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The
Jump start up!
Employment roundup survey: What you told us Global Ageing–the new HR challenge Inside • • • • •
A transport future? Shaping up for the 2015 tax year Will China adapt its business culture to the west? Admark wins world Best of Best Your Summer Briefing Schedule
Issue 122 – February 2015 $6.30
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For more information on these great offers and to ensure you don’t miss out on the latest exclusive member only discounts, simply search ‘rewards’ on our website: www.ema.co.nz All information is correct at time of printing and subject to change. Individual partner terms and conditions and/or service fees may apply, please visit our website for full details.
BusinessPlus is published by : The Employers and Manufacturers Association (Northern) Inc
On the cover...
159 Khyber Pass Rd, Grafton,
Charlotte, a Jump monitor at East Tamaki, demonstrates the company’s trampoline equipment. The member profile is on page 27.
Private Bag 92066, Victoria Street West, Auckland 1142 Ph: 09 367 0909 or 0800 800 362 Email: ema@ema.co.nz Website: www.ema.co.nz Chief Executive: Kim Campbell Manager, Advocacy & Govt Relations: Mark Champion Manager EMA Learning: David Foley
CONTENTS
Manager, Strategy & Enterprise: Mauro Barsi
Advocacy
advice
04 When a council changes the
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rules...
Waikato Denis Quigan 07 823 9311
mob 027 203 0694
Russell Drake 07 838 0018
mob 021 686 621
05 Employment trial periods accelerate job uptake
Terry Arnold 07 575 8401
mob 021 662 656
new tax year
outlook for 2015
RMA changes vital, about time
12 EMPLOYMENT CHAT: Can I
news Rotorua / Taupo / South Waikato / Whakatane Clive Thomson 07 348 0334 mob 0274 372 808
BusinessPlus Editor Gilbert Peterson Ph: 09 367 0916
10 .nz domain name changes
Seeking compensation for power supply breaks
Mary MacKinven mary.mackinven@ema.co.nz Designer Ripeka Mikaere Advertising Sales Colin Gestro (09) 475 9313 colin@affinityads.com ISSN No. 1176-4953
The future of business enforce a restraint of trade? An employee has suffered terrible injuries at work…
18 How to use provisional tax to grow your business
export
26 out and about
20 Enter the Auckland Export
SCHEDULE
Awards: Winning world markets from the edge
gilbert.peterson@ema.co.nz Writer
The view from afar… of our transport future
16 TAX TIPS: Shaping up for the
14 in the lobby: Business Bay of Plenty
COMMENT:
Dubai lands Expo 2020, triggers new build boom
21
Letter from Australia:
28 Summer Briefings Schedule 2015
A clear cut case for a marketing strategy
22 Chinese growth about to hit cultural ceiling?
features 19 retirement: The challenge of Global Ageing
23 member noticeboard: Admark wins best of best
25 LEARNING: “Selling ice to Icelanders”
27 Bright lights of Vegas lit spark for Kiwi couple
18 23
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ADVOCACY at work
When a council changes the rules... BusinessPlus reports on the issues EMA and Business NZ are raising with government to create the best possible environment for doing business. Over the years - as a result of our constant engagement with local and central government, it’s advocacy like this that has helped ensure New Zealand is consistently rated among the top three countries for the ease of doing business. But we all know things could be even better so we don’t let up! EMA in the media EMA was criticised over our support for the sale of Auckland Electricity Consumers Trust (AECT) shares to fund Auckland infrastructure. We said in our press release in December 2014 that we raised the debate on possible futures for the AECT to focus Auckland’s attention on the parlous state of the funding for the city’s development. EMA’s chief executive Kim Campbell said, “Auckland’s planning for growth is being stymied on all fronts. “Many thousands of people are welcomed here every year to live and work but the city is failing to build the infrastructure required to accommodate them. “This is irresponsible. “If we keep on slowly building more roads and adding piecemeal more public transport as at present, by 2024 we will all be taking an unacceptable time to get to work and paying heavily for goods delivered around Auckland. “People who argue differently haven’t looked at the numbers. Doing nothing is really head-in-thesand stuff. “Asset sales could delay the need for tolls and other cost increases. “The recycling of city assets to fund infrastructure is very common internationally and we are arguably behind the world in this. “One of our largest assets is the $2.1 billion worth of shares held in trust for Auckland by the AECT. “Any change would require the public to agree, but unfortunately the debate on this degenerated into an ideological slanging match in which the substance is being lost in insults. “Regardless, everyone in Auckland will soon have to pay more. “Either they will pay more in road
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tolls, in higher fuel taxes, in rates, or pay more through far slower transport times and gridlock within 10 years. “Failure to act decisively now will cost Auckland dearly, and hurt the whole country.” We were also reported for our strong view that the Official Cash Rate (interest rates) should be cut to. The case of the product suddenly not meeting the Building Code – ONLY IN AUCKLAND! An EMA manufacturing member is no longer able to sell its flagship product for storing goods in Auckland despite the previous seven councils in the Auckland region saying it was fine! And the company can sell the product in all other parts of New Zealand, where Councils interpret the same Code differently. But the new combined Auckland Council has told the company the product does not meet the Building Code requirements. The company owner [Mr Z] is writing up the case on why his product does comply, to refute the half dozen points where the Council says it doesn’t. EMA mediated for him in a search for an acceptable solution. Mr Z became very worried for his business when the Council told him to stop selling his product in Auckland. Communication became very difficult over several months so he contacted EMA. An EMA Advocacy executive officer arranged a meeting with two Council planners, Mr Z and his chief executive and after considerable discussion the EMA requested the Council inform Mr Z of the “acceptable solution”, which
it did. Mr Z is much happier now. Watch this space! Central Govt chats... We held discussions with the Minister for the Environment Nick Smith on the changes coming to the Resource Management Act, and also with Transport Minister Simon Bridges especially on the lack of action on the east-west road link in Auckland. and with Local govt... We continue to engage with Auckland Council as a member of the “Alternative Transport Funding Independent Advisory Board”. This Board was tasked by Auckland Council with coming up with a way of bridging Auckland’s Transport funding gap of $12 billion over the next 30 years. The Board’s final report to council about funding Auckland’s transport future recommended the Council consider either a package of “existing tools” (rates, fuel tax) or a motorway toll (about $2 per entry to the network). The options are now part Council’s consultation with the public of Auckland, commencing on February 16 and closing on March 16. ema waikato EMA Waikato was among organisations that met with the Mayor of Hamilton at the end of last year to discuss how business groups could help deliver economic development to the region. Discussion is on going.
ADVOCACY By Kim Campbell
Employment trial periods accelerate job uptake Two thirds of businesses polled in EMA’s End of Year Round Up Survey in December last indicated they use the 90 day employment trial periods, and virtually all said it meant they hired a person whereas without it they would have left the position vacant or readvertised. On the other hand, the survey found only 10% of businesses have used the Starting Out Wage since 2013, when it was introduced, to take on someone younger in preference to an older, more experienced person. Business confidence holding up
Expectations OF business conditions overall in 2015
did you make any positions redundant in 2014?
What will business conditions be like in 2015?
Have you made any positions redundant during 2014?
Firms are evenly split on whether they expect business conditions this year to improve or stay the same – 45% for an improvement and 47% for about the same as last year. But a significant majority, 58%, expect their own businesses to grow this year. The survey also identified most businesses are unaffected by the recent changes to the Employment Relations Act. 9% said they are affected significantly, or a lot, by changes for skilled positions, to collective bargaining; 12% by the law Filling skilled positions how change allowing requests for flexible work difficult is arrangements from all staff; and 10% by the it for you increased flexibility to apply to rest and meal to attract breaks. suitable candidates? Over half, 54%, are finding it difficult to recruit the skilled people they need with a further 29% neutral. On the impending changes to Health and Safety law a big majority, 80%, feel they have a reasonable grasp of what it will require. They agreed that health and safety has to improve and that businesses need to accept extra responsibilities as part of that.
 do you think there A question on the impact of poor literacy is, or will soon be and numeracy in the workplace revealed skills shortage employers awareness of the resulting costs in your industry and loss of productivity. They ranked the sector? poor completion of workplace documents and reports where the most cost occurred with wasted time second, and general communication problems third. Continued next page BusinessPlus
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ADVOCACY at work
employers appeared well satisfied with tertiary graduates more so than with secondary school students for their skills in literacy and numeracy
Basic literacy-Graduates v School Leavers
Technology skills amongst tertiary graduates were related highly by business
Technology
on a scale of 1 to 5, what is your understanding of the new H&S law?
