The old market development grant scheme is being tossed out. In place is a new scheme which aims to be more targeted in its approach to helping companies reach new markets.
BY: VIRGINIA MCMILLAN
Exporters’ love-hate relationship with the market development grant is all but over.
While Exporter has heard from companies who valued the New Zealand Trade & Enterprise (NZTE) grant scheme’s dollar-for-dollar support for forays into new markets, there were also complaints that “box-ticking” and compliance were a drag on time and resources.
Now the scheme is morphing into a new fund, its name not yet decided as the magazine goes to press. This time, the focus will be on return on investment for taxpayers’ dollars expended.
The old grant scheme closes this year, after companies already in the system have had their final applications processed.
The new fund will feed out $30 million a year, less than the former scheme under Labour but with a more strategic approach.
Applicants will fit one of two funding streams. The first will apply to “key accounts”, which will be considered for up to $1 million (including GST); the second, to “pipeline clients”, who will be eligible for up to $500,000.
In each case, the maxima apply in a five-year period and could be given in one year. Companies will match the grants with their own investment.
Grant McPherson, NZTE group general manager for business solutions, says an emerging exporter planning to attend a trade show may still be in line for a grant.
CONNECTIONS
But the new approach will consider how the company is connecting with the new market and with other NZTE services, such as those in offshore offices, and how the show fits the company’s three-, five- or 10-year goals.
The overarching theme will be long term benefit to the company and to New Zealand, says McPherson.
The scheme being phased out did not require companies to assess factors contributing to a marketing exercise’s success, nor did it require NZTE involvement via other services, he says.
He admits form-filling could become cumbersome, and multiple or different funds might have been accessed, each with different criteria.
There was also a “first come, first served”, entitlement approach that won’t be seen with the new fund.
The help will be more disciplined, the approach more planned and the probability of success higher, McPherson says.
Each application will be assessed on its merits, and grants made for projects or efforts that are additional to “business as usual”. Some work – eg, to improve productivity – might have a domestic focus, with an eye on future offshore expansion. The changes come not just as a cost-cutting exercise (see Budget story on page 27). They are also, McPherson points out, in tune with feedback from hundreds of business people.
He says NZTE held focus groups with clients, engaged with clients offshore, and heard from organisations such as Chambers of Commerce on the shape of the grants scheme. “No one said they didn’t agree with what we are trying to achieve.”
FANS OF THE OLD SCHEME
Auckland-headquartered storage systems manufacturer Lundia has found market development grants “instrumental” for high-profile advertising and website creation in its newest market, Dubai. Managing director Monte Stone says the Company is disappointed with the grants’ demise. “We know the government has to trim its sails but maybe this is something that should be maintained.”
He was commenting after Economic Development Minister Gerry Brownlee announced the canning of the old scheme but before details of the new one became available.
Emerging export company Roundy, run by Wellingtonians Walter and Margaret Hensch, received a market development grant to help them present the patented Roundy plasterboard technology to interested parties in Korea.
Walter Hensch says it’s understandable the government wants to prioritise this spending. The couple are grateful for the assistance and say they have also been helped “tremendously” by their NZTE client manager
KEY TAKEAWAYS
- Market development assistance grants are being phased out.
- A new fund will provide up to $1 million (including GST) for “key accounts” or up to $500,000 for “pipeline clients” (over five years).
- Companies will match the grants with their own investment.
- The overarching theme will be long-term benefit to the company and to New Zealand.
- $30 million annually will be up for grabs.
