BusinessPlus news | advice | learning | networking
Issue 116 – July 2014 $6.30
Publicatio n o f t h e E m p l o y e r s & M a n u f a c t u r e r s A s s o c i a t i o n Inc
Thirty years packaging success
Raising capital? What you need to know HELP, a staffer is wrecking our cars! In this issue: • • • • •
TAX: More changes in the wind
NZ teams win at world robotics champs Your reputation is everything in this digital age Kiwi businesses bank on accounting in the cloud The Trade Academy value proposition Export Award winners!
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BusinessPlus is published by :
CONTENTS
The Employers and Manufacturers Association (Northern) Inc
Advocacy
159 Khyber Pass Rd, Grafton, Private Bag 92066, Victoria Street West,
7
04 Senator at lunch 05 Election buzzword II: a ‘living wage’
Auckland 1142
news
Ph: 09 367 0909 or 0800 800 362
06 Large power users can opt to
Email: ema@ema.co.nz
become direct market participants
Website: www.ema.co.nz
07 NZ teams win VEX Robotics World Championships 6th year running
Chief Executive: Kim Campbell Manager, Advocacy & Govt Relations:
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IN THE LOBBY: Following the election road to growth
David Lowe Manager EMA Learning: David Foley Manager, Strategy & Enterprise: Mauro Barsi
agreement offers low cost 3D printing
Waikato Denis Quigan 07 823 9311
mob 027 203 0694
Russell Drake 07 838 0018
mob 021 686 621
23 Letter from Australia:
Niche networks are the way to go in Australia
mob 021 662 656
10
RAISING CAPITAL: Regulatory changes making capital raising easier
11
Raising capital - Three views
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tax tips: GST and bodies corporate, provisional tax unfair
Clive Thomson 07 348 0334 mob 0274 372 808
BusinessPlus
25 member noticeboard:
Celebrating 30 years packaging success; Bonson
Editor Gilbert Peterson Ph: 09 367 0916
mary.mackinven@ema.co.nz
Reputation is key in the digital age of marketing
advice 08 COMMENT: Kiwi businesses realising cloud potential
Designer Ripeka Mikaere
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EMPLOYMENT CHAT: Is this really
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remuneration strategy:
Advertising Sales Colin Gestro (09) 475 9313 colin@affinityads.com ISSN No. 1176-4953
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26 Digital Marketing Summit:
Writer Mary MacKinven
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features
Rotorua / Taupo / South Waikato / Whakatane
gilbert.peterson@ema.co.nz
22
23 EXPORT AWARD WINNERS
Bay of Plenty Terry Arnold 07 575 8401
22 EXPORT: Taiwanese trade
27 28
constructive dismissal? Help, a new staffer is wrecking our cars. And someone accused of downloading porn!
learning
BusinessPlus
09 From school drop out to scholarship
Thirty years packaging success
Unblurring the lines
news | advice | learning | networking
Issue 116 – July 2014 $6.30
Publication of the Employers & Manufacturers Association Inc
star. The Trade Academy value proposition
20 Facilitating the success of our
SME’s through Owner Manager Development
21 Four reasons why ‘sustainability’ is not a dirty word
On the cover... David Tsui says the success of Bonson Industrial relies on constantly innovating. His story is on page 25.
Raising capital? What you need to know HELP, a staffer is wrecking our cars! In this issue: • • • • •
TAX: More changes in the wind
NZ teams win at world robotics champs Your reputation is everything in this digital age Kiwi businesses bank on accounting in the cloud The Trade Academy value proposition Export Award winners!