Understanding of workplace health and safety law changes
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BusinessPlus
Brickbats and bouquets for school leavers and graduates
Our survey asked employers a range of questions about their level of satisfaction with the skills that school leavers brought to the workforce and also those of the graduates of tertiary institutions. Many young people that businesses are seeking to recruit are indeed up to their expectations with EMA members tending to rate the skills levels of tertiary graduates overall higher than those of secondary schools. Technology for both school leavers and graduates topped the class. But employers scored school leavers below par for basic literacy and the use of English language. But whereas they were unhappy with school leavers’ literacy, communication and problem solving skills, on the other hand they are pleased with their technology know how, self-management skills and capacity to learn. The technology skills of school leavers came up to their expectations with 44% saying they were satisfied or very satisfied with the standard. For tertiary graduates approval levels were higher, with 67% of employers saying they were impressed by their technology skills and a further 29% neutral; just three per cent were dissatisfied. Clearly business thinks our universities and technical institutes are doing a particularly good job in the teaching of technology, and also for basic literacy. Half the businesses participating in the survey reported they were satisfied or very satisfied with the basic literacy levels of tertiary graduates, with a further 39% neutral. Other areas where school leavers scored well with employers included self management and planning, and their capacity to learn. EMA has proposed Work Readiness
ADVOCACY at work
Certificates be issued to school leavers to help with employer expectations, and we have promoted careers education and workplace literacy and numeracy over many years. EMA’s work in the education area includes: • The Learning Auckland Accord linking community education programmes • Career Capable Auckland to improve students’ transition from school to the workplace • Workbase which aims to boost workplace literacy • The Youth Employability Passport/ Leaving Certificate with the Ministry of Education, MBIE, Auckland Council and others • Young Enterprise Scheme • NZQA to help prepare of a new guide for employers on NCEA So businesses are finding most of the young people they are looking to recruit in general meet their expectations. Over half of them, 54%, also said in the survey that they are finding it difficult to recruit the skilled people they need with a further 29% neutral on this question.
Is OH&S a regular Board topic?
Cost of poor literacy
Has your business ever used 90 day trial employment period?
Employers are also very aware of the cost and loss of productivity from poor workplace literacy and numeracy. In assessing the costs they said the most area of cost was from the poor completion of workplace documents and reports. Wasted time was second, and general communication problems the third most costly area. The EMA Annual Employment Round Up Survey was conducted in the first week of December, 2014 attracting 322 senior business manager respondents.
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BusinessPlus
7
comment By David Vinsen
The view from afar… of our They say travel either broadens the mind, or reinforces your existing prejudices. Travel also affords the opportunity for reflection on your own country with time and distance allowing a useful perspective on what is usual and commonplace. You see things through a different lens. Mary and I are travelling for a month or so. We’ve taken the opportunity to visit friends and family in Hong Kong, Germany, England and Scotland. And visiting these different countries and experiencing their transport systems has given me cause to think about our network in New Zealand. In Hong Kong we used up to eight different modes of transport over two days, some of them on multiple occasions. None involved private vehicles! Every one of the thousands of high-end expatriate business people and their families here uses public transport: shuttles, ferries, and buses. The system seems to work really well; it’s very easy to get around. (Hong Kong pic) Probably one of the most impressive features of Hong Kong’s public transport system, apart from its efficiency and variety of modes, was the super-convenient “Octopus” debit card, universally accepted for public transport and incidental purchases. I know Auckland has been working on the AT Hop card, but it’s been a long time coming. If Hong Kong’s Octopus card system is any indication, it’s worth persevering with. On to Frankfurt. As you would expect, trains run on time…to the minute. Once again, convenience was the keyword. Automated ticket vending machines in multiple languages make it very easy for stopover travellers to get from the airport to the city centre and back by train. Once again the mix of public and private transport seemed to work well; it has obviously evolved over time to suit the needs of the city and its commuters and visitors. Now the UK. We had a rental car for our time here, a Skoda Fabia 5 door compact SUV, diesel and manual. The vast majority of private
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Hong Kong transport is all public
vehicles, and almost all rentals seem to be manual. We collected it at the airport, plugged in my motorcycle SatNav device, and away we went. A night in London, then off to Cornwall during the summer school holidays. Good smooth traffic flow even during the busy summer holiday season in the prime holiday destination area. A pleasurable driving experience. It seems all families here have private vehicles, but they are used as shopping baskets and school runs locally, and for family use at weekends. Commuting to work is nearly always by public transport, mainly train. So how does this once-over-lightly layman’s view of various transport systems relate to New Zealand? It is certainly not a case of “public: good vs private: bad”. It really is a case of developing the optimal mix of transport modes that will give us
the greatest efficiencies and freedoms to enable us to enjoy everything our cities have to offer while ensuring Auckland continues to be an efficient engine room for the whole NZ economy. Though it may seem paradoxical, even hypocritical from someone with a vested interest in private transport, I thoroughly support the concept of having an efficient, effective public transport network. So what if I were to be appointed Transport Czar charged with the responsibility of achieving the best possible transport outcomes for New Zealand and Auckland? What would I do? Here are some suggestions:
Push on with the current infrastructure projects, including Waterview, the northwesten motorway upgrades and other motorway improvements.
comment
transport future • Remain committed to completing all aspects of the Roads of National Significance programme. • Bring forward the start of the Auckland Inner City Rail Loop, not just for inner city residents and businesses, but to complete and free up the entire transport network (road and rail). • Don’t be apprehensive about borrowing to fund the long term. This is intergenerational investment for developing our country. • Issue Transport Infrastructure Investment Bonds to fund major transport infrastructure projects, freeing up the need for central or local government direct funding, to provide regular incomeearning investment opportunities for superannuation funds and other investors. • Introduce variable Electronic Road Pricing across the network in Auckland (as in Singapore) to minimise congestion, maximise the efficiency of the roading system, and service the costs of the Transport Infrastructure Investment Bonds. Be bold. • Develop and implement an integrated plan for all modes of public transport for Auckland, with a simple debit card, universally acceptable for fares. • Take bold decisions to maximise the benefits of our maritime setting by developing the use of ferries for commuter transport in Auckland: park and ride facilities, modern terminals, no other infrastructure investment needed. • Seek out strategic partnerships with leading edge transport technology businesses: Google (autonomous vehicles), Tesla, Nissan etc (electric vehicles), and telecoms companies (intelligent transport systems). • Promote New Zealand as the ideal place to develop, test and implement new transport technologies, with government support (R&D tax considerations, etc).
“Issue Transport Infrastructure Investment Bonds to fund major transport infrastructure projects, freeing up the need for central or local government direct funding, to provide regular income-earning investment opportunities for superannuation funds and other investors” None of these ideas are original, or unique. The key is to be both bold and pragmatic, and to look past the petty nay-sayers and small-minded NIMBYs. I’m not suggesting we ignore due process but that decisions be taken in the overall long term interests of having an efficient multimode truly integrated transport network. We need to develop the optimal mix of public and private transport options to create a truly liveable city as the hub of an efficient national transport network.
David Vinsen is Chief Executive of the Imported Motor Vehicle Industry Association, a member of EMA. This article is slightly abridged from that published in the IMVA magazine.
Frankfurt’s transport networks are highly efficient
BusinessPlus
9
NEWS
.nz domain name changes – your options expire soon You may be aware that any person or business can now get shorter .nz domain names – for example, anyname.nz - in addition to all existing registration options like ‘.co.nz’, ‘.org.nz’ and ‘.net.nz’. You should already have heard from your provider about this change and what it means. We don’t want you to miss out on any special options available to you - options which will expire on 30 March 2015 - so read on for a reminder. You could have preferential eligibility
If you already have a website or email address ending with .nz, you could be able to register or reserve the shorter .nz version of your domain name before anyone else. To see if you have preferential eligibility, talk to your .nz provider or visit the Domain Name Commission’s anyname.nz site, which also explains how you can go about registering or reserving the new kinds of domain names.
Preferential eligibility expires 30 March 2015
If you are eligible to register or reserve the shorter version of your name, you need to decide if you want to do so by 1pm, 30 March 2015. If you don’t, then the shorter version of your domain name will become available for someone else to register. Even if this happens, though, your existing domain name will still be yours as long as it remains registered to you. ‘Conflicted’ names dealt with at anyname.nz
Some .nz domain names are ‘conflicted’, which means they’ve been registered in at least two different second levels. For example, you might hold the .co.nz version, while another person might hold the .net.nz or .org. nz version. If your name is conflicted you’re able to go to the Domain Name Commission’s anyname.nz site and lodge a preference for who might get the new, shorter .nz version of the name. There’s no date or time limit for lodging a conflict preference.
Remember…
• Check your eligibility at anyname.nz or by contacting your provider. • If you’re eligible to register or reserve the short version of your name, you’ve only got until 1pm, 30 March 2015 to take action. • Registering is done through any .nz provider. Reserving is done on the anyname. nz site. • Anyname.nz is also where you can lodge a conflict preference if the short version of your name is conflicted. For more on the change go to .nz domain names, contact your provider or visit anyname.nz.
