The 2016 ExportNZ DHL Export Barometer shows Kiwi exporters are feeling confident and expecting orders to increase in the next 12 months, despite the uncertainties in the UK and US.
The research shows that overall 2016 has been a good year, with just over half (52%) of exporters achieving an increase in international orders.
When asked about expectations for the coming year, optimism is very positive with 63% of New Zealand exporters expecting international orders to increase, and 32% saying they expect orders to remain at the same level.
Commenting on the results, Catherine Beard, ExportNZ Executive Director says, “This is a positive signal in an increasingly uncertain global market. While the survey was conducted before the US election result was known, the chance of TPP getting across the line was looking weak whichever candidate won.
“Export destinations have remained consistent, although China, ASEAN and Hong Kong have slipped back a bit since last year. Now the top five export destinations are: Australia, North America, Europe, Pacific Islands and the UK.”
Online commerce holds steady
The 2016 ExportNZ DHL Export Barometer shows that while some exporters have embraced online commerce, there is still room for growth.
One-fifth of exporters now generate more than half of their international orders online, including 6% who generate all export orders this way.
Mark Foy, DHL Express NZ Country Manager says, “Online commerce is a massive growth area for Kiwi companies and almost three-quarters of exporters now generate orders in this way.
“Correspondingly, 40% of exporters say they currently use social media to increase international orders. This is an additional opportunity to market to international consumers looking for innovative and unique goods.”
Overcoming export challenges to thrive
While exporting poses many benefits in tapping into much larger offshore markets, the 2016 ExportNZ DHL Export Barometer shows Kiwi businesses need to navigate a number of barriers to do so.
The biggest of which is the level of the NZ dollar, with exactly one-third of exporters highlighting the exchange rate as a challenge. Coming in second is the strength of competition in overseas markets, a concern for 30%. Finding partners or agents in a new destination comes in third (28%) – with the ever-present set-up costs/funding being a challenge for 23%.
However, encouragingly, one-in-six (17%) of exporters say there are no major barriers faced by their business regarding international trade – the fifth most popular answer.
Neutral or negative sentiment dominates calls to lower import duties threshold
While there have been calls from some parties regarding lowering the GST-free threshold for imported goods entering New Zealand, exporters overall signal neutral or negative impacts.
The majority (56%) of Kiwi exporters said there would be no impact to their business if there is a change to the current regime, whereby goods valued at $400 and under are not subject to Government duties and taxes. However one-third (32%) cited negative impacts around an increased cost of importing raw materials, delays or other administration costs.
Foy added: “Just one in ten Kiwi exporters believe that reducing the GST threshold would make it easier for them to compete with overseas retailers.
“Instead, this research highlights that while exporters are confident for the year ahead, the high dollar continues to be the biggest challenge, making competitiveness an issue.
“Exporters indicated the most valuable support from Government would be more R&D assistance. This is very positive as it indicates an ongoing focus on innovation and new product development, which is a better way to stay ahead of the global competition than trying to compete on price alone.”
Calls for more free trade agreements
The 2016 ExportNZ DHL Export Barometer shows that a quarter of exporters support more free trade agreements (FTAs).
“Interestingly, Australia is the only country out of our most popular export destinations that currently has a trade deal with New Zealand, so progress needs to be made on the rest, including the UK as a result of Brexit,” says Beard.
“ExportNZ is hopeful that if the TPP can’t come to fruition, the wider Asian region can show the way with a high quality free trade agreement “RCEP” (a 16 country, Asia-wide free trade agreement including India and Japan). This would help New Zealand exporters remain competitive in these markets.”
A joint initiative between ExportNZ and DHL, a total of 536 New Zealand exporters were surveyed for the ExportNZ DHL Export Barometer 2016. This research aims to provide Kiwi businesses and Government officials detailed feedback on exporter sentiment plus barriers to exporting and how to help reduce them where possible.