For exporters

To export is to sell your products, services or knowledge overseas. Exporting can help your business grow and prosper, but it can also improve your competitiveness by exposing you and your staff to new ideas and demands from overseas customers.

Advantages of exporting

• Increased sales from extending your market base to overseas countries, where you can find new customers and niche markets.
• Higher profit margins from producing on a scale that makes better use of resources (economies of scale).
• Faster growth from not being confined to New Zealand markets.
• Lower risk from diversifying into different international markets rather than relying on New Zealand’s economic climate. 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

• 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.

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 mercurial in domestic markets, let alone foreign ones containing cultural and language differences. It is vital you have a strong understanding of your overseas target markets and the influences that drive purchasing habits in them. If you don’t know who your target customers are and 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, this is designed to help you understand how to build an export plan, including choosing target markets and finding a distribution partner and channels.

Export Essentials Programme (external link) - NZTE

Exporting a service rather than a product can entail its own unique challenges such as 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.

• Take regional intellectual property law into account when you choose your potential export markets.
• Either make a specific foreign filing through the Intellectual Property Office of New Zealand (IPONZ) to register your patent in your overseas target market; or
• Make one patent application, again through IPONZ, to the World Intellectual Property Organisation (WIPO) Patent Co-operation Treaty that has powers in most international markets.

Although seeking patents in different markets can be a sizeable time and money investment, it’s worth doing so because the process will include searches for existing patents your design may infringe upon.

What is Intellectual property has more about this.

Filing international patent applications (external link)  on the IPONZ website has more information.

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.

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.

Choosing the right business structure has information on common structures for your business.

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 obligations. These include 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.

Importing and exporting laws has more about if you’re planning to become an importer or exporter.