Seeking compensation for power supply breaks If power outages unexpectedly damage your business you may have a way to seek compensation. For example the wide scale power outages on October 5th last year harmed many businesses in some areas of Auckland, but to get redress firms have only three months to lodge a claim. So the Auckland companies affected had til January 5th this year to make a complaint with the company responsible, in this case Vector. EMA emailed all members in the
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affected areas late last year to alert them to their options for redress. If you don’t lodge a complaint within the time frame permitted you have no further recourse. If you do, your power supply company is legally obliged to respond to you within 20 working days and start working with you towards a resolution. If your supply company doesn’t seem to intend to do anything about your complaint, or if you would suffer unreasonable
harm by waiting you can contact the Electricity and Gas Complaints Commissioner (www. egcomplaints.co.nz). The complaints scheme run by the Electricity and Gas Commissioner is open and free to all residential and business consumers for claims up to $50,000. All power companies are members of it. We’ll have more on the work of the EG Commissioner and how you can benefit soon.
Transfer of ANZAC Day 2015 Transfer of ANZAC Day 2015 This year marks the first time that the ANZAC Day public holiday will transfer to another day. The purpose of this update is to assist you to understand what this change means for your business.
How do I know whether a day is an “otherwise working day”?
If it is not clear whether a day would otherwise be a working day for your employee, you should consider these factors with a view The change to reaching agreement with your employee: The Holidays Act 2003 recognises 11 public holidays including • Whether, but for the day being a public holiday, the employee ANZAC Day, which is observed on 25 April each year. Prior to 2013, would have worked if ANZAC Day fell on a Saturday or Sunday, it was observed on that • The terms of the employment agreement day and would not be automatically moved to Monday (as occurs for • The employee’s work patterns The change the public holidays during the Christmas/New Year period). • Other relevant factors, for example: The Holidays Act 2003 recognises 11topublic holidays ANZAC Day, which is 25works Aprilfor each In 2013 an amendment was made the Holidays Actincluding 2003, - Whether theobserved employeeon only youyear. whenPrior work to is 2013, if ANZAC Day fell on a Saturday or Sunday, it was observed on that day and would not be automatically moved to Monday with the effect being that where ANZAC Day (and Waitangi Day) available on afor Saturday or Sunday, andduring that day is not an “otherwise Year period). - The roster (as falls occurs the public holidays the Christmas/New working day” for an employee, the public holiday will instead - The reasonable expectations of both parties that the In 2013 an amendment was made to the Holidays Act 2003, with the effectemployee being that where ANZAC Day (and Waitangi Day) transfer to the following Monday. would have worked on the day concerned
This year marks the first time that the ANZAC Day public holiday will transfer to another day. The purpose of this update is to assist you to understand what this change means for your business.
falls on a Saturday or Sunday, and that day is not an “otherwise working day” for an employee, the public holiday will instead transfer following Monday. Howto it the works Can we still agree to transfer ANZAC Day to a In 2015, ANZAC Day falls on Saturday 25 April. If this day is not
How works working day” for your employee, the public holiday anit“otherwise
different day? Yes. You are still able to agree to transfer the public holiday to
will transfer to Day Monday If the day is an “otherwise either a different 24 hour (which starts or the finishes on 25 In 2015, ANZAC falls27 onApril. Saturday 25 April. If this dayworking is not an “otherwise working day”period for your employee, public holiday day” for your employee, the public holiday will not transfer, but will April) or to a completely different day, provided the Holidays Act will transfer to Monday 27 April. If the day is an “otherwise working day” for your employee, the public holiday will not transfer, continue to be observed on the Saturday. An employee will not be requirements are met. but will continue to be observed on the Saturday. An employee will not be entitled to more than one public holiday for ANZAC entitled to more than one public holiday for ANZAC Day. Day. Shop trading restrictions apply as per usual to Saturday 25 April,
Further assistance
andtrading will not restrictions transfer to the Monday – regardless of whether25 theApril, and Consider on the will need toofmake for the Shop apply as per usual to Saturday will notearly transfer toarrangements the Mondayyou – regardless whether public holidaytransfers. transfers. ANZAC Day. Particular complications can arise with employees public holiday who work on 24 hour operations, who work in retail or trade, and
What to pay if public the public holiday transfers where the work patterns are variable. If you would like further What amam I toIpay staffstaff if the holiday transfers to Monday? to Monday?
clarification on this issue, contact AdviceLine for telephone
and your employees do work that day, you will need to pay them at time and a half for the hours they have worked, and provide them with an alternative holiday.
For more information about the topics covered in this update, please see our A-Z Guides to ANZAC Day, Public Holidays and the Shop Trading Act Repeal Act 1990.
TheThe provisions of the Holidays Act 2003 will still apply. If the Monday is an “otherwise working day” and your employees don’t provisions of the Holidays Act 2003 will still apply. If the assistance on 0800 300 362 in New Zealand or 1800 300 362 if work that day, will need to pay them Relevant Daily Average Pay). If Monday is an “otherwise working day” Monday is anyou “otherwise working day” and their your employees don’t Pay (or calling from Daily Australia. andwork yourthat employees do work that day, you will need to pay them at time and a half for the hoursnotthey haveasworked, and for provide day, you will need to pay them their Relevant Daily Pay This is only a guide. It should be used a substitute them with an alternative holiday. (or Average Daily Pay). If Monday is an “otherwise working day” professional advice.
What happens if staff can’t work on Saturday due to trading restrictions? If Saturday 25 April is an “otherwise working day” for your employees, the public holiday will continue to be observed on that day and will not transfer to Monday. If the business is unable to trade for all or part of the Saturday due to shop trading restrictions, you may still have options. Depending on the terms of the employment, you may be able to direct them to perform other work (for example, stocktaking), or to work at other locations where the restrictions do not apply. Payment for the day is as per the Holidays Act 2003.
Contact Us Free call AdviceLine, NZ 0800 300 362 AU 1800 300 362 E-mail advice@ema.co.nz Visit our website www.ema.co.nz Follow us on twitter.com/ema_nrthn BusinessPlus
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EMPLOYMENT CHAT
Can I enforce a restraint of trade? An employee I have a salesman leaving to become selfemployed. He’s gone out in a newsletter to all our customers and stakeholders saying ‘please add me to your LinkedIn profile or email me now so we can exchange contact details’. I am angry about this – what can I do? – John Dear John It’s ok in principle for a departing employee to say to customers ‘I’m leaving and here’s how to keep in touch’. Presumably he was trusted to send out the communications without oversight by you or a communications manager? Or did he overstep his responsibility? Check his employment agreement for clauses specifying non-solicitation or non-enticement of your customers away from you, which can apply for a certain period such as three months after he leaves your employment. Also check for clauses in the agreement on restraint of trade that affect his setting up in competition with you during a certain period after leaving his job with you. Even your pricing and all intellectual property is confidential and covered by these clauses. It’s not so bad if he is going off to
“Check for clauses in the agreement on restraint of trade that affect his setting up in competition with you” work in a completely different field to you. LinkedIn is part of personal life and not just work so you can’t constrain how he uses it unless his employment agreement specifically mentions it. After checking what you signed to in his agreement, you could talk to him about his obligations from now on including for a defined period after he leaves your employment.
One of our staff recently sustained terrible injuries after an accident at work and we need to know what might eventuate in terms of fines and compensation so we can budget for the pay outs. We have no idea because, thank goodness, nothing like this has happened here before. But it is technically our fault, and we feel very guilty…. – Deb
Dear Deb We are always sorry to hear of workplace injuries. However clumsy or incompetent an employee is, no one should be maimed at work where health and safety are fundamental responsibilities of the employer. Wait for the full WorkSafe investigation process to attribute blame before you jump to any conclusions; but in the meantime it is only fair that you support the injured employee as much as you can reasonably afford to. In the event you are prosecuted, the specific monetary figure you are facing is impossible to determine but here are some examples to give you an idea. When an employee at a biscuit and condiment manufacturing plant had their arm badly burned and muscle tissue destroyed while cleaning a machine, the company was fined $12,500 and ordered to pay reparation of $45,000 to the employee. WorkSafe New Zealand’s investigation discovered that there were no written procedures for cleaning the machine and the guards on the machine were left open during production and cleaning. The keys to the guard were also left in the machine instead of only being accessible to authorised staff. WorkSafe NZ took the company to court under the Health and Safety in
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Our member only resources allow you to download templates for all the difficult jobs that face employers - like Employment Agreements and OH&S.
