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Going Global - learnings from 2010 conference

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We have just had our second GoGlobal conference for exporters, and the strong line -up of speakers and topics saw a great turn-out from exporters in Auckland on the 27th October. Highlights were many and varied, but David Mahon, one of our foremost experts on China and Andrew Ferrier, Chief Executive of Fonterra were both obvious crowd pullers.

David Mahon has some amazing insights into China as an expat kiwi who has lived there since the 1980’s. In that time he has seen China transition from its communist past into its much more commercial present and he has lived through that transition. He made the point that in China political change is evolutionary now rather than revolutionary and we should expect that to continue as there is no desire amongst the leadership or the people to go back to where they came from. In his view the recent issues around the so called “currency wars” between what the US think is a fair value for the Chinese Renminbi and what the Chinese think is partly due to a misunderstanding of how the Chinese like to operate. They like things to evolve slowly rather than arrive at some end point too fast when the risks of the downside of any action is uncertain. He also pointed out that while parts of China are getting wealthier, there are still very poor parts of China and the average GDP is still very low compared to developed countries.

David Mahon thinks there are great opportunities in China for New Zealand companies, but we need to take the window of opportunity sooner rather than later. We also need to make more of an effort to understand the culture and language and take the time to build our personal relationships, but we also need to back ourselves as we are sometimes our own harshest critics.

David Mahon said China was better placed than some other developing countries to take advantage of their growth opportunities due to the fact that the early communist party leaders believed in getting people educated and making sure they were healthy. The result has been that the people were ready to seize the opportunity to escape from poverty more easily than we are seeing in some other developing countries.

Andrew Ferrier, CEO of Fonterra celebrated the risk taking of our dairy farmers from the very early days of the dairy industry, through to today. At each stage of its development, dairy farmers made some critical and courageous decisions to invest in milk processing and exporting, which eventually evolved into the leading industry we see today. Fonterra is New Zealand’s only company that is truly multinational, controlling about 30% of the trade in global dairy products today.

The strategy of Fonterra has been to spread the risk by going global, increase the return to farmer shareholders by increasing added value, and seeking to dominate the dairy exporting niche. Many countries have a domestic dairy industry, but not many export. Due to Fonterra’s global penetration they can team up with other companies like Nestle and take produce into more markets as a team, sometimes under a Fonterra brand and sometimes under the partner’s brand. Fonterra has worked hard to be the most trusted partner of their business partners and their goal is to be irreplaceable. It is clearly paying off. Fonterra will not be limited by the supply capacity of the local dairy industry either, sourcing milk from all over the world and manufacturing close to market as well. This is a model of manufacturing and exporting that will become increasingly compelling for New Zealand firms, and we heard similar stories from other manufacturers and exporters, such as from Sir Ken Stevens of Glidepath fame.

Glidepath manufacture in New Zealand, but they also manufacture closer to their markets as well if the business case warrants it. They also team up with other companies to win projects that are too big for their balance sheet, where they have the reputation and relationship with the client, but the backing of a bigger company means they can manage the upfront capital investment.

Sarah Gibbs, Chief Executive and co-founder of natural skin care company Trilogy was another exporter who set out to export right from the start of the company’s existence. She explained how they set out to build an international brand, contracting out the formulation and manufacture of the product, so it can be manufactured close to market. Right from the beginning the product was manufactured to the highest standards (European Union) which enables it to be sold anywhere in the world. Increasingly New Zealand will be home to the creation of the intellectual property and the brand development, with companies able to partner with others around the world to do some or all of the manufacture. We can pick and choose as we need to and Rod Drury of Xero told us we all need to get behind superfast broadband to overcome the tyranny of distance – and then the world is our market place.

Catherine Beard
Executive Director
ExportNZ

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