Entering overseas markets has always been a challenge for New Zealand small businesses but what will it be like in the new pandemic world?

Certainly with world wide travel restrictions, it's difficult at present. 

Would-be exporters need to eyeball importers to establish their network and develop their new markets. Personal contact is vital. Even those who are already in the overseas markets may need to refresh their overseas contacts who may have shifted some direction with the pandemic. Digital meetings are one limited way for established exporters to reinforce their trading markets in the new pandemic regime, but it doesn’t replace direct physical contact.

Delivering your products overseas is also problematic. Freight movements have started to accelerate but it’s sluggish - that’s why we’ve seen a lot of shelves empty in our supermarkets and products, like building supplies, limited. It’s still an issue for supply chains relying on overseas companies.

The New Zealand government summed it up in a latest report: “There are no formal restrictions on market access for the vast majority of goods exports and imports as a result of COVID-19 but the global pandemic continues to place pressure on global supply chains and is disrupting trade flows and the wider international economy.”

So, New Zealand small businesses that are reliant on the international markets or are aiming to enter overseas market may still have a long road to travel. There may be a few issues they need to contemplate.

β€œNew Zealand small businesses, used to trading with countries further afield, may find dealing with Australia offers more stability and less volatility than the currencies of China, US and Europe.”

The new global economy may impact on Kiwi business

We may be seeing a slow recovery from COVID-19 but the global economy will be unlike what went before. The challenge for New Zealand businesses is how to adapt to cope with this new global economy. Businesses here who are reliant on importing, exporting and, of major concern, manufacturing overseas may  face a more challenging operating environment.

Global politics, something New Zealand businesses perhaps ignored before the global pandemic, are starting to make an impression on how we trade and increase the uncertainty businesses involved in overseas trading and manufacturing will face in the future. We are seeing the growing interdependency of economic and political goals.

For example, when Australia called for an inquiryinto China’s handling of the pandemic, it faced stiffer tariffs and restrictions on some of its exports to China. New Zealand seemed to come close to the same fate when China criticised New Zealand for its support of Taiwan.

The elephant in the room - China

Nearly 25% of our exports, worth more than $20 billion, went to China in 2019. Much of our manufacturing has moved to China in recent years. China is also a major dependant for our supply chains, with a fifth of exports containing Chinese components. As Associate Professor of politics and international relations at Auckland University Stephen Hoadley points out: "if China wanted to make a point, it could punish New Zealand and suffer very little. It could live without New Zealand milk powder. So there is this sense of vulnerability in the New Zealand Ministry of Foreign Affairs and that's why New Zealand is fairly courteous in its relationship with China."

China has loomed large in New Zealand and other markets for some time, but the pandemic has made the focus of our reliance even more pronounced. Economists predict that in the post- COVID-19 world many countries may look to partnering to avoid the acute dependence on China.

There’s light at the end of the tunnel

Perhaps ironically, COVID-19 has been good PR for New Zealand. Its success in combatting the pandemic and its return to some form of normalcy has garnered a lot of international attention.

New Zealand’s enhanced reputation is liable to be attractive to overseas markets as the COVID-19 contagion starts to be reduced. New Zealand may be seen as an even more desirable country to visit, to invest in, and to buy goods and services from.

New Zealand businesses, both large and small, in the international markets will be able to capitalise  on New Zealand's already “pure” brand. Those entering overseas markets may find their passage easier to find overseas trading partners with New Zealand’sCOVID-19 battler brand.

And then New Zealand  has its  “mates” across The Ditch. The Trans-Tasman Bubble when it settles down is likely to impact on our import-export businesses and, importantly, how Australian and New Zealand view their trade relations in the future.

As said earlier, the pandemic has made most countries, including New Zealand and Australia, realise the uncomfortable - and fragile - dependence New Zealand have on China.

Economists are pointing out that both New Zealand and Australia need to take a longer-term view of boosting economic activity, particularly with increased manufacturing and trade integration between both countries.

New Zealand small businesses, used to trading with countries further afield, may find dealing with Australia offers more stability and less volatility than the currencies of China, US and Europe.

The Bubble may reinforce, as we begin to travel and trade more, the opportunity to grow business between countries.

Be patient

It makes sense for New Zealand small businesses to potentially look to become exporters. Studies show small businesses that export as well as produce for the local market increase profitably rapidlyLikewise, a wider geographical spread may lessen the impact from local downturns or disasters. Simply put, it’s a big world out there with more markets (and, therefore, consumers) available to sell your products and services to.

However, until COVID-19 has been substantially diminished, export (and importing) to other countries may remain difficult. New Zealand small businesses who have had to reduce their international trading may find progress back to some form of normalcy slow. Likewise, New Zealand businesses looking to expand and start exporting may find it frustrating to launch themselves overseas at present.

But with the “clean” New Zealand brand recognised overseas and our closer relationship with Australia, New Zealand small businesses may need to  be preparing themselves for what could be a great journey into international markets in the new world.

 

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