Free call AdviceLine, NZ 0800 300 362, AU 1800 300 362 or visit our website, www.ema.co.nz
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EMPLOYMENT CHAT
has suffered terrible injuries at work… Employment Act for failing to take all practicable steps to ensure the safety of an employee. The District Court judge referred to that case as “bad offending” that resulted in a “mutilating injury”. The starting point for the fine was $70,000 and after appropriate discounts the end fine should have been $35,000. However, due to the company’s poor financial position and the fact that it had 20 employees, the court reduced the fine to $12,500. Money isn’t always involved in work accidents; but employment concerns are. In another case, an electrician who was electrocuted while working on power lines questioned his dismissal for serious misconduct – for breaching procedure that led to the incident. He sustained minor burns to his hands and was hospitalised for two nights after falling six metres into a hedge, from the shock. The employee said to the Employment Relations Authority he had been unjustifiably dismissed for allegedly not following safety procedures. The court upheld the company’s dismissal, saying the company could reasonably be entitled to form the view that non-compliance with safety procedures could not be condoned. In the case of a man having his pelvis broken under the weight of a
“The company did not have in place a standard operating procedure for the digger or for the use of it as a lifting machine” fallen digger bucket that came loose from the digger, his employer was fined $42,187.50 and ordered to pay reparation of $22,560.23. The reparation compromised $20,000 for emotional harm and $2,560.23 for lost wages. The fine was reduced from a starting point of $50-100,000 (the ‘medium band of culpability’) based on similar cases as well because it was the company’s first offence and due to the company’s remorse and cooperation, early guilty plea and ability to pay. The court said the company did not have in place a standard operating procedure for the digger or for the use of it as a lifting machine as it was being used in the circumstances when the bucket fell off it. • By the EMA communications team in consultation with EMA Advice, and loosely based on real calls to EMA’s AdviceLine. All names are fictional.
The information in this article is a guide only and not to be used as business advice without further consultation. EMA members can start with our free AdviceLine team at phone 09367 0909 or 0800 300 362 (within New Zealand), and 1800 300 362 (from Australia), 8am-8pm weekdays. Alternatively, email advice@ema. co.nz or read or print information such as the A-Z of Employing – a manager’s guide on more than 100 specific employment topics, at www.ema.co.nz
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BusinessPlus
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IN THE LOBBY
Business outlook for 2015 New Zealand is on a steady path of growth and indications for business in 2015 are reasonably positive. Last year New Zealand’s GDP growth was nearly 3 percent, inflation only 1 percent, and unemployment fell to 5.4 percent. These are better results than in many other places. Last year enterprises in agricultural-based and foodproducing sectors earned a substantial amount of export revenue, despite a high dollar and some volatile prices. Other sectors also saw positive growth, including tourism and IT-based and technology-based companies. As a trading nation we continue to be affected by economic conditions in other parts of the world. Many of our trading partners are taking time to recover from the aftereffects of the global financial crisis. China’s economic growth and appetite for dairy products have reduced over recent months, but increased growth prospects in the
US economy are positive. Also positive is the drop in world oil prices and its potential for bringing down prices of many consumer items. New Zealand enterprises in both the export and domestic sectors
and building consents numbers are climbing. The Resource Management Act is being reviewed, hopefully leading to greater enablement of development with fewer unnecessary constraints as in recent years.
“We face a real corporate tax rate higher than in other developed countries. Research indicates that the real or actual rates of corporate tax (after taking account of exemptions) of all other OECD countries are lower than New Zealand’s”
currently enjoy relatively favourable business conditions. Low inflation means less likelihood of interest rate rises this year. ACC levies will be reduced in 2015. Land supply constraints in Auckland are slowly being tackled
Exploration for petroleum and minerals resources is receiving official encouragement and the potential for economic spin-off from a positive find is great. Development in infrastructure for business is proceeding, with ongoing
RMA changes vital, about time The changes telegraphed by Environment Minister Nick Smith last month on the Resource Management Act is the most important piece of work the government will undertake during this term, and it will be a major focus for EMA. The business community will be watching developments proposed for the law changes with intense interest, said Kim Campbell, EMA’s chief executive. But its not just about business, he said. All of our communities stand to benefit if we restore the framework for decision making about New
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Zealand’s environment and economic development to world best practice standard. Our lifestyle and standard of living depends on it. We welcome the inclusion of the impacts of natural hazards, and opening up land for housing which are clearly in everyone’s interests. Local councils have a poor track record for adding compliance costs to housing, commercial development, and infrastructure projects intended to benefit their communities. Business will expect the reforms to ensure councils become more consistent internally and nationally,
with delays and uncertainty greatly diminished, and with their transactions costs much lower. More national standards will remove the hotch potch of council approaches. The reforms should also curb councils’ ability to hide behind false efficiency measures. Claims, for example, that 98% of consents are issued within statutory time frames should be laid bare by the new legislation. Business hopes and expects the new regime’s legal requirements will limit the opportunities for commercial adventurism, litigation and bounty hunting behavior.
Phil O’Reilly
investment in ultra-fast and rural broadband, irrigation infrastructure and roads of national significance. Shortages of key skills for business such as IT and engineering are being addressed, with more engineering places available in tertiary institutions, and with the establishment of IT graduate schools (although much more could be done to improve the overall supply of skilled people needed by business). Callaghan Innovation, the institution supporting the growth of technologybased companies, is investing in the development of some high prospect businesses. These are some of the positive aspects of the business environment in 2015. There are also a number of challenges. We continue to face a real corporate tax rate higher than in other developed countries. Research indicates that the
real or actual rates of corporate tax (i.e. after taking account of exemptions) of all other OECD countries are lower than New Zealand’s. Comparative tax rates matter because it is harder to attract business investment to highertaxed countries. If New Zealand’s corporate tax rate was lowered to below the real rates of other developed countries, it would help gain more investment into New Zealand business. Local government also provides challenges to business. Restrictions of land supply for development, and bottlenecks in processing of consents under the Resource Management Act are definite areas for improvement. High council spending is pushing up rates, and council wages are growing faster than wages in other sectors, and faster than New Zealand’s GDP growth rate. More disciplined local government
management would provide a better environment for business. These are some of the issues where EMA and BusinessNZ are advocating for improvement in the environment for business. A more competitive tax regime, an improved Resource Management Act, better local government management, an education system that produces more graduates with the right skills for enterprise – changes in these areas would provide a boost to business prospects. This year our prospects for growth will be shaped by the decisions and strategies of enterprises within an overall gradually improving business environment. Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz
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TAX TIPS By Jo Doolan
Shaping up for the new If you haven’t file your 2014 tax returns, the message is clear: get it done now. Even if you’re on an agency list and think you can wait until 31 March. Each year the UK tax office shares the top 10 weirdest late tax return excuses. In 2013 the top two were “my pet goldfish died” and “I had a run-in with a cow”. For 2014, the list was: 1. My pet dog ate my tax return… and all the reminders. 2. I was up a mountain in Wales and couldn’t find a post box or get an internet signal. 3. I fell in with the wrong crowd. 4. I’ve been travelling the world, trying to escape from a foreign intelligence agency. 5. Barack Obama is in charge of
my finances. 6. I’ve been busy looking after a flock of escaped parrots and some fox cubs. 7. A work colleague borrowed my tax return to photocopy it, and didn’t give it back. 8. I live in a camper van in a supermarket car park. 9. My girlfriend’s pregnant. 10. I was in Australia. Our IRD does not produce a similar list but the message is the same. If UK taxpayers fail to file their return by midnight on 31 January, they face a late filing penalty of £100. In New Zealand the late filing penalty is between
NZ$50 and NZ$500, depending on your net assessable income. If your net income is...
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manufacturing’s contribution to our economy at 14% of GDP. In 2040 a lot more paid work will be done remotely due to ultra-fast data transit. The nature of work itself will change too. Advances in automation and such as 3D printing will see a lot of backbreaking labour disappear. The labour cost in car making is already 5% compared with 50% in the past, with material costs 70-80%. Some goods will scarcely be touched by a human hand, but even those manufacturers will still employ thousands of people since their work will be largely thinking! More and more people will be identified by their capacity to pick up new skills and educational achievements, their ability to learn and adapt. A significant part of our population will be young, Asian and Polynesian, not wedded to post-colonial views or loyal to the British Crown or other former New Zealand traditions. They will be more demanding
less than $100,000
$50
$100,000 to $1 million
$250
more than $1 million
$500
You will also lose a year of statute barring where the IRD’s ability to reassess your return, except in the case of evasion or failing to return income from a particular source, is limited to four years from the end of the year that you file your return.
