New research sheds light on NZ service industry in Asia
Against the increasingly familiar backdrop of Asia's staggering economic growth, new research from Victoria University's School of Marketing and International Business identifies the opportunities and challenges for New Zealand service companies on the ground in China and India. A seven-person team conducted interviews with managers from seventy New Zealand companies doing business in China and/or India, and forty managers in each of these markets.
The research is being launched in major New Zealand cities in the week of 28 March 2011. Asia:NZ caught up with project leader Associate Professor Val Lindsay to talk about the vast opportunities - and possible pitfalls - in exporting services to India, where New Zealand's total exports were valued at NZ$726 million in the year to June 2010.
Would-be service exporters to India have a valuable new tool with the release of research that lays out how to succeed in India and China.
The two-year, $700,000 project “Building a sustainable competitive advantage for New Zealand service firms in Asia: Spotlight on China and India” has quizzed Kiwi service companies already in the market – and their customers – to identify opportunities and challenges.
Photo: Members of the research project team with a senior manager at Tata
Services are defined as design, programming, intellectual property, installations and after-sales service, maintenance and training, and the like.
Fisher & Paykel Healthcare, Jade Software, Airways Corporation and Lincoln University are among the companies to share what has worked for them – and what hasn’t.
And overall, says lead researcher Val Lindsay, an Associate Professor at Victoria University’s School of Marketing and International Business, “there are huge opportunities for New Zealand services.” As economies develop, their need for knowledge-based services grow; services exports, she says, offer greater prizes than raw materials for a country like New Zealand with finite land resources.
“The research is about encouraging more engagement by New Zealand firms in that market, and for those companies already there, helping them improve performance and ensure sustainability,” says Lindsay. “Getting into the market is one thing; staying there is another.”
However, on India, she says, New Zealand companies will need to act smartly: the window of opportunity for us there “is just three to five years. If New Zealand isn’t engaging by then, getting in will become harder because there is increasing global competition for India”.
A range of factors provide a good launch pad to India, not least its rapid growth and development – five times New Zealand’s entire population joins India’s acquisitive middle class every year.
Photo: Val Lindsay at Big Tree Entertainment Pvt Ltd.
A common colonial, linguistic and legal heritage smooths the way, as do established political, diplomatic and trade relations. Lindsay says that Kiwi companies already in India generally share their insights freely.
Indians view New Zealanders kindly, thanks to Edmund Hillary and our cricketers, and numerous New Zealand companies are already doing well exporting to India. It is hoped that the ongoing India-New Zealand free-trade agreement negotiations will eventually deliver simplified market entry.
However, the challenges in India are large, and Lindsay divides them into strategic and operational challenges. The strategic challenges include the fact that India is made up of 28 states, each vastly different; would-be exporters have to approach each state as if it were a stand-alone country.
Photo: Val Lindsay conducts interviews at Reliance in India.
Integration into supply chains is a challenge, and here Lindsay recommends taking a joint venture/local partner approach in India rather than a transactional one. Industry groups also need to band together to promote their services, as the aviation industry has been doing with its export-focused group Aviation New Zealand. New Zealand is not well-known in Indian business, says Lindsay, but there is keen interest is finding out what we do.
Meeting demand can be a challenge in a country of 1.1 billion people. Bureaucracy can be frustrating and corrupt practices persist, despite the ‘no bribe’ lead showed by several Indian conglomerates.
One of our best tools is here at home, says Lindsay – the talent in New Zealand‘s 100,000-strong Indian community. “By and large, we are not drawing on the opportunities presented by this well-educated and experienced diaspora.”
The operational challenges include having the courage and the cash to invest in a long-term, serious commitment; establishing lasting relationships and networks and spending time on the ground nurturing them; managing and protecting intellectual property; and improving negotiation skills – New Zealanders are seen by Indians to be fairly weak here, says Lindsay.
Success in India is complex and multi-faceted; “there’s no magic bullet,” she says. “Companies have to get everything right: the market opportunity; the value proposition; the company’s strategy and approach; the implementation and the consistency.”
- by Julie Middleton