by TradeNZ
(Not edited by ITC)

As a nation, New Zealand has no other option but to adopt e-business and increase participation of its SMEs in the global economy. E-Business has the potential to expand the country’s current exports and grow the number of new exporters. Since uptake of true e-commerce is slow among exporters and other companies, the New Zealand Trade Development Board (Trade New Zealand) has taken on a leadership role through a NZ$10 million project supported by additional funding from the Government.

Over the next two years, the project will assist exporters to enter the online marketplace by lowering the barriers to entry; increase New Zealand’s foreign exchange earnings; and enhance the range of Trade New Zealand’s services through the introduction of new Internet offerings.

The e-business initiative consists of four tightly integrated streams: Education, Knowledge Management, Online Services and E-Markets. Each stream has its own manager, and is supervised by a senior management Project Steering Group.

The e-business strategy builds on competencies and expertise that have been gained over the past years in a number of web-related projects.

Ever since an influx of European settlers started to arrive on its shores in the early 1800s, New Zealand has been a keen participant in the world economy. The pioneering export trade included gold, timber, whaling products, grain and wool. And once the country’s engineers introduced the world to refrigerated shipping at the end of the 19th century, the British Empire never again needed to be short of beef, butter, mutton or lamb.

With its small population by world standards - currently 3.8 million people - economic self sufficiency has always been out of the question for New Zealand. In order to afford its import dependency, the country must perform strongly as an export nation. Right now, some 26% of a NZ$92.9 billion GDP (year to March 2000) is exported, whereas imported goods and services amount to a value of NZ$28.8 billion, or 30% of GDP.

The export landscape has changed dramatically in the past few decades, first when New Zealand’s main export destination Great Britain joined what’s now the EU in 1972 - forcing business to diversify and supply to other markets. Then, in the 1980s, Government embarked on a policy of economic deregulation and broke down the protection offered by subsidies and tariffs - forcing the harsh realities of operating in an open market upon farmers and industry.

As a result our current export economy is more robust and competitive than ever, but another ‘threat’ is approaching fast over the horizons of the global economy - electronic commerce. New Zealand must now turn this new rollercoaster business challenge into an ‘opportunity’.

While a limited number of exporters is adapting to the rapidly transforming global business environment, the uptake of e-commerce among SMEs has been slow up until now. While the rate of web-access uptake by corporates in New Zealand always has been encouraging, industry analysts point to a much lower level of true e-commerce, which involves transactions and payments. Our economy is considered as two to three years behind the uptake in Europe and the United States.

E-COMMERCE TECHNOLOGY USAGE IN NEW ZEALAND

Being a small country, New Zealand counts a disproportionately large number of SMEs’ among its 300,000 businesses. With SMEs recognised as the job engines of today’s advanced economies, harnessing the export potential of our small firms is crucial to become one of the winners in the new global economy. As an import dependent nation, burdened by our inherent ‘smallness’, it may even be crucial to our status as one of the world’s wealthier nations.

In general, SMEs lack the focus and critical mass to deal with e-commerce developments on an individual basis. Research shows that SMEs:

• Are pre-occupied with survival, with a vision tightly focused on the short term and issues such as profit, tax, competition and regulations
• Spend little time developing a strategic view of their business
• Have limited recognition of opportunities available through the World Wide Web or e-commerce

Barriers for SMEs to adopt e-commerce include:

• Lack of knowledge
• Concerns about security
• Concerns about customer readiness
• Confusion - there is no single voice or core of agreement
• Lack of standard operating procedures
• Fear of investing time and money in a rapidly changing environment
• Fear of isolation, since there appears to be no critical mass of other users

E-BUSINESS TODAY: PERCEIVED BARRIERS

SMEs are Trade New Zealand’s largest client group and have been looking for leadership on the issue of e-business. Many businesses can clearly see its benefits for a nation at the edge of the South Pacific whose keen participation in the world economy has always been hampered by what we term 'the tyranny of distance'. Internet technology can help business transcend the constraints of time, distance, language and currency, and offer a more efficient means to address contraints of scale and coordination through collaboration with virtual networks of other businesses .