ADVOCACY at work
Senator at lunch EMA hosted Senator Bam Aquino from the Philippines to lunch in Auckland. The discussion was all on employing young people, trade and business in general. Senator Aquino is the youngest senator in the current Philippines Congress and chairs the Senate Committees on Trade, Commerce and Entrepreneurship, and on Youth. He won several awards as a youth leader before being elected into the Senate. He is also the Philippines first social entrepreneur-senator and was named a Young Global Leader of the World Economic Forum in 2006, and one of the 10 outstanding Young Persons of the World in 2012. EMA Election Manifesto hits nerve on education
EMA launched its Election Manifesto 2014 last month to members, the media, and sent it to some secondary school principals and chief executives of regional councils. Our proposals on education and local government gained the most feedback. On education EMA is proposing that all school leavers be given an ‘Employment Readiness Certificate’ in addition to their NCEA record. Employers want every student leaving secondary school to be issued with a work readiness certificate detailing their abilities in reading, writing, mathematics, on-time attendance and attitude. The proposal is part of the Employers and Manufacturers Association sixpoint Election Manifesto 2014 issued today. Employment readiness certificates “Businesses keep reporting young people are leaving school without adequate work readiness skills,” said EMA’s chief executive Kim Campbell. “The present NCEA report issued to school leavers is simply not up to the job
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for helping employers choose amongst young job seekers. So we are proposing students be issued with a new document that employers can easily understand: an Employment Readiness Certificate containing a meaningful assessment of the student’s skills. “Along with that, much more needs to be done to encourage students to take up a career in the trades. The perception that going to university will earn the best jobs and the big bucks still persists, but it is not necessarily so. “Our policy prescription is to boost the numbers of students choosing a trades career with an ongoing national public relations campaign that highlights trades as valuable, and often demanding of considerable intelligence. “We also want to urge those who influence students’ career decisions not to discourage high achieving students from choosing a trades career. Consent processes On local government consents Kim Campbell said some local building and resource consenting authorities need a rocket up them. “Members keep telling us about constant delays in the issuing of building and other resource consents, so EMA’s Election Manifesto calls on the next government to require all local authorities that issue building and resource consents to establish and publish a standard for the total elapsed time between a consent application being submitted and being granted, with unreasonable standards being subject to judicial review.” Other issues covered in the Manifesto include automatic extensions of migrant work visas, soft loans to encourage innovation, and reducing the tax on Kiwisaver savings to 15%. Teacher performance on the agenda
President of the Post Primary Teachers Association Angela Roberts addressed EMA’s Policy Forum meeting on “Rewarding teacher performance through higher pay and creating expert teachers”. She discussed whether it was the best way to improve education outcomes. The Forum discussions are held under Chatham House rules.
Labour Deputy David Parker on all things business
Labour’s Deputy Leader David Parker (list, from Otago) gave his views on a range of topics to members at an EMA Policy Forum. Mr Parker is also Labour’s Finance Spokesperson and Shadow Attorney General. A summary of some of Labour’s business policies are: • Capital Gains Tax – this to neutralize investment signals and decisions so they were not decided on tax advantage. • KiwiSaver – to become universal with a total contribution ultimately of 9% between employee and employer. Exemptions will be aligned to Australia. • R&D – tax credits would be re-introduced with accelerated depreciation on capital investment. • Aging population – health costs will continue to increase. Superannuation expenditure will exceed education expenditure in 2015. Entitlement to National Superannuation would be lifted to age 67. Mr Parker also answered questions about the Reserve Bank Act, employment law, immigration, population policy, farming land and foreign ownership, oil exploration and regional development. Changes to membership of policy meetings
EMA is interested to hear from senior executives and business owner/ managers interested in actively participating in our regular Policy Forum, Employers Forum and Manufacturers Forum. Participants need to be able to interact with others with different viewpoints, and able to represent the business perspective. Please email your expressions of interest to Anne Clarke at anne.clarke@ema.co.nz You can read more about the Forums at www.ema.co.nz/ resources/Forums
ADVOCACY By Kim Campbell
Election buzzword II: a ‘living wage’ (First published in NBR)
