James & Wells recently held its annual seminar series fostering business innovation in New Zealand. This year’s theme was exporting, with eleven industry experts and successful exporters sharing their pearls of wisdom as well as common mistakes. There were a few key messages that stood out:
Choose your partners well
Speakers from New Zealand Trade and Enterprise stressed the importance of businesses visiting the intended export market and doing the appropriate due diligence on potential partners. “Check out their reputation and support capability, talk to their customers and ask end users who they would use as a distributor,” said Estelle Carmichael. “Make sure you choose a partner who shares your goals; someone you sell with, not to.”
This message was reiterated by Lowry Gladwell from Vend who said, “We’ve partnered with many businesses and there needs to be reciprocal benefit. If one party relies on the relationship more than the other, it’s not sustainable. We’ve had to pull out of partnerships that weren’t paying off and it was difficult.”
Vend has recently launched a US distribution strategy that relies on partnerships – 1200 of them in fact. Lowry said “We realised there is a whole sales tier in the US that doesn’t exist in New Zealand. We found agents that share our target market and pay them commission for selling our product as an add-on to theirs. The products are better together and we both get less customer churn – a win for us, our partners and the customers.” Lowry recommended that business think outside the box on who their potential partners could be. “We didn’t even know these agents existed a couple of years ago, and today they are driving our growth in the United States.”
Prepare your intellectual property in advance
Gus Hazel from James & Wells said, “A lot of people do not realise that intellectual property (IP) rights are jurisdictional. You may have patent and trade mark protection in New Zealand but that doesn’t guarantee you can sell your product in other markets. It’s important to carry out a freedom to operate search. You can start with a basic DIY search for business names, domain names and even checking the local trade mark register. Although there is an expense involved, I would recommend speaking to a specialist. They will know the specific IP laws and languages of the country and will also be able to carry out a more comprehensive search. It is a lot cheaper to perform a search early on than it is to be hauled into a legal dispute at a later stage.”
Rockit Global Limited (Rockit) is a prime example of a company that did their IP research but have still faced legal disputes. “If you’re successful you will be copied,” said Gus, “Rockit have a very popular product and unfortunately they’ve had to take legal action to protect it.”
After telling the story of Rockit, CEO Austin Mortimer, shared several images of counterfeit products that use near identical packaging and design to Rockit’s distinctive apple tubes. “We’ve been through periods where it’s like playing whack-a-mole. No sooner had we sent a cease and desist letter to one infringer, another pops up. It’s costly and time consuming to deal with.”
When asked what the alternative is, Austin said, “There isn’t one. If we didn’t have our IP registered and take legal action, our brand would completely devalue. Our apples are bred to be small and taste great, these copycats use under-developed full-size apples which taste bitter. We’ve invested years into creating a premium product and brand; we can’t be associated with sub-par knock-offs.”
Research the market and work with locals
Chris Boys from Katabolt demonstrated a variety of different pricing strategies by posing a question to the audience – “What would the ‘sell price’ be for two litres of fresh milk in China?” Only a few groups came back with a price close to what the product was selling for on Alibaba. Chris said, “It is important to do your research and understand the value that your consumer is willing to pay. In this case, the customer will pay a premium so selling for less leaves money on the table.”
James Robertson from Invert Robotics spoke about the success they have had in certain countries being dependant on whether they were ‘pushing’ their way in or ‘being pulled’. ‘When someone really wants what you are offering it’s so much easier’. After a few failed attempts sending New Zealand staff on sales trips, Invert realised that having a local salesperson who knows the culture is invaluable. “We made some silly mistakes like gifting wine to a client in a country where alcohol is frowned upon. The person was an ex-pat so I thought it would be OK, but he wouldn’t accept it. I quickly learned to not to make assumptions.”
With a background in manufacturing offshore and some bad experiences with suppliers cutting corners, HMI technologies made sure it was in control of the entire supply chain when it ‘accidentally’ got into the business of producing the southern hemisphere’s first electrical self-driving shuttle. Mahmood Hikmet said, “After years producing road signage we began developing products that could communicate with self-driving cars. The problem was that we couldn’t find a car manufacturer to collaborate with us. Eventually we decided, let’s just make our own vehicle.”
When they established offshore manufacturing, HMI spent time in the market before training local staff. “Spend a lot of time there and make sure your partners or employees understand the ‘kiwi’ way of doing things. In some countries, regulations exist but are commonly flouted. If we receive inferior product from our partners there is a chance that it won’t meet our regulations and will have to be binned.”
Learn from others
Andy Hamilton, CEO of The Icehouse spoke about the kind of leadership required to take a business global. He recommended that entrepreneurs form networks with others who are in, or have recently been in, the same situation as themselves. “Wisdom and learning can be accelerated by surrounding yourself with a great bunch of other entrepreneurs. Having connections with people in the same field who have specific insights is invaluable.”
Whilst exporting can be tough, it can be lucrative if you get it right. Fortunately, there are many resources available to help New Zealand exporters, from Government agencies to private sector organisations. Reach out to these sources and don’t be afraid to ask for advice from experienced exporters, they are usually more than happy to pass on their knowledge.
