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E-Commerce Seminar - Paul Swain Speech

Thursday, 25 October 2001

Speech Notes - Hon Paul Swain

Address to E-Commerce Seminar

I am thrilled to be here at this E-Commerce Event.

I understand that this is the third e-commerce event organised by Vision Manawatu, but the first that has also included the regions of Wanganui, Tararua district and Horowhenua.

It is also the fifth this year in a series of Regional E-commerce Events that the government has been supporting through the Ministry of Economic Development.

I have been particularly impressed with the very practical sessions and the line up of impressive speakers that I've seen here today. I hope you leave here with some ideas on how you can use e-commerce to help run your business better. I want to take the opportunity today to reflect a little about where we've been, and where we are going.

It is now nearly a year since we held the E-commerce Summit in Auckland and launched the government's strategy to achieve our vision of NZ being world-class in embracing e-commerce for competitive advantage.

In that time a lot of things have happened. We've witnessed the dot com crash, and of course we have no clear perspective yet on what impact the events of September 11th will have on the New Zealand economy.

This in no way lessens the importance of e-commerce. History has shown that whenever there is a new technological development it takes time for business to work out the best applications and models.

We are seeing this with e-commerce. Indeed I want to make the point that it is very easy to forget how much things have changed over the last decade.

Eight years ago there was a cartoon published in the New Yorker of a dog using the Internet - the caption read "on the Internet, nobody knows you are a dog".

That was a time when many people had not even heard of the Internet. Back then it was still very much the territory of academics and computer nerds. Anonymity and the free sharing of information was the hallmark of Internet culture. Multi-billion dollar companies like Amazon and Ebay were not even dreams let alone ideas. Nobody was talking about e-commerce.

In eight years the Internet has undergone a huge change, impacting on governments, business and consumers.

Today the Internet is a commercial environment that empowers businesses to collect and manipulate information, to customise, repackage, market and ultimately to sell products and services.

We can talk about the obvious benefits of this, such as helping New Zealand overcome the tyrannies of distance, the speed and efficiency with which we can do business nationally and internationally and so on.

But most importantly e-commerce is an essential part of the wider and more important issue of New Zealand becoming a key player in the world knowledge economy.

At the recent Knowledge Wave conference one of the key points made time and again was the need for economic transformation in New Zealand.

In order for New Zealand to become a top economic performer we need to be a country where information and knowledge generate new products and services, and new value for traditional products and services.

The most important thing we have done is to reject the old, last century thinking that governments have no role in economic development. They do.

This government has rolled its sleeves up, and is working in partnership with business, tertiary institutions and communities to provide opportunities for all New Zealanders.

And the key here word is partnership - working together to maximise potential in the interest of all New Zealanders. Indeed this event today is a demonstration of partnership in action, and I want to thank the organisers and you the participants for showing the kind of local leadership we need.

I think that one outcome of the Knowledge Wave conference was the feeling that although it is very useful to look at the strategies employed by countries such as Ireland and Finland, we in New Zealand need to forge our own path to knowledge based prosperity. We need to take account of our own natural advantages and seize the opportunities that are uniquely open to us.

And they are considerable - we are a predominantly English-speaking nation with a stable government and sound legal systems. We are in the right time zone, have good infrastructure by and large and our education and skills are well regarded. We are innovative, adaptable, and have a thirst for new technologies. And of course New Zealand is a great place to live.

In order to be a true knowledge economy, we need what we might call a "knowledge economy infrastructure" - an infrastructure that supports and nourishes the efforts of our entrepreneurs.

Such an infrastructure includes: · higher performing networks, including telecommunications and business networks; · improved human and business capability; · quality education and training; and · an environment that supports innovation and the creation of new value.

Today I want to briefly mention just a few of the things that the government is doing to ensure we get those elements into the mix in New Zealand.

E-government strategy Without e-government we won't reap the full benefits of e-commerce. The e-government strategy was launched in April 2001 - it sets out a plan to work towards New Zealand being a world leader in e-government. It includes the mission that by 2004 the Internet will be the dominant means of enabling ready access to government information, services and processes. One of the key planks of this is e-procurement. Implementation of the E-Government Strategy is the responsibility of the E-government Unit.

