What are some of the market opportunities and challenges in New Zealand?
New Zealand offers the ease of an English-speaking culture, a stable democracy, rule of law, a transparent market, and business practices similar to those in the United States.
The foundation of New Zealand’s economy is exporting agricultural products such as dairy products, meat, forest products, fruit and vegetables, and wine. Global economic and financial uncertainty amongst New Zealand’s trading partners, forecasts slow growth in 2012. High international commodity prices, particularly for protein will help New Zealand face any further market volatility. Domestically, the economy anticipates growth in the building and construction sector as the Christchurch rebuild, earthquake strengthening and remedial work on leaky homes raises the prospect of the largest construction-led boom in New Zealand history.
Opportunities exist for American technologies and products that reduce cost, increase productivity, and wring more value from supply chains. In addition, a continuous drive to remain globally-competitive with a relatively-small manufacturing sector should drive prospects for productivity-enhancing products such as information technology and manufactured goods.
Some important factors to consider when doing business in New Zealand:
- Successful American exporters to New Zealand should develop business models allowing them to do business effectively given New Zealand’s small population and distance from the United States.
- Competition is relatively open in most sectors, but neighboring Australia’s dominance of New Zealand’s trade presents a significant challenge to American suppliers who face higher freight costs.
- American exporters are advised to monitor exchange rates and New Zealand’s demand for price-competitive technologies that support economic sustainability.
- The importance of the agricultural sector to New Zealand’s export economy will maintain demand for innovative, agricultural equipment.
- An imminent construction boom led by the Christchurch rebuild.
What is needed for business travel to New Zealand?
New Zealand business customs are similar to those practiced in the United States. It is common and courteous practice to make and keep appointments in a timely manner. Senior level officials are as accessible for relevant business consultations as their peers are in the United States. Normal commercial travel agency assistance is appropriate for travel and hotel arrangements while traveling in New Zealand.
The State Department consular information sheet for New Zealand can be found at: http://travel.state.gov/travel/cis_pa_tw/cis/cis_984.html
New Zealand maintains stringent bio-security standards to protect its agricultural industries. Arriving international travelers should be careful to make an accurate declaration of any food or plant items in their baggage. Quarantine officials can impose immediate fines for infractions. For more information consult the website of the Ministry of Agriculture and Forestry (MAF). http://www.maf.govt.nz/
For longer stays, the New Zealand Embassy or Consulate should be contacted for information pertaining to workers’ and permanent residency permits. For more information on New Zealand visas consult the website of the New Zealand Embassy in Washington. http://www.nzembassy.com/usa
What is needed for business travel to the United States?
The United States and New Zealand enjoy a visa waiver program allowing travel without a visa for stays up to 90 days. For this program, possession of a return or onward ticket is required. U.S. citizens should carry a valid passport with an expiration date at least three months beyond the date of departure. The program allows the traveler to work but not receive employment payments during the stay.
U.S. Companies that require travel of foreign businesspersons to the United States should be advised that security evaluations are handled via an interagency process. Visa applicants should go to the following links.
State Department Visa Website: http://travel.state.gov/visa/
In New Zealand, consular activities are undertaken at the American Consulate General, Auckland.
Is there a free trade agreement between the United States and New Zealand?
No, there is currently no free trade agreement between the United States and New Zealand. However, in 2010, the United States, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam began negotiating a regional Asia-Pacific trade agreement called the Trans-Pacific Partnership (TPP), with the objective of shaping a high-standard, broad-based regional agreement. This agreement will create a potential platform for economic integration across the Asia-Pacific region, and a means to advance U.S. economic interests with the fastest-growing economies in the world.
For a list of other free trade agreements see the NZ Ministry of Foreign Affairs & Trade website: http://www.mfat.govt.nz
Does the United States and New Zealand have a bilateral tax agreement?
New Zealand has agreements on taxation with 35 countries or territories, including the United States. On November 12, 2010, a protocol amending the income tax treaty between the United States and New Zealand entered into force. The amendment was approved by the U.S. Senate on July 15, 2010 and entered into force when the United States notified New Zealand that the required procedures for bringing the protocol into force had been completed.
Are there tariffs on U.S. goods entering the New Zealand market and where can I find the rates?
The New Zealand Ministry of Commerce grants tariff concessions to goods unavailable from New Zealand manufacturers.
Most tariffs range from zero to 10%. These duty rates apply mostly to clothing, footwear, and carpeting. Most passenger vehicles and almost all computer software and hardware enter tariff-free. Alcoholic beverages (including beer, wine, and spirits), tobacco products, and some petroleum products are subject to excise duties that also apply to similar items that are produced domestically.
All imported goods are liable to a 15% Goods and Service Tax (GST). This tax is payable on the sum of the Customs value of the goods, any Customs duty payable thereon, and freight and insurance costs incurred in transporting the goods to New Zealand. The government implements an import transaction fee of NZ$ 18 on every commercial import that has a duty and/or liability of NZ$ 50 or more. The fee is not charged on private import declarations for goods valued under NZ$ 1,000.
