Monday , December 18 2017
Informed Influential Indispensable | newzealandinc.com
LeonGrice

Partnerships key to Auckland companies reaching the world

  • New Zealand companies should consider forming joint ventures and partnerships to gain traction in overseas markets.
  • New Zealand has a tendency to be Kiwi-centric, assuming that because our domestic market loves our products, overseas markets will too.
  • Māori businesses reflect the world view of Māori: that long-term sustainability is more important than profit.

“Māori want to hear your heart, not just slick words. If there is no connection to your heart, then there can be no deal – because it will be doomed from the start.” – Te Ururoa Flavell

Throughout the Tripartite Economic Summit, a point of consensus appeared to develop among those in attendance: the ability of New Zealand companies to form joint ventures and partnerships to gain traction in overseas markets will be crucial to spurring economic growth in the future.

As Steven Joyce, Minister for Economic Development, said in his keynote address, “We know that we actually have a challenge to get more companies out into the world more quickly.”

Achieving the success required to spur further returns for New Zealand companies internationally requires a number of changes, according to the Investable Auckland panel – both in mind-set and strategy. “We have a relatively poor history of taking our developments overseas and not losing all our money,” said BNZ’s Chief Economist, Tony Alexander.

One key cause of this is failing to modify and adapt products, based on research, to the needs of overseas markets. “We have a tendency to be Kiwi-centric,” assuming that because our domestic market loves our products, overseas markets will too.

The message was perfect for an audience including Auckland business owners, as well as investors and potential partner companies from Guangzhou and Los Angeles. “What we lack is the linkages with people overseas, which is where you come in,” Alexander told the audience. “Not just foreign direct investment into New Zealand, but facilitating the trade and the spread of these products overseas.”

“Increasingly, where our potential lies is as the place that loves to solve problems,” said Andrew Patterson of NBR Radio. “The potential to work with larger companies that are in that space is a real opportunity for Auckland in the future.”

Andrew Simmonds of Simmonds Stewart said he had observed a real growth in software as a service companies in New Zealand, but a stumbling block when they looked to grow internationally. Our SaaS companies (there are “literally hundreds and hundreds” of them, says Simmonds) “often stumble at the point they really need to put on more sales and find international partners.”

Alexander highlighted the need to drive a harder bargain when setting up joint ventures. He has observed Kiwi companies often settling for what would provide us a nice and comfortable lifestyle, as opposed to extracting the maximum possible return.

“Don’t undersell yourself when looking at setting up a joint venture.” -Tony Alexander

“Don’t undersell yourself when looking at setting up a joint venture,” said Alexander. “Put a higher price than you may be thinking as a Kiwi – because we tend to think that if somebody is going to pay me $5m, I can get my boat, a holiday home, a new car, and that’s all I need in New Zealand! You need to raise your selling price.”

This was echoed by Simmonds, who said, “Valuations are often crazy low (in New Zealand) in comparison to the States.”

One recent example of the importance of these partnerships highlighted by Simmonds was that of Grinding Gear Games, a New Zealand video game developer that has recently signed a deal with Tencent, a Chinese internet giant, to crack the Chinese market with their role-playing game Path of Exile. The partnership could help navigate cultural differences in the Chinese market that the game will have to be modified for, but perhaps more importantly, is expected to provide a gateway to a huge community of new users.

“If they can convert this and get distribution with Tencent, 20 million customers is really nothing in the scheme of what they can achieve,” said Simmonds. As Grinding Gears Games said at the time of the announcement, the partnership will provide “unparalleled access and reach for Path of Exile in the world’s largest gaming market.”

Tuo Zuhai, from the China Animation Comic Game Group, spoke about the value of partnerships for animation across cultures. In particular, Dreamworks have a joint production with China on KungFu Panda.

“In 2012, DreamWorks Animation took a gamble and launched Oriental DreamWorks, a US$330 million joint venture that was the first of its kind,” said Zuhai. “What started with the launch of the original Kung Fu Panda film is paying off significantly, with the release of Kung Fu Panda 3 out this year.”

Both Te Ururoa Flavell and Paul Majurey emphasised how important partnerships are for the Māori economy. For Māori, relationships are about mana. Māori are spiritual people, and agreements are based on trust. Their motivation in business reflects their world view: that long-term sustainability is more important than profit.

“Māori want to hear your heart, not just slick words,” Flavell said. “If there is no connection to your heart, then there can be no deal – because it will be doomed from the start.”

“There’s a lot of affinity between New Zealand expertise and LA opportunity. It makes for very natural and strong partnerships that will drive New Zealand exports, particularly intellectual property exports, into the future.” -Leon Grice

Leon Grice, New Zealand’s Consul-General to Los Angeles, shared similar views on the importance of partnerships. “There’s a lot of affinity between New Zealand expertise and LA opportunity,” said Grice. “It makes for very natural and strong partnerships that will drive New Zealand exports, particularly intellectual property exports, into the future.”

Rebecca Needham, New Zealand Consul-General to Guangzhou, expressed similar thoughts. “Looking to the future, a more exciting area is around the opportunities for New Zealand, and LA for that matter, to partner with Guanzghou in the innovation and technology sectors, or in business development, or at the intersection of these areas.”

As Needham said, bringing the joint ventures and partnerships that so many speakers extolled the virtues of will require a mindset shift by the Auckland business community: a need to “look beyond Guangzhou, and China for that matter, as simply a market for our goods and services, and emphasising the potential for partnerships that really create new economic value.”

About NZ INC.

NZ INC. is focused on innovation, entrepreneurship, foreign policy, trade & investment. NZ INC.’s mission is to enable New Zealand businesses and business leaders to succeed internationally by staying informed on current issues, trends and challenges in key international regions.

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