The future of business Twenty-five years from now in 2040 New Zealand will be the world’s leading smaller nation, and a highly flexible, willing and non-threatening trade partner. Isolation and small scale will have diminished as we turn new technologies and our international time zone to our advantage. We will achieve this by continuing to embrace political and economic reform. These opening comments were by EMA’s chief executive Kim Campbell in MYOB’s recent report “Future of Business: New Zealand 2040.” Mr Campbell went on: Inevitably our ties to mid and north Asia will be strong as a result of their growing prosperity and our ability to produce food and at an unsurpassed rate of innovation. Our fundamental credentials to take our place at the world’s forefront are already in place. Though not generally well known New Zealand is highly urbanized by world standards; 86.2% of our population lives in cities. And we rely to a high degree on
then the penalty is ...
too, more focused on results in an entrepreneurial world. Business and individuals will have to deal with a loss of privacy and space as our shopping habits, tastes and values are tracked online, analysed in consummate detail, and leave an enormous digital footprint. Success will rely on how well a business differentiates itself through creativity and innovation, not price. Energy will be less important as we learn to become more efficient, with plenty of sustainable alternatives ensuring abundant energy supply. The larger resource challenges will concentrate around food and water, of which we have plenty, but the political issues associated will call for cool heads. Small to medium enterprises will still be the drivers of economies worldwide, though perversely some will be big! One thing won’t change and that is the need for flexible attitudes, staying positive, being adaptable to change, and importantly the ability to get along with other people.
TAX TIPS Claire Dilks
tax year Common errors in the return itself often result from a misunderstanding of the law. These include: • For a bad debt tax deduction, the debts must be physically written off in your books before the end of the year. • Entertainment expenses within New Zealand are only 50% deductible for tax. An adjustment is also required in your next GST return to ensure that 50% is treated as a supply. • Provisions are not tax deductible unless you have evidence to show they are incurred in the particular tax year. Generally this will be the case where you are definitively committed to a reliably measurable expense prior to the end of the income year. • Tax losses can be carried forward only if the shareholder continuity test is met. This requires you to have at least 49% of the same ultimate shareholders from the start of the loss-making period to the end of the profit period in which you utilise the loss. • The above also applies to imputation credits though a 66% level of continuity is required. A transfer to a family trust will be viewed as a change in shareholder. • Companies with unused imputation credits can convert these to losses (grossed up at 28%). Shareholder-operated businesses should distribute, via salary or dividend, at least 80% of their profits, which should be taxed in the shareholder’s name. Sometimes this cannot be achieved. Maybe you are expanding the business or making new capital acquisitions, or there are doubtful debts to fund or bank funding to repay. Nevertheless you must document the reasons at the time the decision is made. This is a critical point. The IRD (rightly) expects what is termed “contemporaneous documentation”. In your mind, you and your company may be the same but the company
“A work vehicle that is available for your employee to use privately is still subject to fringe benefit tax” is a separate entity and needs documentation recorded when the decision was made – not as an afterthought, when you-know-what hits the fan. Income is generally taxable when you are entitled to invoice it. It is not refundable, other than for a breach of contract, so check if any extra income not recorded for accounting purposes, should be brought into the tax year. If you have offshore entities, ensure your prices are arms-length. Even if you do not want to pay for a transfer pricing report, you should have evidence on file to show why you consider the prices charged are what you would have charged if you were dealing with a non-associated party. This includes interest rates charged on funds lent to, or from, your offshore entity. Intergroup loans are often ignored. Even if you are providing only a guarantee for your offshore entities’ borrowing, you will still be expected to charge a guarantee fee. Reconcile your GST returns with what is shown in your tax returns. There may be all sorts of differences but this is something the IRD will look at. Then there is the old private expenditure bug-bear. Ensure private expenses are not being charged to the business. New rules are in place for what is termed “mixed-use assets”. It is no longer advantageous from a tax perspective for these to be
part of your business if they are used mainly for private purposes (particularly for corporates with any debt funding) so consider moving these out of the business. Watch the overdrawn current accounts as interest should be charged on them. A couple of extra considerations: • If you have contractors, ensure they are not employees. There are strict tests but they are too often ignored. It does not matter if you have a signed document saying the individual is a contactor and responsible for his or her own taxes. If they are employees you can be liable. Do they dictate their hours of work? Do they provide their own materials? If the answer is no, you could have a potential employer liability. • Have you paid fringe benefit tax on all non-cash benefits provided to your employees? A work vehicle that is available for your employee to use privately is still subject to fringe benefit tax. It does not matter whether they have actually used the vehicle privately; it is the fact that it is available that triggers the FBT liability. At a top rate of 49.25%, this is an expensive mistake. Even if you have restrictions in place or charge employees for private use, the IRD expects to see evidence these policies are policed. There is no such thing as materiality when it comes to tax. This is an accounting concept that has not been adopted by the tax office so do not ignore things on the grounds you think they are immaterial. Mistakes soon add up. Joanna Doolan is a tax partner with EY and Claire Dilks is a senior tax manager with EY joanna.doolan@nz.ey.com claire.dilks@nz.ey.com Any questions? Just email us. BusinessPlus
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ADVICE
How to use provisional tax to grow your business Tax pooling frees up the cash flow businesses need to take advantage of favourable economic conditions. The business outlook for the coming year is positive, with reports indicating that 2015 will be another strong one for the New Zealand economy. According to a survey conducted by the Employers and Manufacturers Association at the end of last year, 92% of respondents felt things would improve or stay the same in 2015, while 58% expected their business to grow during the next 12 months. While the economy is still strong, business owners are likely to make hay while the sun shines and continue investing in their business. Reinvesting into a business always sounds good in theory, but often cash flow constraints can halt plans to buy new machinery, equipment or other items. However, a growing number of New Zealand businesses are easing cash flow pressure by using an unlikely source: provisional tax. That’s right – businesses can free up working capital for reinvestment by using tax pooling to defer upcoming provisional tax payments to a time which suits them, without having to worry about being charged use of money interest of 8.4% and late payment penalties of 20% per annum from Inland Revenue (IRD). Imagine what a business owner could do with additional money in their business right now if they had put in place an arrangement to pay their 15 January, 2015 provisional tax at a later date. There are several advantages of using this IRD-approved method. Rates are competitive compared to many other traditional forms of finance such as an overdraft or unsecured loan, with rates at Tax Management NZ (TMNZ) starting from less than 6%. It only costs $287 to defer a $10,000 provisional tax payment for six months. No security or credit check is required. Approval is guaranteed.
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“Businesses can free up working capital for reinvestment by using tax pooling to defer upcoming provisional tax payment without being charged use of money interest and late payment penalties” Businesses do not need to pay for all the tax financed if they end up owing less than first anticipated, while the finance arrangement can be easily extended. How financing provisional tax works
To defer a $10,000 provisional tax payment for six months, businesses would pay TMNZ a one-off, taxdeductible finance fee and TMNZ would arrange the provisional tax payment on their behalf. The finance fee is based on the amount of tax financed and the period of maturity, so in this instance would be $287. The provisional tax payment is held
in an IRD account administered by the Guardian Trust. Guardian Trust instructs the IRD to transfer the tax into your IRD account when you repay the $10,000 principal in six months’ time. IRD treats the $10,000 provisional tax as being paid on time once the transfer is processed. TMNZ is New Zealand’s largest and oldest tax pooling intermediary, and has helped more than 25,000 small and medium sized businesses save more than $70 million in IRD compliance costs since 2003. sAs an EMA partner, TMNZ offers special rates. Visit www.tmnz.co.nz to find out how TMNZ can assist you.
RETIREMENT
In the second in our series on Retirement Planning, David Shannon highlights some of the impacts of global ageing our world is about to experience. Future articles will address responses to these challenges.
The challenge of Global Ageing New Zealand and the rest of the world stand on the threshold of a social transformation with few parallels in history - Global Ageing. The phenomenon will create extraordinary economic, social and political stress. Global ageing is a result of falling fertility and rising longevity. The first is lowering the relative number of the young people, while the second is increasing the relative number of the old. Global ageing will place new burdens on workers and employers and pose difficult choices for voters and government leaders. First there will be a staggering fiscal cost. In every major developed country, the unfunded liability for public pensions alone amounts to 100 to 250% of GDP. The burden of health benefits for tomorrow’s elderly may be even larger. But global ageing transcends the impact on government budgets; it promises to restructure the economy, reshape the family, redefine politics and even rearrange the geopolitical order. Global ageing is not a hypothesis but a revolution certain to happen. When it has run its course, nothing will be the same. For the government in New Zealand Global Ageing will:
• •
• •
Vastly increase the cost of pension and health-benefit programmes. Generate enormous pressure to cut spending on defence infrastructure, education and public services. Lead to generational tensions between those who pay and those who benefit. Guarantee exponentially increased health-care spending for all age groups as advances in medical technology raise expectations.
For business, Global Ageing will add pressure to:
•
Increase taxes and increase capital costs.
• •
Intensify competition over shrinking consumer markets. Tighten labour markets, requiring productive employees to work longer.
For individuals Global Ageing will:
• • •
Mean inevitable cuts in old-age benefits and a larger family role in long-term care. Change work patterns, including midlife retraining and delayed retirement. Make today’s government pension promises a risky personal retirement strategy creating a new urgency about planning and saving.