SCIAC Successful knowledge economies have a dynamic innovation framework. The Science and Innovation Council was set up by the Prime Minister to advise the Government on that framework. The Council recently published their proposed Innovation Framework supported by an Innovation Report card. The guts of this document is the outline of a strategy to support the commercialisation of good ideas, particularly those derived from scientific research. I encourage you to read this document, which is available from www.siac.govt.nz.

Immigration Our Immigration policy has been changed to give priority to recruiting the talent needed to drive the new, upmarket economy and make it easier for industry to recruit the skills it needs in the short term.

Venture Capital & Incubators Increasing the numbers of startup and spinout businesses is crucial to building the knowledge economy. In this context increasing the support for new businesses is important. This is why the government is establishing the New Zealand Venture Investment Fund, with capital of $100 million from this year's Budget. This money will be used to co-invest with the private sector in seed-stage and start-up New Zealand businesses based on technology or high value-added goods and services. I also want to mention the vcapital.co.nz website. This is an example of how the Internet can work to improve access to information for businesses. The vcapital website is funded by Industry New Zealand and provides a very comprehensive range of information to assist companies looking for investors.

Incubators New businesses need more than just cash. Business incubators that provide management expertise and support for start-ups are also a vital part of the mix. Industry New Zealand is supporting a growing number of business incubators around New Zealand through awards under the Government's business incubator support programme.

Broadband The availability of high-speed two-way (or Broadband) Internet connectivity has been widely identified as fundamental both to the uptake of e-commerce and to building the knowledge economy.

Two weeks ago I announced with Jim Anderton the Government's new goal of ensuring that all kiwi communities can access two-way high-speed Internet services by the end of 2003. To this end we are funding up to six regional pilot schemes. The pilots will test the potential for bringing together demand for broadband services in a particular region in a way that is commercially attractive for suppliers.

For example, it may not be commercially viable for a telecommunications company to provide a broadband link to one or two businesses in a remote community. But if a number of businesses and consumers in a community pool their demand, that could be the difference between the service going ahead or not. The pilots will support initiatives driven by the communities themselves and by the suppliers. They are not driven top-down from the Government. This once again is partnership in action.

Information from the pilots will be made available for other communities to use.

E-commerce Strategy And of course, there is the E-commerce strategy. This identified the role for government: oLeader ship and communication oBuilding capability oensuring an enabling regulatory environment

In round figures this document identified some sixty commitments, objectives or goals for action or attention by government in partnership with the private sector. On November the1st I will be releasing a report which will indicate how we have dome on each one of these. Of course it is a dangerous thing for a politician to make so many commitments, and in writing!

But I'm pleased to say that overall we have done very well. The amount of activity in a wide range of areas is impressive. I have already mentioned e-government and the broadband plan which are certainly highlights. Today I want to take you through just three more of the many highlights.

The first is the work of the E-commerce Action Team.

ECAT was formed in March - it includes representatives from private and public sector who have strong interest in e-commerce. We wanted ECAT to break the mould of government advisory committees of the past.

We wanted the focus to be very much on the words "ACTION" and TEAM", and on achievement and networking. The difference of course between a team and a committee is that in a team the unwilling are picked from the fit to do the necessary.

The aim has been to develop a six-quarter action plan that will strengthen awareness of and accelerate the adoption of e-commerce across NZ business, particularly small and medium businesses.

ECAT has two principal roles; helping to advance the government's e-commerce strategy, and encouraging and promoting the adoption of e-commerce within the private sector. We wanted to find a way of involving as many New Zealanders as possible.

The first initiative - in partnership with local communities - is to promote local e-commerce initiatives or activities. Like that which we are taking part in today.

The ECAT Network works through a means of connecting ranges of groups, businesses tertiary institutions and individuals that have an interest in driving the uptake of e-commerce in NZ.

Membership is self-selecting - anyone can be a member. The network is a channel for sharing information, expertise and solutions.

The Network will help raise profile of local, regional and sector e-commerce initiatives.

It will be a means of utilising the expertise of local and sector leaders to drive the uptake of e-commerce and greater use of the Internet.

Success of the Network depends on willingness of members to contribute and collaborate.

As of today - more than 110 organisations, businesses and individuals have registered as Network members.

