dinner table of posh Victorian households.

But since then our exports, and our markets, have changed dramatically. These days it’s dairy to Asia, meat to the Middle East and education, manufactured goods and wine to the world.

Bridget Gourlay scans a critical eye over foreign markets to look at what’s hot and what’s not in 2012 and beyond.

Asia

Asia is our exporting buzzword – it’s a heady mix of emerging middle classes starting to demand products we specialise in on an ever-growing scale. It’s possible to eat a New Zealand Natural ice cream in Singapore, or a slice of Hell’s Pizza in Seoul.

Make no mistake, China and India are the big two. Our FTA with China was originally projected to lift New Zealand’s export revenue from trade with the country by between NZ$225-$350 million per year. Far exceeding expectations, in the first year of implementation New Zealand exports to China increased by NZ$1 billion to $3.5 billion. This success has also meant China has eclipsed the USA and become our second largest export market. New Zealand exports in 2010 totalled $4.83 billion, up a staggering 33 percent on 2009.

Talks are underway for a free trade agreement with the other booming Asian economy, India. Currently the world’s 10th largest economy, its growing middle class and a youthful and increasingly well educated population offers a plethora of opportunities. Two-way trade is worth more than $1.2 billion per year and India has become our third-largest source of international students and 10th largest source of visitors. However, other markets offer an array of opportunity. With the recently-signed ASEAN (Australia-New Zealand Free Trade Area) agreement, we have better access to a number of growing and vibrant economies, such as Malaysia, Singapore and Indonesia. In all of these Asian countries, it’s food and beverages, high tech manufacturing and education that are doing well.

Europe  

It’s hard to turn on the TV or pick up a newspaper without reading about the serious economic situation in Europe. Headlines seem to always discuss the 125th bailout Greece has received. However, that doesn’t mean the continent should be discounted. New Zealand Trade and Enterprise (NZTE) regional director of Europe, Ann Chappaz says it’s important to remember how wealthy Europe still is. It’s a place “with high levels of GDP/capita, relatively low levels of household debt, and a very welcoming and low risk environment for doing business”.

She says European companies selling into global supply chains are posting comfortable profits and the tourism sector in Spain and France remains strong. “Furthermore, the need for cost savings means that New Zealand businesses offering productivity gains will be taken seriously, especially in the public sector.

“Businesses should listen to advice from their financial experts about how to manage the currency risk in Europe, but relative to many other markets, Europe still offers a large, wealthy market for New Zealand’s premium products and is a point of access into multi-national partners that can help take distribution global.”

USA

Another country that dominates the ‘economic gloom’ part of the news is the United States. Despite the fact our overall imports and exports with the US have fallen marginally during the past decade, it is still New Zealand’s third largest destination for exported goods (behind Australia and China).

The Land of Opportunity is still just that for Kiwi businesses. For example, NZTE’s recent report on the country shows the United States aviation industry is forecast to remain strong and continue to grow. Opportunities for New Zealand aviation companies continue to remain in the specialised equipment, niche aviation products and pilot training sectors. On the ground in the airports, companies offering security technologies and streamlined systems such as baggage handling operations stand to be successful.

Again, food and beverages are key. Research shows New Zealand has a positive image and reputation in the food and beverage space in terms of quality, safety and innovation. For example, the United States wine market is forecast to grow to 407 million cases of table wine by 2030 from the 282 million cases sold in 2009, presenting significant opportunity for New Zealand wine.

Research conducted in 2009 and 2010 by NZTE showed that United States consumers no longer consider living more sustainably as an alternative lifestyle. Although ‘quality’ is the most important United States purchase driver, attributes that relate to sustainability often strongly suggest quality to United States consumers, with some willing to pay up to 10 percent more for more ‘sustainable’ products.

Other markets

There are other growing markets Kiwi companies would do well to keep an eye on. Most of these are outside of our traditional exporting base, which have young populations of growing wealth.

Take Saudi Arabia. In 2010 it was New Zealand’s 16th most significant export destination, and largest export destination in the Middle East. Despite their oil, New Zealand held a considerable trade surplus with Saudi Arabia in 2010, with exports approximately twice the value of imports from the Kingdom.

New Zealand exports to Saudi Arabia have grown by just under 50 percent over the past few years, from NZ$411 million in 2006 to NZ$615 million in 2010.

“More New Zealand businesses are also starting to consider the three big emerging powers in the EMEA (Europe/Middle East/Africa) region – Russia, Turkey and South Africa where high growth rates have been sustained,” NZTE’s Ann Chappaz says. “As with the Middle East, these young, educated populations provide a built in demographic dividend making them attractive investment locations as well as offering a rapidly growing middle-class consumer base.”

Author: fatweb

Share This Post On