Goff: Big export opportunities for innovative co's
Hon Phil Goff
Minister of Trade
Big export opportunities for innovative NZ companies
Good evening and thank you for this opportunity to be part of celebrating another successful year for New Image in its 24th year of business.
New Image and companies like it play an important role in transforming New Zealand’s economy.
They reflect our aspiration for our economy to become high-value and high-income, innovative and export led.
Economic transformation requires businesses that take clever ideas and through innovation turn them into successful ventures. New Image does just this producing a high value New Zealand manufactured product.
In a world where health and wellbeing are increasingly important, New Image has tapped into the multi-billion dollar global functional foods market.
Development of added-value food products is a growing trend in New Zealand’s dairy industry.
New Zealand accounts for only about two percent of world dairy production. Yet we export more than 95 percent of our product, accounting for a third of the world’s trade in dairy products.
Dairy makes a huge contribution to New Zealand’s economy through employment and contribution to GDP. With an increasing shortage in world food commodities, New Zealand’s premium quality, clean and safe food products are an increasingly valuable resource.
Traditionally inhibited by high tariff barriers, the dairy industry is a major beneficiary of free trade agreements giving it better access to the economies of countries like China which has increasing per-capita incomes and a growing middle class. Future free trade agreements including with ASEAN, the US, Japan and Korea will further boost access to and the return on dairy products.
While dairy is New Zealand’s biggest export earner, the New Zealand functional foods industry is small by international standards. It is, however, held in high esteem for its innovation and its responsiveness to new market trends.
The industry has been successful at diversifying both its products and the number of markets it exports to.
As the pioneer of New Zealand colostrum products, New Image has helped to promote New Zealand natural bioactives to the rest of the world.
When you started out in the mid-1980s, you led the way, proved the critics wrong and are now an award winning business and a growing sector of our economy.
New Zealand’s biological diversity offers a superb natural resource and extensive research and commercialisation of functional foods and nutraceuticals is currently taking place.
Research and development is driving the future of this industry.
The R&D tax credit introduced last year is intended to encourage just this kind of activity. By producing the kind of products that other countries will pay a premium for, R&D benefits New Zealand’s economy and enables New Zealand businesses to compete in a global economy.
The government, through agencies like New Zealand Trade and Enterprise and the Foundation for Research, Science and Technology, is supporting this work which is helping to transform our economy into one that is innovative, high growth and export led. New Zealand’s primary sector has recently received a huge boost with the Government investment of $700 million into New Zealand Fast Forward, to be matched by private sector investment which will generate further research, development and innovation.
The strategic partnership between New Image and Fonterra opens up colostrum to the mainstream functional food market and provides the potential to capitalise on the growth of the global health and dairy products.
The importance of innovation is that it increases productivity.
Productivity gains are key to economic transformation. You cannot get it by just doing more of the same.
Firms need to be innovative in the products they produce, in their organisation, their marketing and their processing. New Image has achieved on all of these.
Products and people are key factors in New Image’s enduring success.
Ninety percent of New Image product is exported and this year New Image achieved $40 million in sales. Share performance has also been impressive with a 59 per cent rise in value in the last ten months. On top of this growth you are aiming for even bigger targets. It’s a great track record.
New Image is now looking for opportunity through a new dairy packaging facility. Plans include new products and entering the huge Chinese market where there is a high awareness of colostrum and its health benefits.
Earlier this year I travelled with Graeme Clegg to Beijing as part of the business delegation that went to China for the historic Free Trade Agreement, signed by me and Chinese Commerce Minister Chen Deming and witnessed by Helen Clark and Chinese Premier Wen Jia Bao.
This agreement and the ASEAN-Australia-New Zealand Free Trade Agreement which the government hopes to sign later this year will help liberalise exports in these key markets and reduce barriers to trade in goods, services and investment.
Free Trade Agreements provide an ideal platform from which to take advantage of new strategic opportunities in key markets and to create an increased profile for New Zealand.
The China FTA will give New Zealand businesses a distinct advantage over competitors into China. Currently major New Zealand exporters into China face tariff barriers of between 10 and 20 percent.
The estimated benefit to New Zealand of the free trade agreement is a growth in exports against baselines of between $225 million and $350 million a year and, in due course, a reduction in tariff payments worth $115 million a year.
This is good timing for New Image as you take your new ready to drink beverage into the Asian markets and build on the success of your existing products.
New Image has successfully capitalised on the Asian economy boom and is currently making a big impact on the Malaysian health food market.
I congratulate New Image on this and for winning three regional export awards.
Exporting does not just benefit the exporting business itself. It also benefits those businesses which supply the exporter, the people employed by those businesses and the wider community in which the businesses are located.
Improved export performance makes an important contribution to the New Zealand economy and is critical New Zealanders’ future prosperity.
The size of New Zealand’s domestic market limits opportunities for growth if companies rely only on their home market. The global market represents billions of people and billions of potential export dollars that New Zealand businesses can capture.
Exporting enables firms to expand their customer base, particularly in high-value niche markets.
New Image is an example of a company that hasn’t waited for the world to come to them – but has gone out and grabbed the opportunities.
Exporting is challenging but there is support through government and private support programmes such as those provided by NZTE.
In 2007, over 1000 companies received NZTE assistance.
NZTE funding to assist entry into overseas markets has jumped from $6 million three years ago to $54 million in the last financial year. More than 500 New Zealand companies gained approval for overseas market entry assistance in 2007.
That funding and assistance is an investment in New Zealand’s future.
In the case of New Image, NZTE has undertaken paid market research and made introductions to potential distribution partners in Taiwan, Hong Kong, Singapore and China. These connections should assist with the launch of the new colostrum beverage. The market development funding New Image has received will also enable increased presence, relationships and opportunities in key markets.
I have no doubt that New Image will continue to succeed through its entrepreneurial spirit and innovation.
I wish you well for the rest of your convention.