During the past 30 years, successive government strategies were
introduced to address New Zealand's natural trade disadvantages.
The initiatives included public interventions such as statutory
export marketing boards, tax-funded export subsidies, and
capability development support. Initially, these strategies
reflected the view that private sector firms which focused on
selling within protected domestic markets needed public support to
motivate them to engage in exporting. During this period, the trade
support network incorporated aspects of public and private sector
activity in:
• domestic capability development - fostered by state-funded
specialist business development support agencies, in particular a
development bank and regional business development board; and
• offshore trade support - undertaken by the government-owned
Trade New Zealand, known at the time as Tradenz.
Links between these two arms of the trade support network were
largely informal. But in one key area, a formal structure linking
both domestic development and external trade support was
established. In a partnership with the private sector, Tradenz
established Joint Action Groups (JAGs) which supported companies
working together as sector groups to export. Other initiatives were
also undertaken. For example, in order to promote scale, business
management disciplines and marketing strategies, Tradenz began to
develop Hard Business Networks - looser arrangements of exporting
companies to pursue specific export opportunities. It also
encouraged the development of "clusters": groups of companies,
including suppliers, clustered around specialist exporting
companies.
The network breaks down
But from the mid-1980s, New Zealand adopted a more free-market
approach. This resulted in privatization, deregulation and the
dismantling of subsidies. Trade New Zealand ended its business
development role and decided to focus exclusively on trade support.
While a number of JAGs had successfully lifted the export
performance of a sector, for others, Trade New Zealand was simply
funding administrative assistance and little real export
activity.
However, in a coincidental and unrelated development, regional
business development boards closed. This left a vacuum in business
development services that some people thought might be filled by
private sector consultancies. Unfortunately, consultancies did not
fulfil this role for small firms, which still made up the bulk of
New Zealand's businesses. There were no economies of scale to allow
major consultancies to bring fees down to affordable levels for
small and medium-sized enterprises (SMEs). And small companies
found it difficult to afford consultancies, especially since
returns were hit by both growing competition on the domestic market
and lower export returns due to a stronger currency. The potential
for developing more small and young firms into fully-fledged
exporters was not fully realized, because domestic-focused firms
saw it as difficult and expensive to enter exporting.
Filling the gap
In 2001, the Government moved to fill this gap, establishing a
new development agency, Industry New Zealand, to provide domestic
support for developing management skills, high-growth industries
and sectors, and export clusters. The Government has also
implemented and encouraged some formal coordination of strategies
and activities of its business development and trade support
agencies at board level. With their business clients, management
has set up activity coordination forums and a technology
development agency, Technology NZ, to provide an integrated
service. Each member of the trade support network has a specific
role or speciality, whether it be management capability
development, technology development or trade support. Where there
is overlap, for instance in dealing with industry sectors, or in
attracting investment at different stages of the business life
cycle, roles are clarified along the way, creating what might be
termed a "virtual team" approach to promoting trade.
Michael Hannah is Manager of Government Relations and
Policy, Chief Executive's Office, New Zealand Trade Development
Board, New Zealand. E-mail: michael.hannah@tradenz.govt.nz.
The views expressed in this paper are those of the writer and not
necessarily of Tradenz. A longer version of this article can be
found on the ITC web site.