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High kiwi dollar spurring competition for Kiwi businesses

High kiwi dollar spurring competition for Kiwi businesses

Kiwi companies advised to focus on their niche business to gain the upper hand

Overseas firms are now increasingly looking for new hunting grounds. And New Zealand has appeared on their radars because our high dollar now means they have a prospect to earn decent money and take it back with them. They can buy back their own currency with a New Zealand dollar that’s never been as strong or as stable as now.

If Kiwi companies thought it was a hard road to win large contracts they are now facing new challenges. Whereas the battle used to be against fierce competition, entrenched incumbents and back room deals they are now also elbowing against Johnny Foreigner as a high Kiwi dollar combines with a low Euro and US Dollar creates an inviting platform for new players to move in here.

Anecdotal evidence of major contracts going to overseas companies and global players sending satellite business pods to NZ on scouting missions; to not only test the waters but to grab and hold onto lucrative deals, is growing.

Executive director of Export New Zealand Catherine Beard says it is likely that the high dollar is here to stay for the foreseeable future and that Kiwi companies need to focus on their niche business to gain the upper hand.

“The dollar is high relative to the US and the Euro but it’s low on a historical basis to the Australian Dollar. The challenge that they’re having in Australia, (because their dollar is at an historical high) it that it makes it very tough for their manufacturing sector and that makes New Zealand a more competitive place to manufacture. And that’s actually very important for our economy because Australia is our number one export market. So at the moment we’re carving out quite a manufacturing competitive advantage against Australia. So it could be that we start to see more Australian businesses relocating in New Zealand.”

She says our low wages make NZ an attractive place to do business. New Zealand wages are around 30 percent less than a company’s wage bill would be in Australia.

“We have a pretty world recognised education system and you can get pretty well qualified people here,” Beard adds.

Many Kiwi companies see this situation as inviting more competition in an already small market.

But Beard says they are missing the point and that it’s important to find what you're good at and market those talents. She says traditionally Kiwis are very good at being business creative and that identifying an opportunity and meeting a demand that others had missed is a very typically New Zealand thing to do.

“We’re in a global market so companies have to be globally competitive in whatever area they’re operating in," she says. “So companies really have to look at what is their major point of difference. The thing with New Zealand companies is that often they’re finding a good global niche, so you don’t necessarily want to go head to head with the big multinationals and try to compete within the space that they occupy but typically they’ll be pieces of work that aren’t attracted to these big firms because they’re interested in scale. The competitive advantage for New Zealand firms is to look for those niches that those companies don’t want to be bothered with and they can do very well in those niches.”

She says the ease of doing business here in New Zealand ranks very high in the OECD and that, compared with Australia, New Zealand has far less regulations and government departments that need to be dealt with on a day-to-day basis.

“IT is very much a global business. Because Europe is fairly moribund at the moment it’s actually forcing them to look outside the European Union. Particularly if you’re in the IT business, the world is extremely flat and you have to be looking for your particular value-add that sets you apart from the competition.”


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