Global Ageing and fiscal policy
The OECD projects the average bill for public pensions in the developed world will grow by over 4% of GDP over the next three decades. Add health-care spending and the total bill for public retirement benefits will rise by between 9 and 16% of GDP in most developed countries. The added fiscal cost will leave developed countries no easy choices as they face: • Increased budget deficits. • Cuts to all spending other than on benefits. • How to collect an extra 9 to 16% of GDP to achieve this. Beyond the fiscal challenge, global ageing presents fundamental economic challenges. As populations decline so too will the number of consumers in the home-buying age group leading to adjustments in construction, real estate and durable goods. As a larger proportion of the population enters retirement, the OECD projects the private saving rate will fall - a trend that will accelerate with tax increases or cuts in pension benefits. Many governments have debated trimming pension-benefit formulas. Britain and Australia are replacing unfunded public retirement systems with funded systems based on
personally owned savings. The US social security system is self-funding and New Zealand is moving slowly in this direction with the broadening and strengthening of the KiwiSaver programme. Global Ageing and the family
Governments everywhere will count on families to assume a heavier burden of long-term care for the elderly. Today’s elders typically have two or more children, so at least one is usually able to help out. With today’s working-age adults likely to have only one child or none, many will have no alternative to public programmes for their care. Global Ageing and politics
Despite the mounting evidence that today’s public retirement systems are unsustainable, politicians remain in denial. In New Zealand talk of benefit cuts instantly raise hackles. They are considered ‘earned’ entitlements, tantamount to personal property. The growing political power of older voters could make reform even more difficult. New strategies for an ageing world
What will societies be like that are much older than any we have known or imagined? With societies, as with people, those that plan ahead are the ones that succeed in ageing gracefully, and wisely. In our next issue we will look at the importance of planning for retirement to both employer and employee and some of the new employment options available to ease the transition. For more information on Retirement Planning and seminars for your employees in the Auckland area, contact David Shannon, Retirement Planning Seminars Ltd daveshan@xtra.co.nz or phone him on 027-600-8793. For elsewhere in New Zealand refer to the website www.pretire.co.nz BusinessPlus
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Enter the Auckland Export Awards: Winning world markets from the edge Entries for Auckland’s Export Awards open this month, on February 17th. By entering you also join the growing Hooked on Export community. Its simple and free! ExportNZ Auckland’s Hooked on Export campaign is to inspire New Zealand’s exporters, to expand their business horizons and grow internationally. 86 finalists and winners from 20092014 have joined the ‘Hooked on Export’ community - check out the list at www.hookedonexport.co.nz/entryprocess/finalists-winners There’s no higher accolade for our country’s international traders than an Award from the Air New Zealand Cargo ExportNZ Awards Auckland. Here’s four good reasons to enter: 1. The Award entry process gives you a structure to step back and
look at what you have achieved, what you have learned, and to get a clear focus on where you are going 2. The Awards put the achievements of your team in the spotlight – they deserve acknowledgement for their hard work, leadership, innovation and commitment. 3. Earn credibility for your brand/ business 4. Attract new talent and retain existing talent The seven award categories are: • Westpac Exporter of the Year (total sales over $25 million) • QBE Insurance Exporter of the Year (total sales under $25 million) • BDO Food & Beverage Exporter of the Year
• Endace ICT Exporter of the Year (total sales $1m-$10m) • TNT Express Emerging Exporter of the Year • Quantium Solutions Best Use of E-Commerce for Export • Baldwins Intellectual Property Best Use of Commercialisation of Innovation for Export The 2015 Awards will be presented at a black-tie gala dinner on Thursday, June 18 at The Langham, Auckland hotel. The Auckland Export Awards highlight the huge variety of Kiwi ingenuity, innovation and export success – and they’re just a snapshot of the amazing stories coming from New Zealand exporters. Email inquiries to: catherine@exportnz.org.nz
Dubai lands Expo 2020, triggers new build boom Dubai has been awarded the Expo 2020 reigniting over USD12billion of deferred projects plus a raft of new ones along with the development of the massive Expo site at Jebel Ali. Amongst them is a environmentally controlled city to be built opposite the Mall of the Emirates, a site boasting the world’s largest with 3000 shops, a separate shopping precinct, a covered theme park, a wellness zone, airconditioned walkways and 100 hotels with over 20,000 rooms. The Middle East is definitely back with new projects as better regulation
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and major world attractions restore confidence and growth. The construction spend in the Middle East North Africa (MENA) region is now estimated at $4.3 trillion with the market set for further rapid growth thanks to stable economies, heavy Government investment and the major market drivers of Expo 2020 and the FIFA World Cup 2022. The Big 5 Exhibition in Dubai is the region’s undisputed premiere showcase for construction. In 2014 it attracted 81,000 participants propelled by a marketing budget of $1.7 million targeting key buyers across the region. Owners, project engineers, architects and planners all came out looking for new and innovative ideas. The show also provides opportunities for workshops to
demonstrate product and services as well as conference and guest-speaker spots. Every year the show is a sell out and a waiting list applies. But New Zealand still has reserved space available through Tradex Exhibitions with a limited allocation of display that won’t last much longer. If you are interested in the Dubai show and the market, email Trevor or Margaret Burgess at margaret@ tradexexhibitions.com for more information. Or call 021 926 327.
Letter from Australia Marketing Specialist Bella Katz
A clear cut case for a marketing strategy There are a two New Zealand companies in Australia that come from different sectors but with one thing in common; they lack a marketing strategy. I know it sounds like a ploy from a marketing consultant to be pushing for a marketing strategy, but for me it has become a glaring hole that’s stifling the development of these businesses. The technology company came into Australia less than 12 months ago as an expansion on the back of a successful New Zealand business. They have their own software and offer a service that is, in theory, compelling to blue chip clients and government. When they entered Australia, it all looked good. They recruited several Australian specialists and flew them back to New Zealand for training. They rented an office, so they had that physical presence. They appointed a board of advisors to open doors in high places. Things were moving. But they approached Australia with the same strategy as they adopted for New Zealand and now it’s holding them back. Firstly, like so many technology businesses, what they say they do is incredibly complicated. Secondly, being “techies” the way they pitch the business is incredibly complicated. Thirdly, like far too many businesses, they forget that everyone says theirs is the best product/service in the market even though it all sounds the same to clients. And through all this complexity (eye-wateringly dull to everyone other than technical people) the very simple and truly compelling offer is lost. Personally, that’s what I think is so important about marketing. Forget all the stuff you think makes your business unique and worthwhile. What do your customers
“Forget all the stuff you think makes your business unique and worthwhile. What do your customers say and how can you say it as simply as possible? Then repeat that message to the right people in the right places”
say and how can you say it as simply as possible? Then repeat that message to the right people in the right places. The other company is in manufacturing. They’ve been here for several years and chugging along at a steady pace. Again, with some good local people, a pretty good product, but no marketing strategy either. What’s quite startling to me is that they also don’t have marketing strategy in New Zealand. I always assumed once a company gets to,
say, $5 million turnover they get good marketing happening. I’m sure that New Zealand customers also respond to a clear brand position and plan. Both companies have recently faced staff attrition. I get the feeling that staff too are having a hard time understanding what is at the ‘heart’ of the message. No matter how good the sales team, without a brand to support them, they can only flog “stuff” off for so long. Both companies entered Australia with a ‘stealth’ strategy, determined to remain under the radar and leap out in surprise competitors, having stolen market share. Unsurprisingly, the lack of clear positioning, decent branding, website and supporting material has backfired for both. If you can take away from the mistakes of these guys (both righting their wrongs, as we speak) you’ll be in good stead for Australian expansion in 2015. Bella Katz is an Australia-based brand and marketing consultant and advises New Zealand companies exporting to Australia. She is also a New Zealand expat, calling Australia home for over a decade.
