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Damn the torpedoes

In walks a bureaucrat telling you that you are in violation of Section 1059 of the close to 2,000-page import compliance guide that you’ve heard legends about but never seen. What are you going to do?

You come from a country that consistently ranks in the top three least corrupt nations, according to Transparency International. In fact our trustworthiness (and our trusting natures) are our biggest assets.

So imagine it’s five o’clock in Mumbai on a Friday. Another successful day for your fledgling export venture is about to end and happy hour awaits, when in walks a bureaucrat telling you that you are in violation of Section 1059 of the close to 2,000-page import compliance guide that you’ve heard legends about but never seen.

What are you going to do? You’d know if you were a seasoned exporter—or have had the chance to talk to one about the pleasures and perils of exporting.

As NZTE’s director networks, Alan Crofts helps point exporters to people with just this type of experience, primarily through one of the country’s more pragmatic undertakings, Beachheads.

The Beachheads programme started as a series of safe havens offshore where a little slice of Kiwiana existed to allow exporters to come in from the cold to conduct their own negotiations. Essentially, they were little more than service offices.

Version two is built on the premise that intelligent information and personal connections greatly influence success. NZTE doors are still open offshore but the current undertaking is a high-level relationship management group— providing realistic advice based on experience.

As the name implies, there is a kind of battle-hardened vibe to the process.

“Once a beachhead is established in a region, then it is game on,” says Crofts. “One way for for exporters to get a feeling for what doing business in a region is really like is to be around seasoned, practical advisors. There is no better way to test your mettle than to match your techniques to those of the pros.”

On offer now is an amalgam of regional and specialist networks that have enough influence to make a difference to exporters. There are about 80 advisors on nine Beachheads boards around the world as well as 20 NZTE staff who help companies in the programme make the most of the experience on offer. Although the program is geared to those well into the export game (the base criteria of entry is $5 to $10 million in export revenue and to be operating in two or three markets—through to the likes of Air New Zealand, Zespri and beyond), many of the teachings are relevant to the novitiate. Eventually, something akin to a boot camp for new recruits could be in the offing, says Crofts.

“By definition Beachheads advisors are senior people within companies but their knowledge is invaluable to those just thinking about going offshore. They can identify the issues that people need to think about sooner rather than later. In places like India and China you don’t want to be making mistakes. Working out the rules of the game in these places is hard. You want as much advice and guidance as you can get. They’re not markets to test your capabilities first up.”

The expertise on offer is structured so that a broad skillset is built around the challenges, needs and opportunities of a particular region. The China team, for example, covers finance, manufacturing, media/comms and government relations.

Good relationships are the key ingredient for any exporter and Beachheads has shown that having access to somebody who understands the variations and nuances of each market can make success more likely.

“Where a New Zealander or even an American might hand over a relationship after the first phone call or introduction, in China it will raise questions if someone in the relationship-building matrix were suddenly not part of the proceedings. Therefore many of our advisors in China are involved a long way into the discussion between the company and the customer. This may not happen in other regions because it’s not necessary.”

Being about long-term relationships, Crofts cautions that any bad impression, sleight or dishonouring of a commitment made by a New Zealander rubs off on the Kiwi brand and others following behind. A Beachheads relationship, like any other, can be eroded through poor management.

Being around successful exporters helps newcomers to grasp the huge cultural differences between New Zealanders and literally every market we export to.

“A casual, down-to-earth, she’llbe- right attitude works well here,” says Crofts. “It may have limited appeal in some markets but will only take you so far. In other markets it can be a serious disadvantage. Also our DIY mentality is a great impediment. Certainly what you know is important but successful exporting is built around who you know and who they know. An ability to leverage networks is among the most important attributes to take into a market—don’t go alone, take advice. Look to other companies who are doing the business in an area that you are thinking about entering. Take them out for a beer and sit down and listen.”

In a fast-changing world, the old fundamentals of doing the hard yards and building relationships haven’t changed. Richard Duckworth of export marketing specialist Zomo says, however, that New Zealanders must remember the downside of our No 8 wire ethos.

“DIY is in the blood for a lot of Kiwis. Sometimes, or a few times, it might pay off but are your export aspirations an area that you’re prepared to risk? Such an approach could end up being a false economy. Consider the cost of a fact-finding mission to Europe for instance. Flights, accommodation, expenses, time out from your business, and the chance that the person you’ve arranged to see cancels the meeting 12 hours before you fly home. For the cost of that exercise (if not less) you could find a locally based agency like Zomo that could prepare an up-to-the-minute report and analysis of the market, and provide photos or video footage of whatever it is you’re interested in.

“Working with someone based locally can remove a lot of hassle and get you thorough market intelligence. Getting the prep work out of the way, getting into a position where you’re prepared to make a commitment before actually setting foot in the country, and then identifying and engaging a possible business partner through face-toface contact during sociable hours. This is great in the first instance, and then as an ongoing solution.”

And while your relationships may be great, anything with a human variable involved may change and even sour. Just because you are sending your goods, services or IP into foreign lands doesn’t mean they have to leave our shores unprotected.

AJ Park’s Greg Arthur says that one of the outcomes of globalisation (and the likes of previous infringers now wanting to become bona fide members of the trading fraternity) is that global systems and standards for enforcing IP rights are farreaching and powerful.

“Many of New Zealand’s historical trading partners have systems as good, or better, than we have. The opportunities for placing injunctions or being awarded damages are available under their respective legal systems. They may vary in detail or procedure but the end result is that infringements can be stopped.”

Most of the means for recourse are embodied in each country’s respective legal system. The pressure for conformity, however, has been driven by the World Trade Organisation at the urging of some of the major players in international trade.

“The likes of the United States and Europe have demanded the rights and means so that their various businesses can enforce their patents or trademarks. These moves have benefitted New Zealand exporters as they are able to gear their exporting, and IP protection, around complying countries,” says Arthur.

Japan, over time, has developed robust systems and, more recently, Korea and China have put into place their own means of enforceability.

“As both countries have become net exporters of IP, they have sought quid pro quo protection mechanisms. In China, although the systems vary to ours, the end results are achievable and are often more expedient and less expensive than in other regions. Korea, too, is becoming more compliant.” Although there are still some unfriendly areas in some Sout- East Asian countries, some have started down the evolutionary path of introducing mechanisms for enforcement.

Any notion that the world is a jungle and that IP protection and other legal enforceability procedures aren’t worth the paper they’re written on is becoming more and more outdated.

“Yes, there are still villains out there,” says Arthur, “but in the next decade or so these will likely be at the stage China and Korea are now. If this is the only excuse one might have for not vigorously safeguarding their IP assets, then it is no longer valid.”

The happier hunting grounds

New Zealand has a number of trade agreements in place to make it easier for trade to flow between New Zealand and other signatory countries. These are:

  • ASEAN–Australia/New Zealand Free Trade Area
  • New Zealand–China Free Trade Agreement
  • Trans-Pacific Strategic Economic Partnership
  • New Zealand and Thailand Closer Economic Partnership
  • New Zealand and Singapore Closer Economic Partnership
  • Australia and New Zealand Closer Economic Relations
  • New Zealand and Malaysia Free Trade Agreement

Free-trade agreements and other trade agreements have the effect of improving and maintaining access (for example through tariff cuts) and reducing other barriers to trade with signatory countries. These agreements can give you preferential access relative to firms from non-signatory countries. However, they also help to level the playing field in markets where competitors have already secured advantage through their own trade agreements.