Australia not easy market for New Zealand to do business

Australia not easy market for New Zealand to do business


Machinery
 New Zealand Trade and Enterprise business adviser, Cathy Wansink, in the Otago region with Gerald Harrex, a co-founder of farm machinery guidance and job management equipment maker, TracMap, which exports to Australia.

New Zealand Trade and Enterprise business adviser, Cathy Wansink, in the Otago region with Gerald Harrex, a co-founder of farm machinery guidance and job management equipment maker, TracMap, which exports to Australia.

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THE language barriers are not too significant, but Australia is proving a bigger, tougher export market than many New Zealand agribusinesses first expect.

Aa

THE language barriers are not too significant, but Australia is proving a bigger, tougher export market than many New Zealand agribusinesses first expect.

Our wide brown land is less digitally connected and a more fragmented marketplace than NZ – and apparently Australians don’t quite have the same work ethic as their Kiwi cousins.

Despite NZ’s relentless successes against the Wallabies on the rugby paddock, Australia can be something of a surprise package when agribusinesses cross the Tasman Sea in search of fresh sales victories in a new land, busy with farming activity and a population six times as big as their own.

Even language can still be a hurdle.

“We speak the same language, but communicate quite differently – at times you think we’re speaking a foreign language in Australia,” said John Stubbs, general manager of NZ livestock product business Shoof International.

Common observations by Kiwi agribusiness bosses like Mr Stubbs include the unanticipated “tyranny of distance” associated with doing business in NZ’s largest offshore market.

The marketplace was vast, each State was different, communications networks and marketing habits were less cohesive than back in NZ and labour more costly and harder to find.

“Culturally, Australia is different,” Mr Stubbs said.

His company started selling across “the ditch” 20 years ago.

“There’s a cultural difference in the way Australians, by and large, treat their work-life balance,” he said.

“Our labour costs in Australia, in real terms are also 15 to 20 per cent more expensive than in NZ.

“Recruiting people who fit our business culture and our team has proven a far more effective strategy for us than employing Australian staff who might have the best skills on paper.”

Shoof sells a range of 25,000 products spanning cattle hoof repair adhesives to calf birthing pullers, protective clothing and stock watering devices.

It has owned distribution operations in Victoria and Queensland since 2002 and in Chile since 2010.

The company’s initial Australian export experience was slow, but Mr Stubbs said business had blossomed in the past decade as management recognised and embraced the cultural differences, and accepted the challenges.

He urged Kiwis to venture into Australia “bit by bit” because each State was a different environment with different market priorities and customers, unlike NZ’s comparatively compact, dairy-dominant farming sector.

New Zealand Trade and Enterprise business adviser, Cathy Wansink, in the Otago region with Gerald Harrex, a co-founder of farm machinery guidance and job management equipment maker, TracMap, which exports to Australia.

“Many NZ companies look across the Tasman and think Australia is a big version of NZ, but it’s almost like you’re dealing with six or seven different countries,” said Melbourne-based commercial business adviser with NZ Trade and Enterprise, Cathy Wansink.

“Employing staff can also catch businesses out – they’re not expecting the wage loadings and other extra expenses they encounter.

“There may be frustrations finding the right people for agricultural industry roles, too.”

Ms Wansink said Kiwis expected a “get in and do it” work ethic which some felt was lacking, in certain situations, in Australia – although it was not an issue she had encountered.

While Australia buys 28pc of NZ’s agricultural technology exports, worth about $360m annually, plus almost $4b in food related products, Ms Wansink said the big distances and differences involved in servicing the market tended to surprise exporters and could create hurdles.

The scale of Australian farming operations and the industry’s hunger for time – and labour-saving technologies also offered exciting market opportunities for NZ ag-tech businesses.

However, poor digital connectivity in many regions, particularly out in farmers’ paddocks, could be an unexpected surprise and challenging for NZ businesses introducing new traceability, automation and livestock or crop monitoring technology to Aussie farms.

“Despite NZ’s rugged geography and some fairly remote situations where people live and work, their technology choices mostly work and are widely used at a regional level, including on farms,” Ms Wansink said.

“In Australia, only a minority of farmers have reliable connectivity over their farms and on-farm telecommunications infrastructure is limited.

“This creates constraints for technology adoption and collection of ag data.”

The opportunities, however, for NZ companies to provide more of these services, including livestock health record keeping and quality assurance monitoring, were obvious as connectivity improved.

With its 66 million sheep flock and a 25m-strong beef and dairy herd Australia was an attractive growth prospect for Kiwi businesses.

Back at home NZ has a more modest 27m head flock and 11m cattle.

Yet, while Australia was the most convenient export market they were likely to encounter, with low barriers to entry, Ms Wansink said many agribusinesses “get a bit of a shock” when they arrive to set up shop.

“Some turn away, deciding they aren’t prepared to carry the cost and effort, but most push on because Australia’s a much easier export proposition than anywhere else for NZ companies looking to expand their market.”

She recommended aspiring overseas operators carefully calculate the time and money they planned to spend, “then triple it”.

Agreeing, Shoof’s Mr Stubbs said making a mark in Australia required investing seriously in customer engagement at field days, trade shows, conferences and other industry events.

“We’re out at the opening of every letter so our target market knows the Shoof story and our farm family origins.

“We started writing some serious business once we showed the market we were prepared to invest in them.”

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