WELLINGTON: The technology sector is growing and is an increasing proportion of New Zealand’s exporting activity. It is the third-largest export sector behind dairy and tourism, worth $6.5 billion in exports last year. Industry sector reports show a third of high-tech companies derive 75 per cent of their revenues from exports. In 2014, information technology and communication exports alone increased by 23 per cent over the year.
University of Auckland professor Rod McNaughton said it would make sense for the country to place more emphasis on its technology exporters, he said.
“Dairying has quite a limited number of product lines but technology can be a wide variety of things. It’s important because of its diversity. It has links to many other places in the economy,”
Boosting the technology sector could lead to improvements in other industries, too, he said, as firms developed better software or other tools that those in other sectors could use.
Many technology firms find themselves become exporters almost by default. McNaughton said the market for high-tech products was incredibly small in New Zealand.
The challenge for the sector is that on one hand it is a very attractive sector to develop but on the other because it’s a small economy, firms who develop immediately need a presence overseas.”
Stuart Wilson, chief executive of network company Endace, said New Zealand was not big enough to support large technology businesses. “It’s almost impossible to get where you need to get good growth unless you are exporting.”
He said Kiwi companies had to find their place in a global economy and leverage their relationships with other suppliers.
McNaughton said that could create tension because businesses that were backed by Government money, such as with grants from Callaghan Innovation, could have an expectation placed on them that they would stay in New Zealand.
“The more a Government invests in a company the more they like to see them remain in the country but the best thing for them is to begin moving overseas quickly.”
BBC Technologies chief executive Geoff Furniss said it had been hard to break into international markets but because his technology – machines which pack and sort blueberries – was niche, it did not take long to make a name for the company once it did.
“We ended up with a global brand reputation. For anyone who is looking to grow blueberries on a commercial scale, our name will come to mind.”
He said it was not logical to have the business based in New Zealand – it had to bring things in, work on them here amd then send them out again. “We bring materials from all over the planet and sell them all over the planet. It’s the additional cost of living here.”
But he said the culture that the business had developed meant that it was not worth the risk of trying to transplant it anywhere else. “If it ain’t broke don’t fix it.”
Furniss said his team spent a lot of time in international markets with customers, to develop relationships. About a third of his 115 staff are out of the country at any one time.
The business, which is a finalist in this year’s ExportNZ Awards, is growing 10 per cent to 20 per cent year on year.
There are a number of tech exporters among this year’s finalists, including Gallagher Group, renowned for innovation and marketing of animal management, security, fuel systems and contract managing solutions, film industry software provider Vista, Waikato Milking Systems, Keedup, which offers service to the international celebrity image business – editing, captioning, keywording and distributing the latest shots from celebrity hot spots, and cloud services provider Virsae.
Furniss said it was possible that his business might eventually shift some of its low-tech, low-value equipment outside New Zealand. It was important to keep the highest-value work, with the most valuable iP to protect, here.
“I have never met the leader of a tech company who is not a committed, patriotic Kiwi,” McNaughton said. “They’re not purposely saying they don’t like running a business here, they’re going overseas because it’s better, they are all concerned that what they do is positive for New Zealand but realise that if the business is going to grow in the way they hope, some components of it have to be overseas.”
Wilson said much discussion had focused on whether an entire product could be built from start to finish in New Zealand. “We need to break that. We need to release we live in a world where we have to rely on providers overseas to build out technology and we have to embrace sharing around the world. It’s a worldwide ecosystem, not just in New Zealand. Where we will be successful is when we focus on what we do well with our products and understand the value we add, that’s the way to get scale rather than try to do it all locally.
“Some stuff will be built here and some overseas. It doesn’t matter. We want to get as much value out of the IP as possible. As long as the value is back here, it doesn’t matter. We need to focus on building talent in New Zealand and bringing value back, not trying to do it all.”:
Wilson said the biggest limiting factor for his business was finding talented people who had been trained in the right skills needed. “We don’t have enough engineers and computer scientists coming through.”
He said New Zealand needed to grow its exports to grow the economy. Technology could eventually become the country’s number one export, he said.
“But at the moment I can’t see it because we don’t have enough people in the technology industry trained with the right skills. But it could happen with an investment in education.”
