Analysis: Tech will pass dairy as NZ's largest export within three to five years: TIN100 boss

  • Scroll down for tables of the largest high-tech exporters, and the fastest growing

High-tech will pass dairy as New Zealand's largest export within three to five years, Technology Investment Network founder Greg Shanahan tells NBR Radio.

Companies like Xero ($207 million) and Orion Health (also $207 million) are actively targeting $1 billion in annual revenue – albeit at the expense of profit, for now. Datacom got there earlier this year.

All told New Zealand's technology export sector delivered offshore revenue of almost $7 billion in the year to March 31, up 13.5% from $6.5 billion in 2015 according to the 12th annual TIN100 report, which is compiled by Mr Shanahan's company with backing from NZTE and Callaghan Innovation (if domestic sales, companies in the TIN100, and the broader TIN200 are included it clocked just over $9.4 billion revenue).

By contrast, Statistics New Zealand figures for the year to June 30 show the value of dairy exports falling to $11.16 billion from the previous year's $12.03 billion.

Stats NZ rates the travel and tourism sector second on $10.2 billion for the year to June 30. Meat is third on $6.6 billion, education fourth on $6.6 billion.

Stats NZ doesn't have a single "high tech" sector but its does list mechanical equipment at $1.6 billion, telecommunications, computer, and information services on $802 million and optical, medical, and measuring equipment at $795 million.

What's behind the high-tech sector's lift in export receipts over the past year?

Part of it is favourable currency movements, particularly at a time when demand from North America is increasing.

Exports to the US lifted 26% to $2 billion, a figure boosted by the rising value of the New Zealand dollar. Exports to Europe grew by 12.5% and to Asia by 11.7%.

But Mr Shanahan says it also helps that New Zealand now has a whole ecosystem of high-tech companies, rather than being dependent on a couple of giants.

And on a more conceptual level, he says New Zealand companies have more self belief and are unafraid to shoot for the number one spot in a sector worldwide, as Xero in accounting software or Orion Heath in patient records are doing.

While the Information and Communication Technology sector showed the fastest increase in revenue growth, up 17.3%, manufacturing contributed the most revenue in dollar terms.

Of the emerging companies, Pushpay delivered the largest revenue growth in the sector, increasing sales by $13 million to $15 million. Wireless power company, PowerbyProxi was second, with revenue growth of $10 million to $12 million. Retail point of sale software operator Vend was third, with sales growing by $7 million to $15 million.

Wellington-based virtual reality company 8i is named as the most promising early stage company, while Palmerston North's Biolumic is second. The company uses UV light to enhance crops. Canterbury's CropLogic, which uses software to deliver optimal yields, was third.

Kiwi companies now preying on others
The TIN100 covers companies that are based in New Zealand. Over the past few years, a constant theme has been Kiwi companies being sold to offshore interests.

Mr Shanahan says US companies have done most of the scoping, but it's notable though F&P Appliances, which dethroned Orion Health from the number one slot this year, was bought by China's Haier.

"That's dropped considerably in 2016," Mr Shanahan says. "In fact the reverse is now happening. There were 31 acquisitions by TIN100 companies in the past 12 months. It's a sign of the ambition and aggression with which Kiwis are pursuing global markets."

TIN100: Fast facts

  • Offshore revenues totalled nearly $7 billion, up 13.5% on last year.
     
  • US exports increased nearly 26% to more than $2 billion, buoyed by currency shifts.The European market grew 12.5% and the Asia market 11.7%.
     
  • ICT led primary sector revenue growth (up 17.3%), but manufacturing contributed the most revenue in dollar terms (61% of total).
     
  • Healthcare ($1.69b) surpassed appliances ($1.68b) as the largest secondary technology sector.
     
  • Financial services technology (31.2%) and digital media (24.3%) sectors recorded the highest percentage gains.
     
  • TIN200 companies created nearly 3000 new jobs in the past year, up 7.9%. They now employ almost 40,000 people.
     
  • Record 16% growth in R&D spend, now accounting for nearly 9% of total revenues of TIN200 companies.
     
  • A record 31 acquisitions were made by TIN200 companies in the past 12 months.
     
  • 40% more TIN200 companies generated revenues over $50 million than five years ago.
     
  • Wellington led regional revenue growth (15.3%), while Auckland contributed the greatest proportion of revenue ($5.4b). The South Island grew 9.2%

TOP 10 TIN100 companies (by revenue to March 31, 2016)

Fastest growing TIN100 companies (by revenue to March 31, 2016)

Fastest growing "Next100" companies (by revenue to March 31, 2016)

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