Spotlight on Exporting
Spotlight on Exporting
In today’s economic landscape, there is a lot of talk about exporting and how it is the lynch pin for business success…
It’s true that exporting can be a magnificent way to grow a business and open the doors to a much larger market than can be found in New Zealand. In fact there are approximately 7 billion people in the world waiting to discover your business. Is it worth the risk? And is it what you need to expand your business into a more successful venture or a global empire?
There is no easy answer, but it is widely recognised that increasing the number and quality of export companies in New Zealand will expedientially boost the national economy as well as the productivity of those individual companies. As a general rule, companies that export are more successful than non-exporters. So let’s look at some of the benefits and risks of venturing in to trade with the global market.
Benefits of exporting
• Can increase product demand. This can increase profit and can trigger greater productivity in your business.
• Expands horizons. Opening the door to a bigger market is always going to create more opportunities for your business. The possibilities could be endless!
• Diversification. If you rely only on your domestic market, what happens when the market changes, you lose a major client or the economy spirals downhill? By increasing your markets overseas, it can offset individual problems in any one market and reduces dependency on the domestic market.
• Stimulates growth. I f you have more demand for your product and service, obviously the potential is there for an increase in profit, and a need for more staff, and resources in your business.
• Helps you avoid seasonal slumps. If your business sells more product in winter or summer, there is no need for ‘downtime’ if you target countries with varying climates and opposite seasons to New Zealand.
Risks of exporting
These risks are not insurmountable, but proper research and advice should be sought to navigate and lessen their effects.
• Inadequate resources. Breaking in to a new market can be time consuming and labour intensive, which will only intensify once demand increases for your product or service. This could put pressure on your raw materials, financial and staffing resources.
• Legalities. Each country has its own rules and regulations including quarantine compliances relating to exporting and importing. Make sure you seek legal advice from a legal expert in your chosen market. You will want to avoid facing legal action or fines if you inadvertently disregard the requirements overseas.
• Financial considerations. It’s important to be fully aware of any potential pitfalls like extending credit in a new market, and how fluctuations in foreign exchange can affect your profit margins.
• Cultural and language barriers. It is essential to completely understand any cultural and language nuances like correct business etiquette and social faux pas. To be accepted in a new environment (whether it’s you or your business) it is important to make an effort to conform to the way of the locals. This will make your introduction to the country much easier and will pave the way for your business to grow.
• IP issues. Don’t open yourself to the risk of your product or service being copied in your new market. Ensure you seek full advice on securing your intellectual property and protect your competitive advantage in all countries you are targeting.
This is only a brief list of pros and cons of throwing your exporting hat into the ring. To explore exporting and other areas of growth for your business, sign up to Auckland Tourism, Events and Economic Development’s (ATEED) complimentary Business Assistance Programme.
ATEED has teamed up with some big government players - New Zealand Trade & Enterprise (NZTE) and the Ministry of Science and Innovation (MSI) - to support business growth and innovation across the region through this new programme.
For more information and how it can help with your business plans visit: www.ens.org.nz/grow
