Exporters planning for growth – more FTAs needed

A survey undertaken by ExportNZ shows the overall business outlook for exporters is positive.

In the next 12 months the majority (76%) of respondents expect business profitability to improve, 19% stay the same and 4% to deteriorate. Most (53%) expected their business to employ more people, and the majority also expected their orders across all markets to increase; either slowly (51%) or substantially (31%).

Of course there are still obstacles restraining growth – the top being exchange rate levels and price competitiveness of products, followed closely by funding for developing overseas markets and overseas regulatory requirements.

That said, exporters are managing the high NZ dollar with a combination of strategies – the leaders being improving productivity, investing in new product development and hedging.

Also, these exporters are increasingly moving away from price as their competitive advantage, saying quality of product/service, innovation and customer service are their top three success factors.

The top export destinations for respondents were Australia, Europe and North America – followed by ASEAN. The ASEAN market was most mentioned as the next new market exporters were intending to export to (33%).

As New Zealand’s third largest trading partner and third largest export market, ASEAN is significant, and so is the fact that we have an agreement establishing the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA).

Respondents’ comments showed the value of FTAs, or rather the consequences of not having an FTA in place. For example, one exporter said: “Our EU competitors in Korea signed an FTA before New Zealand, meaning the customer does not have to pay the 8% duty. Because the EU got in ahead of us I estimate we lost approx. 0.5m in sales in the past 12 months.”

45% of respondents are facing regulatory and non-tariff barriers, and cite a number of difficulties, with China being mentioned quite often.

ExportNZ hopes the rich feedback from exporters on the tariff and non-tariff barriers in many different markets is useful for government officials. We’re keen to work with officials to help tackle these barriers.

This post has been prepared by Catherine Beard, Executive Director of ExportNZ.