It’s just become more attractive for New Zealand businesses to export.
New Zealand exporters will enjoy even greater access to overseas markets from next year now that the CPTPP has recently been ratified by a majority of the member countries*.
Kiwi businesses are already renowned for bringing innovative products and services to the world stage but establishing a business in a foreign market takes the business-building challenge to a whole new level. Entering international trade can be an exciting journey, however there is no denying the mix of complexities and frustrations that go hand in hand with the anticipation and thrill of success.
Successful exporting is hard work and to get started requires a singular clarity of purpose and drive. Before taking the plunge to grow your business through exporting, here is a ‘Five-C’ checklist you need to have sorted:
- Clarity of Purpose -have a clear vision for your product and how it will compete in an overseas market. Understand the issues of access and have a plan in place that allows you to measure and manage to ensure success.
- Capability - capability is about your people (including agents), governance structures, technical ability and processes that perform in a market and keep performing.
- Connections - it will not be ‘what you know’ in most markets it will be ‘who you know’. Develop good networks which will give you access to good market knowledge and distribution systems. Build a team around you of positive mentors.
- Cash - you will need this to visit, research, test markets, meet people, create a local network and go back and do it all again, if you are going to succeed.
- Commitment - exporting to new markets takes time and patience. You will flirt with failure on a rewarding journey to success.
You’ll also need to be clear about your market position – the understanding of where your product fits in the market. You need to determine how and where your product would be sold and marketed, as well as the potential price range, by evaluating the pricing and marketing of existing products in the market. Key areas to consider are:
Distribution -decide on the preferred distribution channel to the end user, whether this will be direct or via an existing distributor with a compatible product range.
- Determine freight options identifying available routes, associated costs and delivery times
- Investigate warehousing options
Market Representation - your local representative will be the face of your brand and your eyes and ears in the market. Choose representation with values aligned to your business and sound local knowledge.
- Evaluate options before basing your own staff in the market or appointing a local agent
- Understand implications of choosing to service the market from New Zealand and need for more frequent visits.
Contracts - clearly defining the terms and conditions at the outset of a sale, representation arrangement or even permitting access to IP, will minimise risk of costly misunderstandings which can escalate quickly with distance and language differences.
Price Setting - it is important to determine your price position before initiating conversations with potential clients or agents. Even an informal price indication, which turns out to be too low, can be very difficult to increase.
- Establish all associated costs including impact of terms of trade, payment terms, promotional cost, representation cost, insurance, duties & taxes etc
- Clearly explain the terms of trade, payment terms and what is included in a price offer
Risk Assessment - there are a wide range of risks associated with export and these need to be identified, understood and mitigated where possible. Risk factors to examine include:
- political & economic climate; creditworthiness & trustworthiness of importer; currency exchange fluctuations; transportation; delays
- Identify best Terms of Trade and Payment Terms for the applicable risk factors and speak with an Insurer or Broker experienced in providing insurance for international trade.
Tax Implications - there will be additional tax implications to trading domestically. Speak with your tax advisor and consult Inland Revenue to ensure you are aware of applicable tax implications and have taken these into consideration in your export plan.
Branding/Advertising - research the words and images of your branding/advertising and check there are no undesired implications in local language. Also check for existing brands with the same or similar names.
The right documentation is a critical part of international trade facilitating the successful movement of goods and receipt of payment.
It is important to investigate the documentation required for your transaction as the type of documents varies depending on the country you are doing business with, their government & port agencies.
Correct paperwork is the difference between getting paid or not, having goods reach consumers or shipped back at your cost. This is a job for the detailed person. Accuracy is essential. There is zero tolerance even for spelling mistakes.
- Check, double check and have a second person triple check
- Ensure statements contained in documents are true and correct
- “Get it right the first time”. There are limited options to amend or replace documents once they have been presented. Incorrect documents increase the risk of the importer and exporter being ‘flagged’ for additional scrutiny of future, current and past consignments, goods being denied entry, fines being imposed or prosecutions initiated.
- Check goods meet criteria for 'New Zealand Origin' under relevant Rules of Origin prior to any commitment to provide a Certificate of Origin especially when a Free Trade Agreement Certificate of Origin is specified in Letter of Credit terms.
How we can help.
The Auckland Business Chamber provides a range of support services for exporters, designed to break down barriers and make the process of trading overseas easier.
By partnering with us, you can tap into the resources and networks of over 12,000 other Chambers of Commerce around the world and representing over 40 million businesses. You’ll also get expert advice and practical support from our specialist Global team.
We also offer practical services, such as quick and easy document certification, to reduce the red tape associated with exporting.
* Six of the 11 countries have to date ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.