Trade New Zealand clearly perceives the benefits for existing exporters, but also the potential for new exporters. Only a small percentage - just under 9000 - of our 300,000 businesses export merchandise goods each year. Almost 7000 of these export less than $500,000 p.a. E-Commerce could substantially grow the number of exporters. Whereas the Internet won't solve the capability problems that many SMEs face in regards to exporting, it can bridge other issues faced by small domestic producers with a good value proposition. E-Commerce is redefining the entry point for exporters and offers an opportunity to grow significant and diverse new enterprises - through an Internet based marketing strategy and outsourced distribution.

With the need for New Zealand's SMEs to enter into e-commerce clearly established - combined with the fact that most of them wouldn't make that journey by themselves - Trade New Zealand has taken on the role to e-enable our country's exporters. Traditionally the organisation has always operated in the area of market failure, where intervention from the State sector is necessary to bridge gaps in resources and coordination. The NZ$10 million investment by the Government in a national e-business or rather 'e-trade' strategy is crucial to ensure that the country's exporters remain competitive into the future.

Trade New Zealand is a Government owned statutory board, charged with growing the nation's foreign exchange earnings, through enabling the internationalisation of New Zealand businesses by promoting trade, investment and other strategic partnerships. Its e-business strategy is the result of extensive research into the domestic and international online marketplace and consultation with staff and clients to ensure alignment with the organisation's mandate and key performance measurements.

Trade New Zealand’s objectives for its e-business strategy are straightforward:

• Increase the range of Trade New Zealand’s services provided to clients, while improving the effectiveness and efficiency of the organisation
• Assist more clients to enter the online marketplace by lowering the recognised barriers to entry and reducing the time and cost of reaching dispersed markets and customer bases
• Enable clients to take their first steps into exporting, and consequently expand Trade NZ's current client base and foreign exchange earnings for New Zealand

Trade New Zealand will adapt and align its business operations to support the anticipated shifts in the way trade will be done in the near future. The aim is to extend the distribution channel and bring down the cost of standard business interactions with clients – giving staff the opportunity to focus more on value added services.

DISTRIBUTION CHANNEL MODEL DIAGRAM

Initial research shows the potential for generating significant additional or new foreign exchange earnings through the facilitation of clients into e-business and online marketplaces. Indications are that the ROI, even though hard to quantify exactly, will be substantial.

Trade New Zealand’s new e-business strategy incorporates a set of thirteen interrelated initiatives that will bring about noticeable change to the organisation itself and the way in which it does business, as well as to clients and the way they do business.

The thirteen initiatives are grouped into four streams, each with a ‘Programme Stream Manager’ responsible for delivery.

This stream will provide education and information on issues and opportunities.

• Education of Staff
• Education of Clients

Once staff have attained a certain level of knowledge about e-business, a programme for client education will begin. Clients will gain a common understanding of e-business effects on exporting, specific knowledge of the impacts and opportunities, and insights into where they can obtain quality business and technology implementation services to transform their export processes.

This stream will contain an as yet undefined set of initiatives, related to the refinement of a Knowledge Management strategy and the deployment of that strategy as required for each e-business initiative. One key initiative has already been identified.

• Decision Support System

This stream is ‘client facing’ and will facilitate New Zealand companies’ familiarisation with e-business and market their capabilities with (potential) overseas business partners.

• Client Profiling (showcase clients’ capability on the Web)
• Marketing Exporters-2-Buyers (create awareness of exporters’ e-capability in offshore markets by driving sales via the Internet, through sector based marketing plans)
• Online Services delivery (provide ‘Off the Shelf’, ‘Built to Standard’ and ‘Built to Order’ services over the Internet)
• Opportunity Matching (match qualified offshore business opportunities with clients’ capabilities – currently Trade NZ receives some 12,000 opportunities through its overseas network of offices each year)
• Investment Matching (match offshore investors with onshore client needs)

Each of these initiatives will provide impetus for clients to transform themselves into online businesses; give critical scale and mass to the country’s international trading sectors; and provide a shared infrastructure and tools to make sophisticated e-business tools more accessible – particularly to SMEs.

This stream will facilitate New Zealand companies’ entry into on-line markets. The initiatives will enable exporters to negotiate, buy/sell, distribute, settle and collaborate using the Internet. They will also offer exporters access to on-line solutions for offshore marketing activities and payment / fulfilment facilities.

