The internet has made our world so much smaller on many levels. A hobbyist in Hamilton can order rare parts direct from suppliers in Shanghai and receive delivery quickly and affordably, while a music lover in Manukau can buy and listen to the latest Beyonce album just minutes after release. And thanks to the internet, Kiwi products can go just as seamlessly in the other direction.
It is probably easier now than at any time before to run a small business with a global reach, from New Zealand. And that’s not only true for software developers – although that’s probably the easiest sell.
(According to recent figures from the New Zealand Game Developers Association, the industry doubled its exports in 2014 to $80.2 million, largely off the back of digital distribution platforms like App Store and Steam.) But even for tangible goods exporters, there is a range of internet-based export options that make accessing world markets possible from the comfort of a Kiwi base.
Hardy brands may bank on their ability to sell from their own e-commerce platforms, but there are other options for brands that lack name recognition on their own – including well-established online marketplaces like Amazon. It’s a strategy more and more Kiwi businesses are experimenting with, as they look to take advantage of a large existing customer base, and the online commerce and fulfillment capabilities of a player like Amazon, says Mark Hargreaves, a partner at intellectual property law firm AJ Park. “Rather than developing separate channels to overseas markets, Amazon can provide a huge market opportunity very quickly for New Zealand businesses if their product is good.” Of course, the gear still needs to be shipped to Amazon’s warehouses, but once it is, picking and packing is taken care of. The downside, says Hargreaves, are the fees and the hassle of managing inventory remotely – though there are businesses popping up that specialise in handling the logistics of selling products through these channels.
One of these is Auckland-based ExportX. Managing director Paul Grey says the company consolidates shipments among its clients so exporters can avoid sky-high freight costs for small quantities. It also offers offshore warehousing options so companies can cut the time and cost of delivery for their customers. ×
Managing risk
Trading on the global stage isn,t easy, even if you aren’t setting up expensive networks overseas, says Gary Cross, head of global trade and receivables finance at HSBC. The problems aren’t just limited to the additional time and cost of getting products into overseas markets, he says. “Exporters are exposed to numerous risks,” says Cross. “These include the inability or unwillingness of the buyer to pay; political or economic pressures; possible credit default by the buyer’s bank; and transport risks.” Foreign exchange movements can also result in exporters receiving fewer New Zealand dollars than anticipated. Cross says banks play three key roles in helping exporters manage the risks of international trade. They can provide working capital funding solutions centred around the exporter’s trade cycle, and can offer products and solutions that mitigate these risks, in line with the exporter’s appetite for risk. They can also act as an agent for receiving and clearing foreign currency in settlement of an export sale. International banks can also provide added value through potentially linking a transaction at both ends of the supply chain, says Cross. “The result may be reduced transaction costs, and identification of further business opportunities.” Visiting new markets to evaluate the opportunities is helpful, as is seeking independent advice before entering a trading relationship with an unknown buyer, he says.
