Few NZ companies are seizing export opportunities in global markets.

When PwC surveyed New Zealand CEOs recently, some curious themes began to emerge when it came to accessing overseas markets.

More than half – 54 per cent – of the CEOs planned to launch a new product or service this year. But many seemed unsure where they might look for business growth outside the three main trading partners – China, the US and Australia.

India, for example, was seen as one of the top five markets for growth by global CEOs but only 2 per cent of New Zealand businesses saw India as a key market, down from 5 per cent last year.

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In addition, New Zealand CEOs were non-committal about which territories were most important for their growth prospects – 25 per cent said they didn't know, up from 5 per cent in 2018. In addition, 26 per cent could not name three territories with attractive markets for investment outside New Zealand.

PwC partner Dan Hansen says the survey results are "not surprising" but represent "an incredible opportunity" for New Zealand business.

Few businesses undertake deliberate and structured market research before exporting, relying on an opportunity instead to lead the way. "The result of this is there are very few failures when it comes to New Zealand companies exporting," he says. "But it can take a long time, 10 years, for instance.

"We have found that, when we support a company going into new markets, our approach helps get them there approximately three times faster – and we have been involved with about $1 billion of extra sales, the bulk of which comes in non-commodity products."

Dan Hansen. Picture / Supplied
Dan Hansen. Picture / Supplied

India was a good example of the difficulty associated with accessing a potentially lucrative market.

"One measure of a market's potential is the number of people who exhibit consumeristic behaviour. National Geographic have a good definition of those people – highly motivated buyers who accumulate non-essential goods. That covers about 22 per cent of the world's population.

Nearly half of global consumers live in developing countries: "There are about 240m in China, thanks to the fast-growing middle class that has been such a phenomenon there, and about 120m in India.

"These are markets with significant potential for growth. India has diverse cultural issues to navigate and, like China, they have already-established networks within the country that make a big difference to how fast outsiders can gain access to consumers."

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The key for any company seeking to enter and access new overseas markets is, when consumer-based products are involved, to align manufacturer and consumer and develop the appropriate supply chains.

"It sounds easy when you say it like that," says Hansen, "but the reality is that it involves a lot of careful work. It's crucial, for example, for a business to enter the right market for their product or service – and we've supported plenty doing that outside their traditional markets.

Local intelligence, Hansen says, is vital – but only comes if the exporter does the hard yards before entering the market.

"Europe is a good example," he says. "We talk of it as a zone and a big trading partner – but the reality is that distribution there tends to be shaped by individual country concerns; matters get blurred by the particular wants and needs of different countries and cultures."

The European Union is a significant trading partner with the UK our fifth biggest export market at about $2.9 billion, and Germany our 10th biggest at about $1.4bn during 2018.

"What you have to know before going into markets like those – and like India and China – is the consumer demand; the problem that your product or service is solving for the customer and the value proposition that resonates with those needs. From that you can form a strategy to get this product to the consumer and decide on price."

"If you don't do that, all you are really doing is sending a product to a port and relying on third parties."

How to begin expanding overseas:
•Market research and evaluation is a vital first step.
•Take time to understand the problem to be solved for the consumer.
•Understand new markets – what's right in one region won't necessarily be right for another.
•Once a business understands its market, it can work on a sales strategy.

Trends affecting exporters:
•Traditional consumer and distribution channels are being challenged, leading to different buyer behaviours and channel conflicts.
•Differentiation is becoming increasingly important; businesses are putting in more effort into how they can stand apart from the competition.
•Companies are becoming more customer-centric as they try to differentiate
themselves from the competition.

For more information: https://www.pwc.co.nz/services/sales-advisory-services.html