Last month I discussed why less attention should be paid to income differences between people in general, and much more to poverty. That is, much more attention should be focused on the deprivation and hardship to people with “not enough” and far less to those with “less than”. We need to know more about the causes of poverty, especially why poor families stay poor, which seem to be systematic and persistent. In contrast, concerns about inequality of itself, and campaigns for a living wage, are likely to distract from identifying and resolving this separate and more serious issue. While it may be true that more equal societies deliver better prospects for all their citizens, including the wealthy, the more pressing issue is to ensure the poorest of our people have the wherewithal for them to take responsibility for their own futures, especially for those of their children. The living wage idea is all about the ‘pre-distribution’ said to be necessary to provide workers and their families with the basic necessities of life and enable workers to live with dignity and participate as active citizens in society. But a ‘living wage’ or otherwise raising the minimum wage doesn’t help people who don’t have a job. Introducing a living wage irrespective of a family’s circumstances would miss entirely the nuances of New Zealand households and lifestyle. It could well cause more confusion than clarity. For instance the New Zealand Treasury calculated that of the people who currently earn less than the proposed living wage of $18.80 an hour, 79% are in families with no children at all, and one in five live in families with total incomes over $80,000 per annum. Over 10% of the people on the minimum wage live in a household in the top 10% of incomes. Public service entitlements also redistribute a large amount of resources from the top income earners to the bottom and while the amounts of
“a living wage or otherwise raising the minimum wage doesn’t help people who don’t have a job...” “...Over 10% of the people on the minimum wage live in a household in the top 10% of incomes” those benefits and services vary across income brackets and over time, the largest recipients of them are in the third decile of incomes which has the largest number of people over 65 in it. In 2010, the bottom 40% of households by income were net recipients of support which averaged between $20,000 and $30,000. Overall, OECD findings paint a picture of rising inequality which is more complex than sometimes suggested. It increased in New Zealand and in most OECD countries from 1970 to 2000. OECD reviews in 2008 and 2011 found that from the mid-1980s to the mid-2000s social and demographic changes, such as an increase in the numbers of smaller households and increases in the number of sole-parent households, were major trends. Eleven% of changes to inequality were explained by changes to household structures with a further
11% explained by the tendency for high earners to partner with other high earners. Increased employment of women has also reduced household inequality, by 19% compared to what otherwise would have been. The reduced employment of men in OECD countries contributed 17% of the changes. Regulatory and policy reforms promoting labour market flexibility increased wage disparities but also increased employment. Variations in wage rates explain 40% of the inequality. Despite these facts the living wage idea retains its attractions for people with jobs while failing to address poverty, which is the more important issue. Poverty and deprivation
While there are no official poverty measures in New Zealand, the defacto standard used is when people earn below 60% of the median income, which is also the figure used by the OECD and the EU. In New Zealand this measure of hardship covers 6-7% of our people in any given year, people who have a high probability of remaining in hardship over time and are less income mobile than others. These kinds of people are most likely to be: • Under 18 or youths • Maori • With low qualifications • Sole parents. Education
Seventeen% of educational attainment can be explained by socio-economic background and around half of our households below the absolute poverty line have no formal qualifications. Currently one continued on pg6 BusinessPlus
5
NEWS
Large power users can opt to become direct market participants Large power users can reduce electricity costs by becoming participants on their own account directly in the market. Promotion of the option is becoming more possible and the Major Energy Users Group (MEUG) has launched a guide to show how it can be done. Ralph Matthes, Executive Director of the MEUG, says improvements in the rules (the Code) and transparency of the wholesale market, along with better techniques to manage demand response to peak spot prices and competition and innovation in hedge products have lowered the costs for large power consumers. They should consider the benefits as
the savings could be tens of thousands of dollars in some cases, rather than relying on retailers and agents to intermediate. The MEUG guide will assist businesses take the first step of assessing if further investigation is warranted for them. MEUG emphasizes it is not comprehensive and recommends expert assistance is used to develop company specific proposals to undertake this. “Each power user has different needs and risk strategies and will need to do due diligence on the option,” Mr Mathes said. “For some the maths will work and for others it won’t.
