Issue 21 2012.pdf - New Zealand Corporate Traveller Magazine

trade feature
Sydney: Gateway to Australia and the World
By Tim Groser, Minister of Trade
AUSTRALIA IS A CRITICAL MARKET for
New Zealand when it comes to achieving our
economic growth targets, including lifting exports
and building more internationalised fi rms. It is
our largest market accounting for a fi fth of our
exports and 16% of imports.
The relationships between our two countries
is exceptionally close and next year we will
celebrate 30 years of Closer Economic Relations
(CER) – once described as “the world’s
most comprehensive, effective and mutually
compatible free trade agreement.”
CER creates a common market of 27 million
people who have a natural affi nity based on
geography and shared historical links, values and
institutions. It increases the effective size of New
Zealand’s domestic market six-fold, and provides
Australia with access to another market the size
of Queensland.
Following up on CER, successive New Zealand
and Australian governments have committed
to one day creating a Single Economic Market
(SEM) to make doing trans-tasman business as
easy as doing business at home.
The (Australian) Bureau of Resources and
Energy Economics reports that in the six months
to October 2011, investment in the resources
sector reached a record $A231.8 billion, up from
$A173.5 billion in April. Such growth generates
enormous demand for specialised plant and
machinery, engineering services and other
industry solutions. The mining boom, in particular,
is creating opportunities for manufacturers.
New South Wales’ (internationally signifi cant)
economy is a microcosm of Australia’s. Over
80% of industry income is from services and
NSW also has the largest manufacturing sector in
Australia and it is the base for many of the smaller
mining operations serviced by New Zealand
60 nzcorporatetraveller ISSUE 21
manufacturers. Other opportunity sectors are
food, beverages, and health
The bilateral goods trade between New Zealand
and New South Wales is over $A15 billion
(Australian Bureau of Statistics 2011) and local
governments have 10-year plans for making NSW
an easier place to do business and developing
infrastructure.
Sydney is specially important with 7.3 million
people. It provides approximately 25% of
Australia’s total GDP, “home” to 90 banks and
half of Australia’s top 500 companies, and 500
multinational corporations.
It has opportunities for New Zealand companies
in virtually every sector and is a potential stepping
stone to other markets. It’s also great place to
gain experience and build scale before tackling
markets like China
Typical of Australia’s eastern cities, Sydney is
so accessible that it can be quicker to source
products from New Zealand than from within
Australia, with many New Zealand companies
running a ‘just in time’ air freight service to
Australian customers.
Connections and Opportunities
Furthermore the relationships are not based on
commercial ties alone. The strength of personal
and family connections across the Tasman is
unique. Accessibility is also two way and the
number of Sydneysiders holidaying in New
Zealand has increased sharply, with the benefi t
that many Australians now perceive New Zealand
as offering sophisticated, quality products and
experiences.
Our goods are well regarded and given preferential
treatment with many entering Australia duty free.
There are also no currency restrictions or visa
requirements. continued over
Not to be Taken for Granted
Being cousins doesn’t mean the business
approach should be less painstaking than
for markets with which we are less familiar.
Complacency in New Zealand’s approach to
Australia has also been counter-productive
to some extent. Underestimating size, labour
market, the regulatory environment, business
culture, complexity and competitiveness is a
common mistake.
Apart from being bigger, Australia has a US-style
state-by-state individuality. Even within New
South Wales, there are 13 business districts not
including Sydney itself.
Many Australian businesses operate out of New
Zealand, which gives Kiwi businesses strong
alignment with Australia, but it doesn’t work
both ways. Most Australians don’t deal with New
Zealanders every day. Successful companies front
their business in Australia with Australians (often
Kiwis who have lived and worked in Australia
for some time). They’ve also been patient and
persistent.
Thus, to better integrate into Australia and improve
export growth, New Zealand companies should
consider setting up in Australia, establishing joint
ventures or buying into distribution chains.
New Zealand fi rms that have succeeded in
Australia have looked to maximise synergies
and leverage differences. Exporters not selling in
Australia should ask why not and those that are
should examine whether they are getting the most
out of the market.
To help fi rms looking to export to and/or build a
business in Australia, NZ Inc agencies like the
Ministry for Foreign Affairs and Trade and New
Zealand Trade and Enterprise, businesses can
provide high quality advice, market information,
networks, trusted intermediaries and capital.