Thinking about China

I received an email from Export NZ (BOP) on Saturday inviting me to a briefing next Wednesday at the Chapel Street offices.

Export NZ Bay of Plenty is planning a business delegation to China next year for both their 'Sister Cities' relationships and to coincide with the Shanghai World Expo 2010. For me, this might just map some longer term thoughts.

New Zealand business is uniquely placed to take advantage of the 2010 Expo. As the first, and at this point, only country in the world to sign a Free Trade Agreement with China, it provides NZ business with a great opportunity.

The NZ Government has already committed considerable resource to build an NZ Pavilion at the event. A number of other initiatives are underway to facilitate engagement between Kiwi and Chinese corporations.

So far as Wednesday's invite is concerned, I am signing up. Time perhaps to build some more substance around those thoughts.

CEO Forums

I received an invitation last night from Ken Stevens, Chairman of Export New Zealand, to attend a CEO Forum here in Tauranga on 24th March. It marks the beginning of quite a season of 'CEO' events.

The Tauranga Forum is designed to help New Zealand businesses share their challenges, learn from each other and prepare for a brighter future. It is co-sponsored by NZTE so I expect to see some familiar faces.

As I write this post, Allan Bollard has just announced a 0.5% reduction in the official OCR. That brings NZ rates down to 3%. One more fall maybe later this year, but I suspect this cycle is almost complete. I do not believe further rate cuts will be passed onto consumers or SME's in any meaningful way. So as a Forum, we will need to adjust our focus on other ways to stimulate the economy and our own businesses.

Effective management rather than Government aid should be the mantra of the day. And for the months ahead.

BOP Export Awards 2009

In my last posting, I talked about NZTE and Pingar.

I expressed the view that despite the current global challenges, I remain optimistic about NZ companies ability to successfully engage and expand into offshore markets.

Tomorrow night, Jacqui and I are attending the launch of the BOP Export Awards 2009 at the Sebel, here in Tauranga. It is a sell-out.

Some sectors might be under pressure, but it is easy to ignore the positive noises coming from many of our local export-orientated businesses. They will help lead NZ out of the current downturn.

This blog and the previous posting are very much related.

Grabaseat v Grabalot

Grabaseat, Air New Zealand's online discount air portal, provides a pleasant respite from Air NZ's normal pricing policy. Using Grabaseat means Air New Zealand becomes a much more affordable travel option, for a wider number of customers.

Grabalot, is less well advertised. It landed in my email this morning. I had enquired, from my normal travel agent, the approximate cost of return flights to the UK this summer. The basic economy return quoted stands at approx NZ$3,500, premium economy at NZ$6,050. That's some advance on the same period last year.

Undoubtedly, part of this increase must come down to increased fuel costs. In a Press Pelease dated 30 the April, Air New Zealand said; "Over the last two months long haul international fares have increased by 4% to 8% dependent on route and class, and look certain to rise further as fuel continues to spiral".

More worryingly, Rob Fyfe, Air New Zealand's CEO has said recently that some international routes are 'under review'. We know what that means. Any further reduction in capacity can only have one impact. Prices will spike again.

In the previous blog, I highlighted tomorrow's NZ New Thinking Export breakfast being hosted here in Tauranga. The economic challenges are real. For exporters, the ability to travel offshore to engage is crucial. So is the cost.

NZ New Thinking Export Breakfast

The Sebel Hotel - Tauranga

This time tomorrow morning, I will be attending the NZ New Thinking Export Breakfast hosted by NZTE and Export NZ (BOP) at the Sebel.

Jon Mayson, Chair of NZ Trade and Enterprise (NZTE) will be speaking about ‘Beyond Export Year - What do we have to DO to achieve export Growth?’ Jon will also provide a personal view on what we need to do here in the Bay of Plenty to build strong export growth.

The NZ New Thinking Export Breakfasts are a follow-up to the series of Export Year 2007 breakfasts organised last year. They provided a forum then, and provide a forum now, for exporters to share their experiences.

It was important that the framework built last year continued into this year. Whilst Export Year 2007 might have been a convenient label to focus minds, the need for the structures it spawned remain as relevant today as they did then.

Wednesday 21st May

The battle for ratings.....

At the recent Bay of Plenty Regional Economic Development Forum, the focus was on long-term inter sub-region and inter-agency cooperation, engagement and love. Fast forward to Wednesday 21st May.

Inter-agency cooperation in action? I think not.

Lining up at 7.00am in the morning is the Export NZ Bay of Plenty and NZ Trade and Enterprise sponsored NZ New Thinking Export Breakfast at the Sebel Hotel in Tauranga. (Cost: NZ$25, to include breakfast) There is absolutely nothing wrong with the agenda. Jon Mayson – Chair of NZ Trade and Enterprise (NZTE) will be speaking about ‘Beyond Export Year – What do we have to DO to achieve export Growth?’ Jon will also provide a personal view on what we need to do here in the Bay of Plenty to build strong export growth.