“The guide is intended to help demystify the complexity and separate critical issues from other mandatory requirements that, while involved, are not difficult to complete with the right advice. “Over time we expect the demand threshold at which it is economic for consumers to become direct market participants will diminish and this will in turn put more competitive pressure on retailers to innovate to avoid losing market share” concluded Mr Matthes.
continued from pg5
with two parents. This is particularly concerning because New Zealand has a comparatively high rate of sole-parenthood; in 2011 around a quarter of children were in such circumstances.
standards, and welfare benefits are low relative to the poverty line.” (‘Solutions to Child Poverty in New Zealand: Evidence for Action’ http://www.occ.org.nz) The poverty vector also coincides with other social issues including: • Family violence • Drug, alcohol and substance abuse • Mortality rates • Depression • Infant mortality • Racial stereotyping New Zealand is the most tolerant country of income inequality in the OECD, and we can speculate this is because most of us feel well off, even though in terms of the rest of the OECD we barely reach the middle class. The raw data also does not inform the debate on why we tolerate family violence, or substance abuse, why we don’t treasure education, or champion ambition, or why we are happy to squander our environment and sell ourselves to the lowest bidder. Perhaps a change in public attitudes would be more effective than a change in government.
in three people aged between 15 and 24 have no formal qualification. A large proportion of these will gain non-school qualifications but their options for higher education will be much more limited than others. New Zealand’s NEET rate (Not in education, employment or training) as a share of people aged 15-24 crept above the OECD average in 2011 (12.7% vs 12.3%). And there are persistent differences across ethnicities in terms of NEET rates: • 1.5% Pakeha • 24.9% Maori • 23.2% Pacific • 6.7% Asian This is high by comparison with other OECD countries in spite of the fact that New Zealand is ranked second in the OECD for its expenditure on education. Sole parents
The Expert Advisory Group on Solutions to Child Poverty noted sole parents have particular characteristics: “Like most other countries, New Zealand children living in sole parent families are much more likely to experience poverty than children
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“The raw data also does not inform the debate on why we tolerate family violence, or substance abuse, why we don’t treasure education, or champion ambition, or why we are happy to squander our environment and sell ourselves to the lowest bidder” “There are two main reasons why sole parent families in New Zealand have a high rate of poverty: sole parents have a comparatively low rate of paid employment by OECD
EMA and MEUG are planning a workshop to demonstrate how a company can become a direct market participant. Watch this space.
kim.campbell@ema.co.nz
NEWS
NZ teams win at robotics championships More than 750 teams from 27 countries competed at the VEX Robotics World Championships held recently in Anaheim, Los Angeles – and New Zealand again walked away world champions for the 6th year. The competition sees robots built over the season by teams of students from junior through to university level compete against other robots in a game of skill. The teams also submit a range of other work for the competition including websites, essays and educational videos on robotics. In the High School category hundreds of entrants are whittled down to only five alliances of three robots. The five alliances then compete in a round robin to find the two alliances that face off in the grand final. Two of the top five final alliances included New Zealand teams. Mt Roskill’s Lynfield College
NZ teams Fielding High School and Otumoetai College with former US Ambassador to NZ, David Huebner
Into the finals arena, with Otumoetai College Robotics
successfully defended their World Championship crown and after allying with a U.S/Canada team again won the High School World Championship. Incredibly Lynfield College battled other Kiwis – Otumoetai College allied with a US team in the final. “The Kiwis were red hot because they have worked hard to become well known and liked and have now been on the World Championship winning team for six years in a row,” says Chris
Hamling, National Manager for Kiwibots, the Australasian advocate of the Vex Robotics programme. “New Zealand had excellent defensive play and sold that concept well – we were valued highly because we could stop the opposing team from scoring. This strategy was successful in the final,” he said. Other NZ teams competing in the US included Albany Home School, Feilding High School and teams from Massey University and a composite university team called OYES who did exceptionally well in the University division, winning the Excellence Award among others. www.kiwibots.co.nz
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www.ema.co.nz BusinessPlus
7
COMMENT
Kiwi businesses realising cloud potential Kiwibank and Xero have announced they are streamlining their communication between their respective banking and accounting services, and their customers are realizing the benefits. Going to the Cloud
Cloud computing is a trend taking the world by storm, and New Zealand’s businesses are proving just as quick on the uptake as their overseas counterparts. ‘State of Cloud Computing New Zealand 2013’, a report published by business consulting firm Frost and Sullivan, shows that of the businesses in New Zealand currently using cloud solutions, 47% spend more than 10% of their entire IT budget on it. In addition to this, 32% told Frost and Sullivan they spend a whopping 20% or more of their IT budget on cloud computing. The reason is simply because it can “reduce IT costs, improve business agility, increase flexibility and enhance collaboration with stakeholders through community cloud environments,” as stated in the report. It says many companies across the country are progressively adopting cloud solutions and reaping the benefits. Phil Harpur, senior research manager of Australia and New Zealand ICT practice at Frost and Sullivan, said there is a marked increase in the number of businesses using cloud computing when 2013’s numbers are compared to those of the previous year. “Though larger organisations generally spend more on cloud computing services, the number of smaller and medium-sized enterprises investing significant amounts of their IT budget have also increased,” Mr Harpur said. The report also sheds light on the kinds of activities companies are using cloud solutions to conduct. In New Zealand, the majority of businesses
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use it to access e-mail, as well as “storage and office productivity solutions”. Frost and Sullivan predict that within the next 12 months, many businesses across the country - at least 25% - will start accessing office productivity solutions, such as Google Docs, this way.
