Balancing act for Kiwi firms going global

Volatile exchange rates and lack of experience were the key barriers to New Zealand businesses engaging overseas in 2011, Statistics New Zealand said today. Offsetting this were the prospects of cheaper production and access to new markets.

In 2011, almost one in five New Zealand businesses gained income from overseas, and over a third of these were hampered by exchange-rate volatility. "The big concerns for businesses receiving income from overseas were both the exchange rate level and sharp changes in it," business performance manager Hamish Hill said. The New Zealand dollar reached a record high against the US dollar in August last year after a period of fluctuation.

Lack of experience and limited knowledge were factors holding back businesses that wanted to start generating overseas income.

Despite the barriers, more New Zealand businesses are producing goods or services overseas – 6 percent in 2011, up from 4 percent in 2007. “Lower production costs are an important factor for more than half of these businesses, up from one-third in 2007."

Businesses purchasing from overseas said the key reason was their need to access products not produced in New Zealand. “Three out of five businesses that sourced goods from overseas did so due to having no supplier in New Zealand,” Mr Hill said. “However, the ability to reduce costs is still important for firms buying from overseas.”

These results come from the Business Operations Survey 2011, which collects a wide range of information on activities from businesses with six or more employees. Information is also available on innovation practices and a broad spectrum of other business activities.

For detailed tables see the Business Operations Survey: 2011 – detailed tables available from the Statistics NZ website, www.stats.govt.nz. A report on innovation in New Zealand in 2011 will be released in June 2012.