The session is scheduled to close at 9.30am. This provides enough time for delegates to get to their offices, open the post and then prepare for the next 'Event of the Day'.

Tauranga Chamber of Commerce have organised their 'Meet the New CEO' lunch at Mills Reef from 11.30am - 2.00pm. (Cost: NZ$45 members, $NZ65 non-members, to include lunch). Greg Bold, the new CEO will talk of his journey to becoming CEO and where he sees the Chamber both now and into the future. Greg will also talk about his role of tutoring and some helpful hints on Problem Solving and Decision Making.

Tummies full, it is now time for delegates to return to the office to ensure staff are still working and time to sign off the day's inventory before setting off to the next 'Event of the Day'.

Priority One and the WBOP ICT Cluster have organised the well advertised “Technology for Smart Business” Expo at Baycourt (Cost: Free, with complimentary canopes after 5.30pm). This runs from 12.30pm - 6.30pm at Baycourt. The tradeshow is being held to provide an opportunity for local ICT companies to showcase their products and services to businesses in Tauranga and the Western Bay of Plenty.

So there we have it. Three significant business events on one day. Inter-agency cooperation in action.

For the record, I will be at the Sebel for the breakfast session and then its off to Baycourt to set up the Pingar stand for the “Technology for Smart Business” Expo. Sorry Greg, but I reckon 2 out of 3 is as much as I can manage in one day.

National Party Forum

An invitation dropped through the letterbox this morning inviting me to a panel discussion forum with National Party representatives here in Tauranga on 16th June.

Nothing unusual there, except the invitation was sent out by Export New Zealand (BOP), in association with Priority One.

Ever since I arrived in New Zealand in 2003, I have only ever really known of Government (Labour Party) trade policies. I was not aware of any major bi-party difference. So I plan to accept the invitation. It will be my first experience of listening to any National Party platform in NZ. With a general election only months away, the invitation, its source and its timing, is interesting.

Tauranga Leadership

Time to doff the cap and acknowledge two great Tauranga business icons.

Jon Mayson, the former Port of Tauranga Chief Executive, is stepping down as President of Export New Zealand. He is taking on a new role as Chairman of New Zealand Trade & Industry.

Rob Jeffrey, Managing Director of Jeffco International, another Tauranga based business is taking over from Jon as President of Export New Zealand.

It says a lot about Tauranga that two of the most senior positions in New Zealand's trade organisations are held by these successful Western Bay of Plenty businessmen. The cap is suitably doffed in recognition of their joint achievements.

The Rising Kiwi - The Perfect Storm

Almost unnoticed, the NZ dollar has risen above 40p in the NZ$ / GBP cross rate. And it is still climbing.

In simple terms, it means that NZ companies exporting to the UK are getting fewer dollars back in NZ when they bank their GBP receipts. The screw is being tightened on exporters once more.

And it is not just GBP. In this morning's New Zealand Herald, an economist predicted that the NZ$ / US$ cross rate could increase to NZ89c to US$1 by the 2008 year end. That would decimate NZ exporters earnings to North America. Looking at the medium term, NZ exporters are facing the 'Perfect Storm'.

Interest rates in the US and the UK are declining whilst rates in NZ look on hold at best. The interest rate differential is becoming such that the US$ - NZ$ could become the new 'Carry Trade' of choice. There is little the Reserve Bank of NZ can do about this. With domestic inflationary pressures strengthening and the labour market remaining tight, there is little headroom for interest rate cuts. For NZ exporters, the currency climate for 2008 looks challenging indeed.

Global Engagement

New Zealand - the dot, bottom right

As I prepare to depart NZ, the globe above does emphasis just how far we are based from global markets. Over the past few months, I have been to a number of presentations focused on Export Year 2007. One common thread has emerged from them. That is the need to spend time offshore to engage with and build sustainable overseas relationships.

That is why I prefer the term 'Global Engagement' to 'Export'. It more properly describes the reality of working overseas markets. It describes the whole picture, not just the sales focus.

Over the next few weeks, I intend to blog about my different experiences to help describe this approach to global engagement. It promises to be an exciting period ahead.

Tauranga Networks

I have just returned from the International Market Forum organised in Tauranga by NZTE & Export NZ.

As ever, I am amazed at the quality of innovative businesses that operate out of the Bay of Plenty. I blog a lot about global engagement. It is great to have an opportunity to do that on my 'home turf'. If you want inspiration, then the Bay has it.

