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BUDGET 2014: Export education investment ‘mission critical’ for SMEs

Lately the media have been in a lather about a certain cup of tea involving a certain politician who visited the Chinese offices of a New Zealand exporting company.

Without commenting on the political rights or wrongs of that situation, the responses from many New Zealanders to this “storm in a teacup” suggest that the understanding of the ins and outs of doing business in China is still a great mystery to many people.

The importance of exporting for New Zealand businesses can’t be overstated, and the importance of understanding the “new” markets that New Zealand businesses will be exporting to more and more – namely, China, India and including some of the other Southeast Asian countries, is correspondingly enormous.

Our economy is doing well but too many small and medium enterprises (SMEs) aren’t fulfilling their potential as exporters. Budget 2014 would be the perfect time for the government to really invest in helping SMEs get their exporting credentials up to speed. 

And not just in the sense of thinking about monetary policy or budgeting for business mentoring (which is of course important) but in providing education so they better understand the political and social landscape of these markets and their people – their cultural values, priorities, ways of doing business and even language – if resourcing could spread that far.

When I talk to the businesses about taking advantages of opportunities in Asia, they tend to focus on the details surrounding potential risks of fraud, bribery, corruption, loss of IP, and their independence, rather than investing in understanding the idiosyncrasies of doing business there.

Small mistakes can sabotage success. 

But potential mistakes can be avoided with a bit of good advice at the right time. 

If some good advice can provide a greater understanding between our businesses and customers in new and existing markets, then the government should be doing all it can to support this to further increase our exports to these lucrative markets. 

Taxpayers may wonder why it’s the government’s role to assist private enterprise to get up and going in these export markets. 

SMEs play an important role in job creation and contribute enormously to our country’s revenue, innovation, growth, well-being and the overall prosperity of the nation. 

I believe it’s vital for us all to contribute now, so later we can share in the prosperity which will eventuate as our businesses feed these growing markets by supplying added value products and services. 

Two things that the government could do to immediately help SMEs are:

  • educating them with the know-how to build and grow relationship in the new markets with honoured customers; and
  • arming them with the skills and knowledge to better service existing and potential customers.

If these two things were implemented in this year’s budget, the positive impact on SMEs and our economy would be enormous. 

For, in the words of Mahatma Gandhi: “A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us an opportunity to do so.”

Shashi Kumar is associate director of business risk at Grant Thornton

Comments and questions
3

Shashi, I would wholeheartedly agree. By and large our SME's do a tremendous job, but the resources of time and money needed to engage and continue the ongoing relationships in Asia and in China are enormous. It is only the stout of heart or the fortuitous that mange to be successful. Corporates can bring a war chest of planned funding to the engagement, but SME's are often trying to engage in exporting from meagre resources as that is all they have. Exporting is not a choice for NZ it is an outright necessity. It is also a long term program (4 yrs min) to develop the relationships with the contacts and buyers we need.

Surely it is the role of the various business associations to provide this sort of support for SMEs. Why does it need to be the Government (i.e. the taxpayer)?

I would agree Lindsay, and they do in the way of specific targeted learning programs. However our SME's are so under resourced with regard to exporting that they need to have access to the same level of "war chest" that our corporates have in order to sustain their export program for an extended period of time in order to develop the relationships that are so essential to success. Malaysia in particular has a whole government division dedicated to the empowerment of their SME's and with exporting support. They actively coordinate their govt. departments to do this in a structured way, even for start ups and strugglers. We, on the other hand, are told to sink or swim, and in the process drain the company resources so that the triers end up collapsing their companies under the weight of relationship costs before the export orders start flowing.