+61 (0) 410 400 657 bella@bellakatz.com.au Bella on LinkedIn www.bellakatz.com.au Skype: beharkatz BusinessPlus
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Chinese growth about to hit cultural ceiling? Robin Chater, Secretary-General of the Federation of International Employers, warns that future growth in China could be set back by Chinese executives failing to get to grips with western business culture. He argued that China has absorbed the superficialities of western fashion and pop culture – but has done little to learn about western business culture. Anyone who has studied the path of Chinese economic development will be aware that although China will soon be the world’s biggest economy it has less than 1,000 genuine multinational companies whilst the USA has over 30,000, Mr Chater said in media statement on January 21st. “Many Chinese companies do have a presence in the rest of the world – although in investment terms the principal location is Hong Kong. Much of that investment is in arms length projects, development aid, JVs and scattered sales offices. My contention is that separate cultural development has created a huge divide between China and the world – something that was not really challenged when foreign companies came looking for cheap manufacturing locations in the 90s and first decade of the millennium. Now things are different. The Chinese government is encouraging the growth of multinational companies and brands as a kind of soft power and also as a way to gain a good return from its many trillions of foreign currency holdings (mainly in US dollars). But to be blunt – most Chinese executive have not got a clue how to operate in the west. They try to apply their well-tried guanxi methods and they do not work. On almost all fronts the west is different in its approach to business from China. This is even down to incidental things like humour and dress. I dress fairly individually and there is no problem in the west, but with my longer hair and multicolored spectacles I get adverse reactions from Chinese executives. They just cannot
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see beyond the shaved hair and collar and tie. Smile at a Chinese businessman and you will be lucky to have a smile back. Their body language and whole manner is different. I am old enough to have experienced the wave of high Japanese economic
also each other. The Chinese business model might work very well for SMEs, but it is a huge burden when doing international business on a large scale. That said, I think China will learn quickly to overcome these barriers – they will have to. But they will only do so if they can recognize the huge barriers which exist and accept that it is no loss of face to
“The Chinese business model might work very well for SMEs, but it is a huge burden when doing international business on a large scale” growth in the 70s and 80s and was able to adjust to such different conduct then. But as then – so now - it is the Asian business executive that expects their western counterpart to adapt to them. I think there is a strong backlash to this in the west. China has absorbed the superficialities of western fashion and pop culture – but has done little to learn about western business culture. That does not matter when doing business in China (do what the Romans do), but outside it is counterproductive. The Chinese view of marketing is incredibly narrow and its seniority system stultifying. Group decisionmaking is qualitatively different in China from even Japan. In Japan it reinforces group commitment, in China it asserts organizational hierarchy. Business networking Chinese-style is also slow and expensive. It is based on a fundamental principle of prior distrust – whereas in the west our early uptake industrial revolution was led by many people operating an unspoken code of honour – reinforced in some cases by Quaker principles of individual integrity. There is a fundamental distrust by Chinese executives not only of foreigners (I guess to those over 45 this comes from the cultural revolution) but
adapt and alter the way business is done. What will come out of this melting pot will be a modern Chinese culture – neither traditional nor western in its nature. Ironically I think that the inspiration for the right course is in communist principles themselves. Egalitarianism is fundamental to both Chinese communism and the emerging western cultures – to a point where the welfare systems of western Europe are more communist than the system in China. Europe and China - as old cultures - have more to teach each other than China can find in other parts of the west. China needs to create a domestic consumer-led market - whilst avoiding American style superficial materialism – and Europe needs to learn that its own brand of pseudo-democracy is betraying it. China has worked out a political system that works and that is what it can teach the world – especially to us in Europe.” The Federation of International Employers is the world’s leading multinational human resource support organization operating on an independent basis from regional offices in the UK and Hong Kong. www.fedee.com
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Awarded best in graphic design If you have an aeroplane you want decorated with art work or a logo you need to contact Admark Visual Images based in Hamilton – Australasia’s only airlines-certified fleet graphics installer. Admark has just won the prestigious Best of the Best Award at the Specialist Graphic Industry Association awards in Las Vegas – for installing the image of Smaug on the Air New Zealand 777 aeroplane in conjunction with the release of the movie, The Hobbit – Desolation of Smaug. Said Admark chief executive Colin Birch: “This recognises Admark as the best digital printing company in the world. “This graphic is the largest ever applied to a plane, globally. Our earlier Hobbit plane is now the second largest graphic ever applied. “We are recognised by Boeing and Airbus as the go-to people for large aircraft graphics. “Our material, printers and staff
all have to undertake safety courses with the airlines and we have to be certified by the aircraft manufacturer and airline for the entire process.” In the winning design, the graphics must survive temperatures of -60 to +40 degrees C for a guaranteed three years, flying 18 hours or more a day. The film on which the design is printed is made by 3M and thinner than kitchen cling wrap- its total weight is 40kg. The installation techniques involve closely-guarded intellectual property. Birch says discussion starts early with clients and depending on the owner of the design, can involve multiple parties. The Hobbit image on the Air New Zealand plane was
done in contract with Air New Zealand but a massive amount of input and discussion was undertaken with Hobbit movie owners and Weta Digital before the image was installed on the plane. “We feel proud to take somebody else’s idea and make it possible.” In other cases Admarks’ own designers create the image. It’s not only planes that get the Admark makeover. Most milk and oil tankers in New Zealand are covered in Admark installations. The company has received more international awards than the rest of the New Zealand print industry combined, says Birch - for point-ofsale images spanning all size products from planes, boats and buildings to food jars and posters; applied inside or out, on ceilings, shelves, floors or walls. The company’s 50 staff are spread between Hamilton and other offices in Auckland, Tauranga , Rotorua, Wellington and Sydney where for the 2000 Olympics Admark draped three sides of a 22-storey waterfront building with graphics for client Nike. BusinessPlus
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Keep your nger on the pulse Your people are one of your biggest assets. To make sure your business is performing at its best you need to get their pay and benefits ‘just right’. That’s where we can help. Using our market intelligence you can keep your finger on the pulse of market trends and act with confidence. The National Employers Wage and Salary Survey covers 216 positions. Our comprehensive reports include splits by industry, location and revenue bands: Salary reports: Reflect Salary ranges by position, location, revenue bandings and industry. Beneets and Conditions reports: Position specific analysis of benefits and conditions. You’ll find sample reports as well as a full list of positions and descriptions on our website.
www.nzsalarysurvey.co.nz The
National Employers Wage and Salary Survey is a joint venture between
LEARNING
EMA graduates from Ultimate Sales Professional Course, December 2014 (l-r): Greg Fitzgerald [Safety & Apparel], Nikita Gillard [Aus Move], Mark Robinson [Century Yuasa Batteries], Vanessa Green [EMA tutor], Kelly Tansey [Designer Textiles], Sam Coleman, Maree Fielder and Danica Williams [Fleet Partners] and Nirupam Sarkar [EMA].
“Selling ice to Icelanders” Graduates from EMA’s flagship training programme, The Ultimate Sales Professional, gathered with their managers to celebrate their achievements at the end of last year. At the party sales managers who completed the course provided feedback on the programme’s value. Manager at Century Yuasa Batteries, Ward Lye, said it takes a large amount of confidence to sell and do client reviews, and while his staff member on the course had experience in the UK and abroad, the New Zealand psyche was a challenge - the course gave him extra sales skills he needed. Mr Lye said, “When you surround yourself with brilliant people as a manager it makes your life so much easier and makes me a lot more comfortable at night.” His salesman Mark Robinson said: “I would highly recommend the Ultimate Sales Professional course to all involved in the sales industry. “Inexperienced and experienced salespeople will learn something. It has been invaluable to me in the progression of my sales career, with many different and diverse topics covered. Vanessa Green from EMA is a superb lecturer, making the course interesting, fun and applicable to me.” Five staff of Fleet Partners have taken the course over the years and their relationships manager Jo MacKenzie who took part last year, said she still thinks about what she learned, and hits her targets. Fleet Partners salesperson Sam