From the bank to accounting
“We’ve seen an increasing number of customers moving to cloud based accounting providers and they expect a seamless experience between their provider and their bank,” says Kiwibank Head of Transactional Banking, Matt Winter. Kiwibank claims the benefits for their business customers using Xero include better visibility and control over their finances, allowing them greater responsiveness to changes in business, saving time and increasing productivity. “The latest Xero integration enhancements represent Kiwibank’s commitment to improving productivity for New Zealand businesses,” Winter said. Xero too is showing strong growth
with its intuitive and extensive solution. Xero banking and payments expert Matt Vickers said, “This is world-class banking that is being noticed across all our markets and we hope it will become a standard banking service over the next few years.” “As the walls continue to come down between accounting software and internet banking, the traditional friction in dealing with banking systems is disappearing,” says Xero’s Matt Vickers. “Beyond the simple flow of transaction data from the bank to the accounting system, Xero’s nextgen platform allows instructions to be seamlessly sent to the bank from Xero, allowing accounts and feeds to be created automatically. “This results in time saved in accounts payable processing, making life easier for the business owner and allowing them more time to focus on running their business. Kiwibank’s Matt Winter says, accounting and banking is a natural pairing, so the decision to improve integration with Xero and streamline the process for our customers was simple. “Our business customers can now quickly set up feeds for Xero and they, or their accountant can prepare direct credit bulk payments in Xero and send them securely to their internet banking account, ready to be checked and authorised by the business owner. “This streamlined approach will provide more time for business owners to focus on doing what they do best - running a business.”
LEARNING
From school drop out to scholarship star The Trade Academy value proposition
Jay Leech, a young man about to leave school, joined the Auckland West Vocational Academy (AWVA) in 2012, enrolling in carpentry as a full time student. “The Academy literally turned my life around”, he says. “Once I proved I wasn’t a failure I earned the respect of my tutor and fellow students. I turned up to class every day and discovered learning was actually fun.” Jay came top of his class and is now employed as an apprentice electrician after completing further study at UNITEC with a $2,500 scholarship. Since the launch of AWVA in 2012, the academy has more than doubled student numbers, now with a record 190 students officially enrolled in 2014. Since its launch, a total of 410 ‘at risk’ senior students have been given the unique opportunity to choose a trades based vocation, attend the Academy and continue to achieve NCEA level 2. Using the Vocational Pathways as a tool, Trades Academies, such as AWVA, provide hands on practical courses working closely with tertiary institutions and industry providers. “Learning in a Trades Academy gives students real life skills and qualifications and using the Vocational Pathways young people can choose their study options and see how it relates to future job or career options,” says Arthur Graves, Group Manager Youth Guarantee, who oversees the Vocational Pathways. “Students can get relevant qualifications to set them up for their next steps, whether it’s into tertiary study, industry training or employment.” Carpentry is one of the AWVA’s most comprehensive courses and part of the Construction & Infrastructure Pathway. The success of it has been proven by the 14 young men from the 2012 intake all of whom are now either currently employed, in an apprenticeship or at UNITEC continuing their studies. Carpentry Tutor Chris Skinner is justifiably proud: “All these young
men have excelled, and if it wasn’t for the Academy they would probably have been expelled from school.” “Ensuring students gain the skills that the trades industry needs now is vital,” says Chris. “We aim to have our students work-ready. The change from school to work is a huge step - we give our students a basketful of skills, including numeracy and literacy. “The students that come out of AWVA will be valuable to any employer,” he says.
