Jamie Gray is a business reporter for the New Zealand Herald and NZME. news service.

Mid-tier businesses are NZ's unsung heroes

GE Capital, New Zealand's fifth-biggest lender, said mid-market companies punched well above their weight. Photo / File.
GE Capital, New Zealand's fifth-biggest lender, said mid-market companies punched well above their weight. Photo / File.

New Zealand's mid-tier businesses are the country's unsung heroes and need better support and recognition, according to GE Capital.

The financial services company said mid-tier businesses had to negotiate their way through the global financial crisis without the services available to their very small and very large contemporaries.

GE Capital, New Zealand's fifth-biggest lender, said mid-market companies punched well above their weight in terms of their contribution to national growth.

Mid-tier companies - which GE Capital definees as companies with annual turnovers of between $2m and $50m - comprised 4.6 per cent of all local businesses but employed almost one in three full-time Kiwi workers and contributed more than $61.4 billion to the economy, GE Capital NZ's managing director Aaron Baxter said in releasing GE's Mid-Market report.

The mid-market overs a wide range of industries, with the largest concentration of businesses in the retail trade, accommodation and food services sector (making up 17 per cent), followed by wholesale trade (15.2 per cent) and manufacturing (12.3 per cent).

The sector is also geographically diverse, with the highest number of mid-market businesses per 10,000 population being in the Marlborough and Nelson regions, GE Capital said.

Baxter said the mid-market has advantages over big and small business, mostly around its flexibility, speed to market and responsiveness.

"In our dealings with thousands of mid-market businesses in New Zealand, we've found that they're inherently closer to and understand their customer base, and they're incredibly nimble when it comes to reacting to marketplace changes," he said.

This has meant these mid-market businesses haven't suffered and have been able to ride the downturn and fuel the NZ economy in recent decades.

The number of mid-market businesses in this country is increasing at a greater rate than any other sector - up 3 per cent between 2007 and 2010, at a time when the total number of Kiwi businesses inched up only 0.3 per cent.

The largest increase was in the agriculture, forestry and fishing sector.

"Essentially, the mid-market is the cornerstone of the New Zealand economy, but unfortunately it is often overlooked," Baxter said.

"Small business can access government assistance and often basks in media attention as a leading indicator of the nation's entrepreneurial drive," he said.

At the other end of the spectrum, large businesses are effective at leveraging size to influence policy and are considered the "headliners" of business. "The mid-market, however, can be lost in the middle and neglected."

Overshadowing mid-market growth is the fall-out from the global financial crisis and on-going uncertainty about the eurozone, as well as the impact of the Christchurch earthquake.

Funding for mid-market businesses in the aftermath of the global financial crisis has tight because of more conservative lending practices and the collapse of around 55 local finance companies since 2007.

The appreciation of the New Zealand dollar against major trading partners has also reduced the competitiveness of the export industry.

Baxter said the challenges facing the mid-market - be it access to capital, or access to talent - would not be addressed by a "business-as-usual" approach.

"With global and local volatility, the mid-market's outlook remains uncertain and it needs targeted support - the support of business, the support of government and the support of the nation - to continue to grow," he said.

GE Capital is involved in providing finance for customers of Noel Leeming and Harvey Norman, and has close ties with state-owned Kiwibank and online trading platform Trade Me. GE Capital is a unit of General Electric - one of the world's biggest companies.


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