Making connections in a dynamic market

David Green. Photo / Supplied

ANZ's David Green says New Zealand needs to look to the rest of the world for growth, particularly Asia.

ANZ has a significant banking footprint across Asian markets like China, Indonesia, Singapore, Hong Kong and Vietnam, Cambodia and Taiwan and a growing business in Laos, India, Malaysia, the Philippines, Japan and South Korea, which it is using to help customers expand their businesses offshore.

Green says in ANZ's case it is using its regional presence to connect businesses to the opportunities in other markets by "using our networks to help them identify business opportunities then using our capabilities in the markets to help them execute.

"Our view is that we are a big part of the NZ economy and we have a very vested interest in NZ growing," he says. "We have an opportunity to invest and use our bank's capability and global strategy to help deliver returns for NZ Inc."

Green, who is managing director Institutional-New Zealand (ANZ), took a bunch of Kiwi businessmen up to Vietnam late last month to connect them with this rapidly-growing opportunity. The group included Danny Chan from the Academics Colleges Group, which already has a thriving international schools' business in Vietnam, Blue River Dairy's Keith Neylon and importer Vaughan Darby.

"I've already had some emails from people on the trip telling me about the opportunities they have identified and how they are planning to work together, not just up there but domestically on some things," says Green.

ANZ's Vietnam mission was the latest in a programme which saw it expose about 100 customers to China during the 2010 Shanghai Expo; it earlier ran successful Kiwi Days in Singapore and Hong Kong to promote some of NZ's biggest companies to Asian funding sources after the Global Financial Crisis resulted in a wide-spread credit crunch.

Green says Vietnam represents an opportunity for NZ businesses to get on the ground earlier than may have been the case in China and have accelerated growth as a result. "One thing I noticed throughout the week is that they all talked about how they had solved problems in China and were now comfortable with that. I pointed out that in Vietnam it is a matter of going through what the unique things about Vietnam are, and how to get over issues."

ANZ will clearly benefit when the customers it connects into fast-growing markets like Vietnam require more banking services to support their growing businesses.

But Green emphasises the bank's growing Asia business is a two-way flow. He says Asian markets have a natural attraction to the New Zealand food story, which excites plenty of inbound interest and activity.

He points out that from a New Zealand perspective, two-thirds of NZ's exports are to that region whereas 60 years ago 80 per cent of NZ's exports were to Europe, the US and Britain. "The whole world has been turned upside down in terms of relevance to New Zealand for trading opportunities and where growth comes from."

ANZ's supra-regional strategy is largely organic. But there is a clear focus on connecting the regions of Australia, New Zealand and Asia and helping its customers do cross-border business. The strategy was already in place but was accelerated when former HSBC high-flier Mike Smith left Hong Kong in mid-2007 to take over the reins at ANZ's parent company. ANZ's expansion was hastened by the acquisition of the Royal Bank of Scotland's retail businesses in Taiwan, Singapore, Indonesia and Hong Kong in 2010.

Green says ANZ has directed group capital to markets where it sees an opportunity to support balance sheet growth. But it also seeks to access the large Asian savings pools to support growth back into the Australasian region.

He notes that, from a wider capital markets perspective, the Asian markets have held up throughout the Global Financial Crisis and are continuing to do so. Already in Asia to date this year, there has been around US$56 billion in issuance.

Last year the figure was US$76 billion and in 2010, US$83 billion. Singapore issuance and the RMB are all at heightened levels.

Green expects financial assets in Asia to total around US$43 trillion by 2012 - with the fixed income share around US$9 trillion.

"Obviously there is a significant pool of funds there. In terms of New Zealand issuers who have core debt and have credentials to access the capital markets, there is a big pool of funds to tap."

Green believes New Zealand companies are now on the radar for Asian investors. "They understand our market and the drivers in terms of our long-term story - around, in part, being the food basket for Asia. But it's also about understanding the way the political environment works and the legal framework."

The Asian investors' positive view also extends to investments in companies that do not have direct agriculture sector exposure like Auckland International Airport or Auckland Council.

"Many offshore investors have seen the potential for New Zealand food products to be posted at the more premium end of the spectrum. And as we heard in Vietnam for instance, consumers put food quality and safety right at the top of their concerns - attaching a New Zealand brand to that and getting a return is an opportunity.

"Currently we have the capacity to feed 20 million people but the outlook is for 40-50 million people in the future, by using known technologies and available resource like water and applying that to get increased productivity."