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  • Discussion Brief for the Export Strategy-Maker

    New Zealand: a virtual team approach to promoting trade

    Michael Hannah, Manager – Government Relations and Policy, Chief Executive's Office, New Zealand Trade Development Board, New Zealand 

    In the early stages of internationalization of New Zealand’s manufacturing sector through the 1960s and 1970s, successive Governments took the view that private sector firms nurtured on protected domestic markets needed public support to motivate them to engage in exporting. 

    In this initial 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, regional business development board. 
    • offshore trade support – undertaken by the Government-owned NZ Trade Development Board (Tradenz). 

    Links between these two arms of development were largely informal in the sense that business development agencies and Tradenz could operate independently of one another and shared no common operational structure. However, some grants provided by the business development agencies were targeted at encouraging export activity, and therefore provided links with external market research and promotions through Tradenz. 

    But in one key area, Tradenz incorporated a formal structure linking both domestic development and external trade support. This was through its Joint Action Groups (JAGs). 

    In partnership with the private sector, Tradenz established JAGs, which supported the business and trade development of companies working together as sector groups to export or grow their exports. Sectoral strategies and activities, aimed at improving the export performance of sectors, were funded by Tradenz. From the mid-1980s to the late-1990s, there was a formal structure linking the capability development and the trade support activities of the JAGs. 

    Other initiatives were undertaken. In order to promote scale, business management disciplines and marketing strategies, Trade NZ began to develop Hard Business Networks – looser arrangements of exporting companies; and encouraged development of "clusters" – groups of companies, including suppliers, clustered around specialist exporting companies. 

    In the late 1990s, however, this strategy was challenged. 

    From the mid-1980s, New Zealand adopted a more free-market approach. This resulted in tariff reductions, privatisation, deregulation, and the dismantling of subsidies. 

    During this period, Tradenz – renamed Trade New Zealand (Trade NZ) – decided to focus on trade support, exiting from its business development role. While a number of the JAGs had been successful in lifting the export performance or a sector, it found that for other JAGs it was simply funding administrative assistance and little real export activity. 

    Trade NZ successfully moved its JAG funding into supporting only the export marketing activities of Export Networks, groups of at least three companies. 

    However, coincidentally and unrelatedly, regional business development boards closed, leaving a vacuum in business development services, that some thought might be filled by private sector consultancies in response to demand. 

    In 2001, Government moved to fill this gap, establishing a new development agency, Industry New Zealand, to provide domestic support for the development of management skills, high-growth industries and sectors, and export clusters. 

    Clearly, this domestic development agency and Trade NZ could develop strategies and activities quite independently of each other. But if both were to be active members of a trade support network, some formality would be useful to ensure co-ordination of both the design and implementation of strategy – just as a formal structure within the more successful JAGs (Joint Action Groups) helped to link capability development with trade development from the mid-1980s. 

    Government has therefore implemented and encouraged some formal co-ordination of strategies and activities of its business development and trade support agencies at board level. Management have set up forums to coordinate activities of the two agencies, along with a technology development agency, Technology NZ, with their respective business clients, providing 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. 

    In New Zealand’s case, the formality of the structure of the trade support network is limited, creating what might be termed a "virtual team" approach to promoting trade. 

    The views expressed are those of the writer and not necessarily of Trade NZ 

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    Posted 18 August 2010 
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