• E-Marketplaces for Trading (a digital marketplace where buyers of New Zealand products and services can transact business online with exporters – including quotes, orders, payments, and (in the future) shipment tracking, customs export clearance, letters of credit etc)
• E-Marketplaces for Collaboration (an online environment where buyers and sellers can collaborate on projects in the area of ‘soft services’ such as consulting - using project management and other tools to manage and deliver the service)
• E-Networks (an online environment where established networks of exporters communicate, share information and collaborate with each other - and third parties - on particular market opportunities)
• E-Procurement (an electronic environment to systematise and automate Trade New Zealand’s procurement processes)

The result of all these strategic initiatives will be the development of an online community that consists of a range of individuals, agencies and organisations working together to assist Trade New Zealand clients to increase their foreign exchange earnings. This online community will include Trade New Zealand staff, exporters (clients and others), exporters’ customers, business organisations, central and local Government agencies, supporting Government agencies such as Customs, information content providers and private sector service providers such as banks or insurance companies.

The new e-business strategy will bring about significant change to the organisation and the way in which it supports its clients. Successful change management – complicated by the organisation’s global reach across almost 40 countries - is considered a critical success factor, and will be managed from within the organisation by the HR team with support from Communications.

To implement its e-business strategy Trade New Zealand has established a multi-layered programme management structure. Most management roles will be filled from within the organisation, but some jobs will be outsourced.

The executive management team acts as Project Steering Group, and holds responsibility for the strategy and its implementation.

The Programme Manager holds overall responsibility for the programme budget, plan, organisation resources and e-business strategy, and is contracted to Trade NZ for the duration of the project.

Each of the four streams of initiatives (see above) has a stream leader who is responsible for that stream and will ensure that all related strategic initiatives and projects are integrated. The stream leaders currently work in Human Resources, Marketing and Information Management, and will take on the additional tasks with the help of outsourced assistance.

Within each stream there are a number of e-business strategy initiatives, each lead by a project manager whose role is to ensure that the project is delivered on time and within budget.

Trade New Zealand has built up considerable expertise in e-business. Over the past two years the organisation has implemented its Knowledge 2000 project, which enables its integrated global network of offices to access a single document management system SilentOne, as well as a SalesLogix corporate database and a OneWorld Finances and HR solution.

The Website www.tradenz.govt.nz will shortly undergo its third transformation, to keep up with the rapid development of Internet technology. The site already provides Online Services by offering the functionality to either order or download ‘Off the Shelf’ products such as educational videos or booklets.

Another proven initiative, MarketLink, has been providing New Zealand exporters in the building and engineering sectors with hot business leads to the value of NZ$40 million over the past few years. This Opportunity Matching facility mainly covers Australia, but has recently been expanded into the Pacific region.

The e-business strategy will also build on an initiative that Trade New Zealand has worked on in close cooperation with Tourism New Zealand over the past decade – country of origin branding through Brand New Zealand. Just as Canada has its maple leaf, we’ve adopted our silver fern, and just like Italy is known for style, we’ve identified and adopted symbolism that reflects brand values such as excellence in quality, and innovation. The e-business initiatives will be consistently branded as pure New Zealand throughout – visually and through tone of voice.

With all these different pioneering initiatives in place, Trade New Zealand is now ready to take the next step. The organisation considers its e-business strategy as a natural progression from the earlier initiatives - bringing together the business and IT skills that have been developed over the years.

Not having an e-business strategy in place for its exporters was not an option for New Zealand. Even though it is extremely hard to quantify the dollar value of the impact of the strategy, or estimate other success indicators, it is easy enough to see the potential for disaster if the New Zealand Government had not acted.

Trade New Zealand’s strategy will address SMEs’ concerns about lack of knowledge, security and a solid core of standards. It will also give our exporters the critical mass they need to be successful in an extremely competitive marketplace – at a fraction of the costs and efforts they’d need to dedicate if they’d "go it alone".

Trade New Zealand has actively promoted the concept of "Cooperating to compete" through exporter networks, ever since Michael Porter advocated the concept of clustering in a study on New Zealand’s competitive advantage in the early 1990s. We explain to businesses that their real competition is offshore and that they need to join forces to outsmart those competitors.

Working in cooperative fashion on an e-business strategy suits the country’s exporters. It fits with an insular attitude that there’s safety in numbers when you step out into the big global economy, it enables them to achieve impact, and it will allow them to enter into e-business the easy way – without falling into all the different, disastrous traps for young players.