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For exporters
Every year many New Zealand small businesses open their doors to new customers and new sources of revenue through exporting. To be successful in the export market you need to invest time and money in research, preparation and developing a long-term plan.
See what it takes to make it work.
Why export?
Selling your products, services or knowledge overseas can help your business grow and prosper. It can also make your business more competitive by exposing you and your staff to new ideas and demands from overseas customers.
Advantages of exporting
There are many advantages to exporting, including:
- Increased sales from expanding your market base overseas, where you can find new customers and niche markets.
- Higher profit margins as production increases (economies of scale).
- Lower risk from local economic conditions. During a local economic downturn, your overseas customers may be unaffected.
- Exposure to new ideas, technology and processes from meeting new markets. This can help your business develop innovative products and services.
- Exposure to international best practice, ideas and alternative ways of doing business from trading in the global marketplace. This improves your competitiveness at home and overseas.
Challenges associated with exporting
It's important to consider the challenges that come with exporting:
- increased costs
- complex regulations and compliance issues
- legal risks that may arise from operating under laws that differ from New Zealand law
- political risk, if trading in a politically unstable country
- expert advice and planning, including an export plan and risk management plan, can help minimise risk.
Are you ready to export?
Successful exporting requires the resources and commitment to deliver your products and services internationally at a competitive price.
The question is: are you ready to do that?
Develop a business plan that will help you identify where you are, where you’re going and how to get there. As you draft it, think about whether you can answer “yes” to the following questions.
Are you committed?
Developing a market can be costly in terms of time, money and resources. It requires regular visits to the market to develop relationships. Your entire business needs to be committed to this from the ground up.
Do you know your product or service?
It is important to know your product or service and its marketing advantages. Can it be tailored to suit a new market? You should know.
Do you have sufficient production capacity?
You need to be confident that your product or service is sufficiently proven and developed. If you’re manufacturing in New Zealand, do you have the production capacity to meet market demands? If you are looking to manufacture offshore you need to factor in hidden costs such as greater management overheads, inflexible manufacturing schedules, quality management and cost issues.
Do you have enough market knowledge?
Marketing success can be unpredictable in domestic markets, let alone in foreign ones where there are cultural and language differences. You need to have a strong understanding of your overseas target markets and the consumer behaviour in those markets. If you don’t know who your target customers are, what motivates their purchases, and who your biggest competitors will be, find out – then go back to the drawing board.
Can you justify your market and pricing choices?
You need to have done the research and have solid figures in hand to validate both the potential and the investment. If not, book more flights, get your feet on the ground and talk to more people with knowledge of the market.
Does your company have sufficient management capacity?
Exporting requires considerable management time. To be successful you will need to at least consider hiring managers familiar with the export market.
Do you have the finance to export?
Does your company have the financial strength to commit the money and the time it may take to develop the market with no guarantee of a return on this investment? Breaking into an offshore market requires considerable funds for, among other things:
- research
- airfares
- accommodation
- advertising
- trade fairs
- sales promotion
- new brochures
- training of overseas sales agents.
You also need to watch out for hidden costs relating to language and cultural issues, and the time you need to spend building relationships and intellectual property protection.
Need further help?
Check out NZTE’s Export Essentials Programme, which is designed to help you understand how to build an export plan, including choosing target markets and finding a distribution partner and channels.
Exporting services
Exporting a service rather than a product can have unique challenges, like intellectual property (IP) protection, business structure and employment.
IP protection
Protecting against foreign competitors copying your idea is important no matter what you’re exporting, but when your export is a service, a process or a unique way of working – rather than a physical item – you have to be particularly vigilant. You can do this by:
- Taking regional intellectual property law into account when you choose your potential export markets.
- Either making a specific foreign filing through the Intellectual Property Office of New Zealand (IPONZ) to register your patent in your overseas target market; or
- Making one patent application, again through IPONZ, to the World Intellectual Property Organisation (WIPO) Patent Co-operation Treaty that has powers in most international markets.
It's worth your time and money to seek patents in different markets because the process will include searches for existing patents your design may infringe upon.
Consider your business and research your target market to identify risks. Careful planning will help your business prepare to take on the challenges involved in exporting services.
Filing international patent applications(external link) — International Property Office New Zealand
Business structure
You can sell services internationally in a variety of ways. First, you need to decide if your business will provide the services directly in your target market, or whether you will form a subsidiary company overseas.
An overseas subsidiary will be subject to overseas company laws, relating to the filing of annual returns and financial statements, for example. This will also affect the tax you need to pay in New Zealand and in your target market.
Understanding your international compliance requirements(external link) — New Zealand Trade and Enterprise
Employment
Next you need to hire people to provide the services. If you are operating a New Zealand registered company you will need to comply with New Zealand employment law, which includes paying holiday leave and ACC levies for the employee, and acting in good faith towards the employee. You will also be responsible for deducting income tax from your employee’s earnings.
You should always seek specific tax advice from a trusted advisor, such as a lawyer or accountant with specialist exporting knowledge of your target market, before considering your options.