More information, including help in categorizing and estimating relevant tariff rates can be found on the websites of the Ministry of Economic Development (www.med.govt.nz/buslt/tariffs) and the New Zealand Customs Service (www.customs.govt.nz).
Will my intellectual property be protected in New Zealand?
Several general principles are important for effective management of intellectual property (“IP”) rights in New Zealand. First, it is important to have an overall strategy to protect your IP. Second, IP is protected differently in New Zealand than in the U.S. Third, rights must be registered and enforced in New Zealand, under local laws. Your U.S. trademark and patent registrations will not protect you in New Zealand. There is no such thing as an “international copyright” that will automatically protect an author’s writings throughout the entire world. Protection against unauthorized use in a particular country depends, basically, on the national laws of that country. However, most countries do offer copyright protection to foreign works under certain conditions, and these conditions have been greatly simplified by international copyright treaties and conventions.
Registration of patents and trademarks is on a first-in-time, first-in-right basis, so you should consider applying for trademark and patent protection even before selling your products or services in the New Zealand market. It is vital that companies understand that intellectual property is primarily a private right and that the US government generally cannot enforce rights for private individuals in New Zealand. It is the responsibility of the rights’ holders to register, protect, and enforce their rights where relevant, retaining their own counsel and advisors. Companies may wish to seek advice from local attorneys or IP consultants who are experts in New Zealand law. The U.S. Commercial Service can provide a list of local lawyers upon request.
More information about intellectual property protection in New Zealand can be found at the Intellectual Property Office of New Zealand website:http://www.iponz.govt.nz/
What marketing and distribution channels should I use in New Zealand?
Marketing channels in New Zealand resemble those found in the United States. Until May 1998, the principal import channels were sales agents, importer-distributors (distributors who import and stock certain lines and take orders for direct shipment of others), direct importers, and users. In May 1998, the Government of New Zealand repealed its prohibition on parallel importing. In October 2003, the Labour Government amended the parallel import law to give greater protection to film and video products.
Sales agents can be employed to market a variety of products including: materials produced to customer specifications and consumer goods for mass distribution. Even before the legal authorization of parallel importing, New Zealanders preferred to buy direct from manufacturers when possible. To counter wholesale purchase preferences, sales agents often employ specially trained personnel to offer technical and sales support.
Importer-distributors are a more common channel for products requiring technical knowledge, service, repairs, or spare parts. The size of the New Zealand market usually allows one or at most two distributors per unique product/manufacturer. Many handle more than one manufacturer’s products. A stocking importer or distributor is important where continuity of supply is a selling point, such as for certain industrial or consumer goods. Large New Zealand retailers also work through purchasing agents or consolidators in the United States and other countries. Numerous subsidiaries of foreign manufacturers import directly from parent companies and distribute products to round out or supplement their domestic production. Import and distribution by a New Zealand branch or subsidiary is common when the volume is substantial and the foreign parent wishes to retain control of distribution.
New Zealand’s modern distribution infrastructure supports any supply-chain or inventory control strategy. A number of well-established companies with nationwide networks perform a broad range of other functions such as trading, transportation, packaging, manufacturing, and distribution at both the wholesale and retail levels. These firms are usually excellent representatives for new products seeking to penetrate the New Zealand market, although they usually import products to complement existing lines.
Can I can financing for my exports to or projects in New Zealand?
Debt and venture capital financing are readily available at New Zealand market rates. Low residential savings rates require banks to obtain higher cost offshore funds to meet loan demand.
Vendors often offer financing for large equipment purchases. Commercial banks, often operating in a consortium, provide project financing in New Zealand. New Zealand is not a developing country, therefore, multilateral institutions and development banks, such as The World Bank or USAID, do not lend into New Zealand.
The U.S. Export-Import Bank standard policies apply to U.S. firms selling to New Zealand entities.
Export-Import Bank of the United States: http://www.exim.gov
Country Limitation Schedule:http://www.exim.gov/tools/country/country_limits.html
Trade and Development Agency: http://www.tda.gov/
SBA’s Office of International Trade: http://www.sba.gov/oit/
What should I be careful of when trading and doing business in New Zealand?
Although New Zealand is generally an easy and transparent place to do business, U.S. companies should hire a New Zealand attorney as they would in the United States: to advise them in drawing up or closing a contract, performing due diligence, acquiring a company, forming a joint venture, or developing human resource policy. In New Zealand, the U.S. Commercial Service maintains contact with a variety of local solicitors and barristers and can provide a list for business reference.
Private credit reporting agencies are active in New Zealand. In addition, the U.S. Commercial Service in New Zealand provides background checks on New Zealand companies for a nominal fee.