Between the lines - Nestlé in the comfort of a small land

By ROD ORAM

Lion Nathan is right to move to Australia for the obvious reason that most of its business is there. Other companies will surely follow.

But a more profound reason lies behind the migration. Understanding it will help New Zealand replace the leavers with companies which will rightly remain rooted here.

To big companies, New Zealand offers only a pale imitation of the investment and corporate culture across the Tasman. There lie deep pools of customers, investors, management, directors and advisers they need to prosper.

Yet Australia has no room for complacency. It offers only a poor substitute for the US. In high tech industries in particular, ambitious Australians are heading there.

But don't blame being a backwater on size and location. The corporate world is full of examples of large companies based in small places. One of the best is Nestlé, the world's biggest food producer. Only 1.5 per cent of its sales are Swiss -- it sells a bit more in the Philippines and 16 times more in the US -- yet it is headquartered at Vevey.

A delightful small town on the shores of Lac Leman, Vevey has been its home for 134 years. It is also 90 minutes by car or train from Geneva, and much further from Zurich, the country's gateway. Despite the inconvenience, Nestlé brings stakeholders -- staff, customers and suppliers -- from all over the world to its beautiful, palatial headquarters.

They come to be imbued with -- or indoctrinated by, depending on your point of view -- Nestlé's culture. The corporate style is unique and successful. It is driven by shareholder returns (which until recent years was an unEuropean mindset) and stakeholder values (which remains unAmerican).

Nestlé is important to Vevey and vice-versa. When a town or country lacks such companies it becomes a branch plant economy. Its fate slips out of its hands. It has less to offer companies to which it is home.

That is happening bigtime to New Zealand. There's two ways to turn it round. Douglas Myers, Lion Nathan's chairman, says we can if we regain our late 1980s glamour by reforming more, by being the freest market in the world.

Yes, we must do more of that to make this a vibrant economy. But even then we would still be small and a long way from anywhere. We would still be a pale imitation of Australia, let alone the US.

The other way is to find out who we really are as a people and what sort of economy and business culture we want to develop. Our advantage lies in nurturing small companies prospering from natural resources, the knowledge economy, sustainable growth principles and New Zealand's unique physical setting and cultural mix.

In a fast homogenising world, that's a potent, different mix.

Over the past three years the Business Herald has profiled a number of highly successful New Zealand companies playing to those attributes. Macpac, which sells its Christchurch made tramping clothes and gear in Europe and the US, is one. Snowy Peak, a maker of fashionable casual clothes, is another.

But such a shift is phenomenally hard for companies and their suppliers such as lawyers, investment bankers and auditors who have grown rich servicing the Lion Nathans.

They will have to learn quite different skills. If they don't we'll have little to fill the gap left by the departees. If they do, we might keep some of the big ones too because of the distinctive edge New Zealand gives them.