Coleman said of this year’s course: “I really valued the Ultimate Sales Professional and what it has done to me as a salesperson. I have been able to learn, confirm and alter my sales approach with new and existing clients, and my results have changed accordingly. “[Course facilitator] Vanessa Green was able to provide fantastic knowledge and experience that I could relate to. I feel that the overall experience of the course will change my sales career for now, and it will only get better.” Manager Brendan Beadle of Safety & Apparel was pleased to see his salesman’s progress on the course through the year. “I can see the value for us and he is well on his way to earning six figures.” Manager Steve Smith of Aus Move which moves household goods to Australia said he has put two staff through this course and is really impressed. “We talk a few days later [after each course session] and go through the learnings. This has led to changing our phone scripts, and they gained confidence, which I see in their sales.” Proud manager Viv Feldbrugge of Designer Textiles, a manufacturer mostly of merino fabric for export to outdoor-wear makers, said “Ours is a complex business mostly done offshore, and its about
relationships more than sales as such - understanding other businesses and their needs and a lot of cultural factors that come to play, finding solutions and solving problems. “The last year has been challenging for us but I have seen [my sales woman on the course] grow in confidence and really apply what she’s learning,” Viv said. “She and two other team members bounce off each other on their assignments – it’s great to hear them doing that.” EMA Learning manager David Foley said at the function, “Making sales is the driver to every business so we hope you have learned a thing or two.” Facilitator Vanessa Green from EMA said over the 10 months of the course the participants change, their eyes are opened, they develop skills and gain the confidence to own their success. The course involves 10 one-day workshops, held once a month at EMA’s training rooms in Grafton, Auckland. This is the 10th time the course has been run in its four years. Each year two courses are run in parallel. You can read about course content and dates, and book online at www.ema.co.nz. BusinessPlus
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Out & About Women Achieving More networking event with Minnie Baragwanath, Auckland
Chantelle Davey [Spark NZ]
Jean Barr [Top Acheivers Sales Training] and Cheryl Wiggins [Pharmaceutical Compounding NZ]
Ashleigh Nelson [EMA], Minnie Baragwanath and Sarah Mitchell [Be.Accessible] and Karen Joe [EMA]
Tracy Moore, Sarah Whetter and Sarah Anderson [ACETS]
Richelle Ashman and Bridget Morris [EMA]
Sharon Clay [Ebm.papst Australia], Julie Keegan [Equilibrium Project] and Alice Kennedy [Ebm-papst Australia]
Julie Perry [Buckley Systems] and Vicki Ammundsen [Ayres Legal]
Indonesia Trade Mission follow-up meeting
Bernard Hill [Hawkins Infrastructure], Tim Anderson [Trade Commissioner to Indonesia] and Tara Okan [DCM Judith Hill [SafeAir] and Lance Sheppard [Power TechnologyASEAN] Process Controls]
Mahi Tangaere [NZ Educate] and Dr Mike Allen [Geothermal NZ]
Carl Easton and Les Kendall [Temperzone]
Steve Turner [Temperzone] and James Gray [Canary Enterprises]
Graduation from The Ultimate Sales Professional programme, Auckland
Maree Fielder, Danica Williams and Jo McKenzie [Fleet Partners]
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BusinessPlus
Sam Coleman [Fleet Partners], Deb Carruthers [EMA] Scott Dobbie [Fleet Partners]
Kelly Tansey and Viv Feldbrugge [Designer Textiles]
Nikita Gillard and Steve Smith [Aus Move]
PROFILE By Mary Mackinven
Bright lights of Vegas lit spark for Kiwi couple In just 13 months from starting out, a young couple, the Mu’s, have set up three trampoline parks, and planning more. At the Jump Trampoline Parks people of all ages, as you would expect, jump on trampolines. Onsite meeting rooms and café aim to appeal to corporate groups. The couple brought the concept back to New Zealand after seeing it in Las Vegas, says Sandra Mu, managing director and co-owner with husband David. She says, “We were looking for something to do while we were there for my brother’s wedding, and we thought New Zealanders would love this, so we took the plunge.” They gave up their other businesses – David ran a security company and Sandra Jump park founder-owners David and Sandra Mu a photography operation. Eighteen months of research and planning were needed to design (with help from the US) and build the first trampoline park, plus collateral like branding (colourful, bright and energetic) and online systems. They opened their first made-to-measure Jump park in East Tamaki. Months later the Frankton (Hamilton) park opened and at the end of last year, one in Mairangi Bay. East Tamaki Jump trampoline park Jump’s branding includes the café name Jump Fuel is colourful, bright and energetic. just adults. Everyone can enjoy Jump Now the three Jumpoline and we are open till 10pm on Friday companies/parks employ a total of 100 and Saturday nights for adults and casual, part time and full time staff. teenagers…to keep them off the streets! Sandra says the business took off “It’s good for you, to get you off because it was a new concept to New PlayStation….You exercise without Zealand. realising it; you don’t realise the “There was a gap in the market for benefits while having fun. One of our entertainment for all ages…and doing mottos is ‘exercise in disguise’.” it together. Other activities are for Health and safety is the number one children to about age seven or eight or priority in design and operation. New
and forthcoming occupational health and safety legislation isn’t a particular concern because Jumpoline has focussed on it from day one. Jumpers don’t have to sign a disclaimer because ACC covers injuries in New Zealand but clients are informed that as their ticket is clicked they agree to terms and conditions of (safe) use of the park and to abide by the rules. Staff hold briefings before every session even if the customers have been to Jump before. Monitors are on hand to ensure people jump within their abilities to avoid injury. Some monitors are trained to demonstrate how to flip, for example, but clients are advised, don’t think you can flip if you haven’t done it before. Says Sandra: “However, we can’t wrap people in cotton wool… We just make safety the number one priority. We check equipment is as safe as houses.” She says when setting up in business, people have to believe in themselves. “It’s a big risk for us, being a new thing in New Zealand, but we decided to give it a go. We are still young so if we lose everything there’s time to start again! Just get on and do it!” And having a new concept was an attraction that became popular, thanks in large part to word of mouth promotion. Social media is also important! Her advice to other start-ups is be prepared for the taxman. “Your accounting will make or break you; be aware of tax or you might think you have made a lot and find you haven’t.” BusinessPlus
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SCHEDULE FREE for all EMA members | To register call AdviceLine on 0800 300 362 or email AdviceLine@ema.co.nz
Summer Briefings Schedule 2015 Auckland Day/Date
Time
Venue
Mon. 9th March
7.30am - 9.00am
EMA, 159 Khyber Pass Rd, GRAFTON (Boardroom)
GRAFTON
Mon. 9th March
2.00pm - 3.30pm
Waipuna Conference Centre, 58 Waipuna Rd (Cole Theatre)
MT WELLINGTON
Mon. 9th March
4.00pm - 5.30pm
Waipuna Conference Centre, 58 Waipuna Rd (Cole Theatre)
MT WELLINGTON
Tuesday 10th March
9.30am - 11.00am
Quality Hotel Lincoln Green, 159 Lincoln Rd
HENDERSON
Fri. 13th March
2.00pm - 3.30pm
ELLERSLIE EVENT CENTRE, 80 Ascot Ave
REMUERA
Fri. 13th March
4.00pm - 5.30pm
ELLERSLIE EVENT CENTRE, 80 Ascot Ave
REMUERA
Friday 20th March
2.30pm - 4.00pm
Bruce Pulman Park, Teamsports Centre, Walters Rd
PAPAKURA
Mon. 23rd March
9.30am - 11.00am
Titirangi Golf Club, Links Rd (Club House Lounge)
NEW LYNN
Mon. 23rd March
3.00pm - 4.30pm
Crowne Plaza Auckland, 128 Albert St (Ballroom 1)
AUCKLAND CBD
Tues. 24th March
9.30am - 11.00am
Counties Inn, 17 Paerata Rd (Rata Lounge)
PUKEKOHE
Weds. 25th March
9.30am - 11.00am
QBE Stadium, ASB North, Stadium Drive (Level 1 Nth Lounge & Waiake Rm)
ALBANY
Weds. 25th March
3.00pm - 4.30pm
Bruce Mason Centre, 1 The Promenade (Hauraki Gulf Rooms 1-3)
TAKAPUNA
Thurs. 26th March
9.30am - 11.00am
Sudima Auckland Airport, 18 Airpark Drive, Airport Oaks (Pavilion Room 1)
AUCKLAND
Frid 27th March
9.30am - 11.00am
Waipuna Conference Suites, 60 Highbrook Drive (Highbrook Suite 2)
EAST TAMAKI
Friday 27th March
3.00pm - 4.30pm
EMA, Room 2C, 159 Khyber Pass Rd, Grafton
AUCKLAND
Day/Date
Time
Venue
Weds. 11th March
3:00pm - 4:30pm
The Northerner, Corner North Road & Kohuhu St
KAITAIA
Thurs. 12th March
9:00am - 10:30am
SCENIC HOTEL BAY OF ISLANDS, 58 Seaview Rd
PAIHIA
Thurs. 12th March
1:30pm - 3:00pm
Kingsgate Hotel Whangarei, 9 Riverside Drive
WHANGAREI
Friday 13th March
2.00pm - 3.00pm
Webinar, www.ema.webex.com
Northland
Waikato / BOP Day/Date
Time
Venue
Mon. 16th March
9.30am - 11.00am
The Junction Hotel, Function Room, 700 Pollen St
THAMES
Mon. 16th March
3.00pm - 4.30pm
Trinity Wharf, 51 Dive Crescent (Trinity Rooms - 3 rooms opened into 1)
TAURANGA
Tues. 17th March
9.30am - 11.00am
East Bay REAP, Pohaturoa Room (Upstairs 2), Reap House, 21 Pyne St
WHAKATANE
Tues. 17th March
3.00pm - 4.30pm
SUNCOURT HOTEL & CONFERENCE CENTRE, 14 Northcroft St
TAUPO
Weds. 18th March
9.30am -11.00am
Holiday Inn Rotorua, Corner Froude & Tyron Streets (Totara Room)
ROTORUA
Weds. 18th March
1.30pm - 3.00pm
Central North Island Kindergarten Association, 6 Glenshea St
PUTARURU
Weds. 18th March
5.00pm - 6.30pm
St John Ambulance, 11 Kakamutu Rd
OTOROHANGA
Thurs. 19th March
9.30am -5.00pm (full day)
Kingsgate Hotel Te Rapa, 100 Garnett Ave, Te Rapa
HAMILTON
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BusinessPlus
0947/0115