KEY POINTS:
The volatile exchange rate is the biggest barrier to more New Zealand companies exporting, the latest business survey has revealed.
Statistics New Zealand last week announced results from its annual business operations survey, which asked companies about international engagement over the past financial year.
It showed 20 per
cent of Kiwi companies generate export income, but 38 per cent do not export purely because of the volatile exchange rate.
Bank of New Zealand chief economist Tony Alexander said the result sent a strong message about monetary policy.
"The Reserve Bank needs a more effective tool for influencing domestic inflationary pressures than the official cash rate, which impacts heavily on the New Zealand dollar's level and movement," he said.
"We have highlighted this problem with monetary policy management in the past."
David Skilling, chief executive of the New Zealand Institute said exports accounted for 28 per cent of GDP, which should be increased to 35 per cent by 2020.
The public and private sector should make investments to reach that goal, said Skilling. "We need a Team New Zealand approach."
Skilling said New Zealand's location still hurt businesses.
"Going overseas is a risky undertaking compared to if you are in the middle of Europe.
"It's also hard to understand world markets when you are a 24-hour flight away."
But it was not impossible and Skilling said firms needed to find creative ways of engaging internationally, such as shifting production or employing distributors. "There's no one approach to doing it, part of the challenge is to find out what works for [each of] them."
Auckland Chamber of Commerce chief executive Michael Barnett told the Herald on Sunday businesses should aim towards export from day one.
They had to focus on areas they could control, he said.
"The exchange rate is always going to be an issue, but instead of looking at things we can't change we need to look at things we can manage - factors around design, manufacturing."
Bruce Goldsworthy, advocacy manager for the Employers and Manufacturers Association, said New Zealand should look to emulate wealthy countries whose locally owned companies were operating overseas.
"Look at Nestle, which is Swiss and has less than 5 per cent of its manufacturing based in Switzerland but the profits are going back to the shareholders in Switzerland."
Businesses needed to be of a reasonable size with reasonable capital to set up overseas, but there were ways smaller companies could go about it, such as setting up distribution channels, Goldsworthy said.
Bob Fenwick, managing director of South Auckland-based Planhorse Systems, used distributors to sell his product into 54 countries. The company has focused on exports for 18 years and now 83 per cent of its product goes overseas.
Fenwick said it was easier to tap into overseas markets in the 1980s when there were more tax incentives and financial support to export.
He said there needed to be a greater push for smaller manufacturing businesses to exhibit at trade shows.
The survey showed the manufacturing industry had the highest proportion of businesses earning an income from overseas (38 per cent), followed by wholesale trade (35 per cent).
Trade and Enterprise received a budget boost last year, which provided $51.3m to help companies move into overseas markets. Between July 1 last year and March 31 this year it helped 419 companies with funding towards market development.