The ECAT Network is supported by ECAT web site, www.ecat.govt.nz. Here you will find a wealth of information, much of it provided voluntarily by the members. I understand that you have been given a document today which outlines the information you can find on the website

I look forward to the Network growing, and acting as a real catalyst for e-commerce in New Zealand. I encourage all of you to use the resources, and to join the Network, which you can do online through the web site.

I understand that you have also been given a copy of E-commerce: a Guide for New Zealand business. This has been well received and we have now distributed as many as 8000 copies.

But in addition to the Guide we have produced other useful information.

An issue that has come up at every E-commerce Event so far is the trouble that small businesses in particular have had in selling through the web in US dollars.

Our response was to use the resources of the ECAT Network to create the Multi-Currency Credit Card FAQ.

This document describes the multi-currency credit card services available in New Zealand and highlights some of the issues you need to know about. I understand you have a copy of this document as well.

Lastly I want to mention the Government assistance which is now available.

Industry New Zealand through the Biz programme has developed an eight-module e-commerce training programme aimed at small and medium businesses, and this programme is now available through the Biz provider network. See www.bizinfo.co.nz for details.

In addition E-commerce and e-business strategies have been included as qualifying categories in the Enterprise Award Scheme administered by Industry New Zealand. Details of this scheme are available at the Industry New Zealand website.

At the E-commerce Summit a year ago I spoke about the need for us New Zealanders to learn to crow a bit about how good we are. I said that in meeting and talking with people what never fails to amaze me is the ability of New Zealanders to do great things.

Even more amazing is that we don't like to talk about it. You never seem to hear a New Zealander talk about the thrill of building a great company.

To finish off today I want to celebrate a few e-commerce heroes.

The first is Virtual Tart.

This example illustrates how the web can expand market reach, Virtual T'art (the T stands for Taranaki) is a web site set up by Taranaki artist Dale Copeland. She uses it to showcase her art that of 33 other artists.

Before the web site the highlight for many of these artists was an exhibition in Hawera. Nowadays for every work sold to a New Zealander, two are sold to overseas buyers.

It has also lead to physical exhibitions overseas - last year Dale Copeland took 200 works over to New York for a two-week exhibition in the Lincoln Centre.

The second is the Okau Wilderness Park.

This web site is another example of the power of the Internet to expand market reach. The Okau Wilderness Park is situated near Castlepoint. The owners Gert and Christine Vermeer run guided deer hunting tours. Until they set up the website their clients came mainly from Australia. But with the website they have been able to successfully target American hunters, while at the same time actually spending less on advertising.

With e-commerce everyone thinks about the web, whether using the web as a marketing tool, or using it to sell goods and services. But some of the most successful applications of the Internet in business are not about the web at all.

Take the Wairarapa Times-Age, one of the few remaining privately owned newspapers. Much of the newspaper's revenue comes from printing other publications - over 33 percent from outside the region.

Use of the Internet to electronically deliver copy and type setting has made much of this business viable.

What is more, a lot of the typesetting work is done by part-timers working on computer at home, but connected to the Times-Age via the Internet. Work can be downloaded to the home computer, and then uploaded to the Times-Age when complete.

General manager Keith Davidson credits this use of the Internet with enabling the continued viability and growth of the business.

Lastly, one of the case studies in the E-commerce Guide is about a Palmerston North company - Obo Goal Keeping.

OBO sells protective hockey gear for goalies. It is already a market leader, with annual sales totalling nearly $3 million. One third of its market is in Europe, where it has up to 60 per cent market share in some countries.

OBO's Web presence, www.obo.co.nz, has enabled the company to reach a much wider audience than that previously served by agents. The site is working well - there are now 100,000 visitors to the site annually and around $150,000 in sales.

But sales, although important, are not the primary purpose of the site. The website has become a core component marketing. Obo use the site's interactivity and global reach to create a very strong relationship with customers - hockey goalies from around the world.

The site is also a core component of research and development. Obo use it as an R&D tool, asking for direct feedback from goalies on Obo products and soliciting suggestions for improvements.

Obo have tapped into a global niche, and this very much the future for businesses in New Zealand.

Conclusion: It is notable that the government has made a concerted effort to forge linkages and partnerships with the private sector in many of these initiatives I've mentioned today.

It's about working together to build a better New Zealand - one where all can participate in the knowledge economy game, and which strives towards those values we hold dear.

It's up to all of us. Time is of the essence.


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