In a dramatically changed international market, New Zealand businesses will need to grow, evolve and adapt to survive.
The minister’s message was blunt, and it needed to be. He spoke of “a time of unparalleled international turmoil and geopolitical uncertainty”. Of a drop in trade so large it was unprecedented going back to the time we began collecting data in the 1970s. “The international rules-based system, that for decades has underpinned global stability and prosperity, is under pressure,” he warned, leaving no room for doubt as to the severity of the situation we faced.
The speech could have been delivered yesterday, but it was a little over a year ago that trade minister Damien O’Connor stood in front of a crowd in Manukau to detail government plans to support a trade-led recovery. As we now know, our already freaky outlook has only gotten freakier. The virus, held at bay in May of last year, broke through in successive waves, first delta and then the fearsome caseload of omicron. Just as we were getting our heads around that, Russia invaded Ukraine. Inflation skyrocketed, supply chains broke and our relative geopolitical stability oscillated wildly, as analysts started to talk about the beginning of the deglobalisation era.
Yet through all that, the policy O’Connor was there to sell a year ago remains in place. Not only that, but the layer upon layer of destabilising events serve only to underscore how vital it is that Aotearoa heeds this call. He was there to talk about plans for a trade-led recovery, in which we would marshal an army of new and growing exporters – some of which might not even realise they have a role to play – to confront the challenges of this era. Its conception speaks to the radical realignment we are witnessing – a period in which traditional alliances are in flux, the once-indomitable cash pipes of tourism and foreign students are much diminished and a new economy is being born out the back of the pandemic.
To replace the old economy’s income streams the government is pinning its hopes on trade, on exports. It’s doing this because not only does trade already support 500,000 jobs, but because those jobs are exactly the type we want. They pay more, and tend to be at companies which grow more quickly. For this country to prosper in a fast-changing world, we need to sell more of what we do and make to more countries and companies. All of our future plans rest on this mission. No pressure, but we really need to pull this off. Thankfully, we have form in this area.
Why we trade
Aotearoa has been exporting for centuries. The United Tribes flag was originally created in 1835, prior to the signing of Te Tiriti o Waitangi, to allow iwi of the far north to profitably trade into Sydney. Before the Land Wars, Tainui was exporting as far as California. This country invented the shipping of frozen meat in 1882, a transformative event which started the process of New Zealand becoming the agricultural powerhouse it remains to this day.
We trade because we’re good at it – but also because we must. As a small, isolated scattering of islands a long way from anywhere else, we have resources, both natural and human, that others want. And they in turn have what we need to grow and prosper as a people.
For centuries we were largely limited in what we could trade, and how. It was goods, not services. It was commodities, not ideas. The bulk of our trade is still in that which we grow here and ship elsewhere. But the arrival of the internet, first slow and sparse, then almost everywhere and blazingly quick, changed all that. In so doing it allowed us to radically reimagine what we might sell, and ultimately our perception of what is most valuable about us as a nation.
What we trade
Our first great export product was wool, which dominated trade from the 1850s through to the start of the 20th century. As recently as the early 80s, hack writers around the world would point to our 20:1 sheep:human ratio as a core joke and only known fact about this country. That position was gradually usurped by dairying, which still represents over 20% of our exports across milk powder, cheese and butter.
Yet over the last 20 years, what we create and export – and through this our national identity – has transformed. Our cultural sector has become globally recognised, winning Oscars and Grammy awards and elevating figures like Taika Waititi, Peter Jackson and Lorde to stand among the most influential figures in the entertainment industry.
This sector has become so grown up that over the past month the likes of musician Aldous Harding and comedian Rose Matafeo each released highly praised new works simultaneously. It’s a mark of our maturity that we’ve largely restrained ourselves from noting each appearance on the front page of our news sites, while international interviewers can now scarcely be bothered referencing their country of origin. It has become unremarkable, which is entirely remarkable, given our long running and deep-seated cultural cringe.
Beyond culture, our ideas and technology have become wildly successful too. Xero effectively changed accounting forever, making the process of setting up a small business far more simple. Rocket Lab took a big idea and sent it to space, again and again. Peter Jackson made the greatest special effects studio in the world next to his house (just because it was convenient!) then sold it to a company in an entirely different industry.
Even The Spinoff has gotten in on the act, with our sister agency Daylight working through the pandemic with the World Health Organization to create its most high-profile Covid-19 public health communications. When the opportunity first arrived, we had only a limited sense of how we should handle it, and turned to NZTE advisor Michael Moynihan for help. Moynihan is a larger-than-life character, a media legend who has worked for some of the industry’s most notorious characters, including a stint running book publishing at HarperCollins for Rupert Murdoch. He gave us a whistle-stop tour of strategy, helped us abandon some bad ideas and set Daylight on the road to becoming the 30-person agency it is today.
Our story of accidental exporting is less common than those who have more deliberately targeted markets – and this country has an increasingly large portfolio of companies working all over the world from these islands. Businesses as diverse as Parrot Analytics, Vend and Viva La Dirt League show that, in the emerging global economy, where you operate is less important than the quality of what you make and who you sell to.
The trade winds of change
We stand as a country with new tools and capabilities on the cusp of a new era. Part of what is attractive about weightless exports like culture and software is that the carbon footprint of a new fan or user, while economically significant, is far lower than that of exporting a physical product. Once the product is made, it can be duplicated endlessly with cost and carbon emissions trending toward zero.
Additionally, while New Zealand’s clean green image has rightly been given some more textured analysis in recent years, this country remains a place of abundant renewable energy and built to grow superb produce. And a new generation of independent makers have started to take those elements and create high value New Zealand products in markets around the world. Garage Project’s beer, Pic’s peanut butter and Paris Georgia’s fashion have all helped change the way this country is perceived in their markets.
They tap into a fast-changing global sensibility which nestles under names like stakeholder capitalism or ESG, wherein global consumers buy more than just a product – they need the story behind it to have integrity too. New Zealand’s brand as liberal, democratic, tolerant and increasingly entwined with the values of mātauranga Māori is something our exporters trade off (and we all must protect and value too).
Where you fit in with all of this
One public agency is tasked with helping grow and nurture New Zealand’s export sector. NZTE has worked with exporters of goods and services for many years to help them enter new markets, and grow their sales and distribution once there. That mission is always evolving and is now open to those further back on the journey – or who have yet to start it at all. They have doubled the number of organisations they work with in a focused way, to 1,400, and created a suite of products which will help on their way those only just starting to dip their toes into exporting.
For NZTE, one of the biggest challenges is simply getting companies to understand their potential. Around 95% of New Zealand’s businesses are small-to-medium in scale, but just 23% of those export at all. Yet operating in an increasingly globalised economy, our young businesses are increasingly measuring themselves against international competitors, and starting with world class ambitions as a result. This means we have brands good enough to sit on shelves or screens anywhere in the world, if only they could get there.
For us to win in the post-pandemic era, we need hundreds more businesses all over Aotearoa to start imagining if they too might be exporters. Those reading this might be running such businesses, or working in key roles within them. It’s crucial for us to ask ourselves whether our skills and products might have applications beyond these shores. The future of our economy depends on how many people answer that question in the affirmative, and turn to face a globalised opportunity in a fast-changing world.