And the networking continues tonight with the Tauranga Chamber of Commerce farewell party for Jane Nees who leaves as Chief Executive to become a full-time councillor. A large turnout is guaranteed so a second set of business cards is at the ready.

At this morning's 'E-Business' workshop, I talked about the value of the medium as a means of collaborating, communicating and networking. I hope the message got across. The tool might be technology, but the application is '100% Pure' business.

E-Commerce in the USA

Tomorrow, I am leading a workshop called 'E-business: Using the Internet as a Sales Tool'. It is all part of an International Market Forum being organised in Tauranga by NZTE & Export NZ. This focus is on North America.

The timing is appropriate. I noticed a lead story on Yahoo Finance today that is highly relevant to tomorrow's workshop. It is entitled 'Wary Online Retailers Step Up Offers'.

According to the article, with a holiday season that is expected to be the weakest since 2002, and numbers of new online customers leveling off, more Web retailers have been pushing special offers and promotions to draw consumers. "The online community is getting more competitive as the amount of new customers slows," according to Scott Silverman, executive director of Shop.org, an online arm of the National Retail Federation. "Add to that the concerns about the economy, and promotions and sales provide a great way to get people excited."

Silverman said the number of retailers offering free shipping with no conditions, such as a minimum purchase, has jumped to 41.4 percent from 36 percent last year.

It does pose a series of questions at NZ businesses that might be thinking of entering the US e-commerce market. How up-to-speed are they in terms of online market intelligence and how should they respond to the type of commercial pressures that now exist within this online space? Tomorrow's workshop will attempt to address some of these questions.

North American Market Forum

Export NZ, NZTE and Tauranga Chamber of Commerce are jointly organising a North American Market Forum on 27th November.

The forum will run multiple workshops catering for Emergent and Established exporter streams.

I have been asked to facilitate the workshop: E-business: Using the Internet as a Sales Tool. Given Pingar's own interest in the North American market, there are a number of other workshops I will try to attend.

I like these focused Forums. They provide a great networking environment for businesses facing common problems. The North American market is massive, but so are many of the challenges. If you operate out of the Bay of Plenty and are looking to export to North America, then this Forum is for you.

Export Year 2007 Breakfast

7.00am tomorrow morning and I will be attending an NZTE Bay of Plenty sponsored Export Year 2007 breakfast meeting here in Tauranga.

The guest speaker is Stephen LeFebvre, BioVittoria Co-Founder, Managing Director Sales and Marketing. BioVittoria Limited is a research-based, product development and marketing company that develops, markets, and sells proprietary active compounds that are naturally derived and biologically proven.

Stephen is asking the simple question. Does your desire to grow match the size of the opportunity? He is talking about the opportunities offered by the growing China, India and ASEAN markets. He is also talking about sales opportunites in the United States.

These Export Breakfasts are a 'must do'. They provide good speakers, great networking opportunities and a neat (well subsidized) breakfast. The alarm is set.

NZ Government goes Global

NZ Economic Development Minister Trevor Mallard announced yesterday that the Government is scrapping some grants aimed at attracting foreign investors and will instead boost support for local firms keen to partly move offshore.

New Zealand, he said, needed to dramatically boost its companies' strategic linkages and investments in other countries if the export sector was to grow at a faster rate.

This is a pretty courageous move in my view, but one that is right. I have blogged many times before on the need for NZ business to engage more in the global economy, as opposed to just focus on 'exports'. The fact that the Government now appears to be proposing some concrete (let's see the detail first) proposals to help NZ business do this can only be positive.

NZ$ Reality

Last week, I attended a Breakfast meeting where Doug Steel, Westpac Bank economist, forecast that the New Zealand dollar would remain high for some time yet.

This morning, his colleague Sharon McCaw, another economist at Westpac, has said the same thing. Climbing world dairy prices are to blame. It's good news of course for the farmers and it's good news for New Zealand Inc. For those not in this sector however, the impact is more serious. The high dollar is here to stay and I guess to stay for some considerable time yet.

Planning for this is now a critical part of any business strategy.

Understanding Exchange Rate Risks

I am putting the finishing touches today to a Business Plan, using Excel.

There is one factor though that is difficult to manage. Although based in New Zealand, most revenue is likely to be generated in the form of US Dollars, Aussie Dollars, the British Pound and the Euro. That is creating a problem. With the NZ dollar at record highs, what impact will its eventual decline have on the bottom line? Given the unpredictable nature of exchange rates and different timing scenarios, how do I build this into a plan?

On Thursday, Export NZ and NZTE have organised an Export Breakfast in Tauranga called 'Understanding Your Exchange Rate Risk in a Global Economy'. I will be there. It is a little scary that no matter how well a business is planned and managed, a sudden major correction in the NZ exchange rate could blow a hole in the best prepared Plan.