“The Academy literally turned my life around” Based primarily at Massey High School, but with an associated academy at Waitakere College, the AWVA uses Vocational Pathways to align and structure what students are learning so there is a better understanding of their future options for work or study. Ten courses are on offer to senior students, with an after-hours level 3 course in Hospitality added this year. A new Construction and Infrastructure course has been created for students interested in excavation, roading, traffic management, large vehicles, and infrastructure. Other courses include: carpentry, hospitality (2 levels), electrotechnology, business computing, automotive, construction and infrastructure, early childhood education, engineering (2 levels), and fashion & beauty. Academy students can now gain their driver’s license as well as part of their course. “This is a hugely exciting initiative for education,” says John Tinling, Deputy Principal Massey High School. “We now have options for senior students who just do not fit the mould of our traditional schooling system. “Already more than 200 students have successfully come through
the Academy - many would have previously failed, but now they have a vocation, skills, employment options and a plan for the future.” “To get employment you need to get a solid education, achieving at least a minimum qualification, or more,” says Arthur Graves. “NZ has poor retention rates of 15-19 year olds remaining in education to get qualifications and skills.” More than 4,200 senior secondary schools students, from 264 schools are currently enrolled at a Trades Academy this year, in 22 Secondary-Tertiary Programmes throughout New Zealand. For more on these programmes, see the ‘Youth Guarantee Monitoring Report: Impact of Trades Academies & Youth Guarantee Fees-Free Provision on Student Performance’. http:// youthguarantee.net.nz/assets/assets/ Youth-Guarantee-MonitoringReport-one-page-for-YG-staff.pdf Students in Year 11 and 12 can choose to focus on one of six sectors offered by Vocational Pathways including: • Manufacturing & Technology • Construction & Infrastructure • Primary Industries • Services Industries • Social & Community Services • Creative Industries Vocational Pathways allow for students to ‘get a feel’ for what work in an industry sector is like in the real world – they are work ready and skilled. Your company can help engage students who may have dropped away. The Ministry of Education is holding regional workshops on the Youth Guarantee which will discuss initiatives to raise student achievement and develop relevant learning opportunities for them and their future employment. Dates and registration are at www.youthguarantee.net.nz/home-/ workshop-calendar BusinessPlus
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Raising capital
Regulatory changes making capital raising easier New developments are making raising capital easier, said Allan McRae, a corporate partner at Lowndes Associates and chairman of the Business Intelligence Breakfast workshop in Auckland last month. MORE listings
By historical standards 2013 was a great year for listings. There were 11 in all. So far this year there have been four new IPOs: Genesis Energy, Intueri, Serko and Gentrack with others either announced or under consideration: Scales, Metro Glass, IkeGPS, Eroad, Triple Jump, Powerby Proxi, Vista, Fronde, Wherescape, Orion Health and Pushpay. new regulatory framework
This is being introduced in two Phases; the first took place on 1 April and the second is scheduled for 1 December this year. As part of Phase 1 the Government fast-tracked a number of initiatives to improve access to New Zealand’s capital markets. These were to allow certain capital raising offers to be made to the public without a prospectus or an investment statement. They include four key exemptions particularly relevant to smaller fund raisings. 1. Crowd Funding and Peer to Peer Lending: Companies are now able to raise capital through licensed intermediaries such as crowd funding or peer-to-peer lending providers. So long as the intermediary has been licensed with the Financial Markets Authority (FMA) to operate the relevant platform, share capital can be raised through a crowd funder, and debt capital through a peer-to-peer lender, without the need for a prospectus or an investment statement. There is no cap on what can be raised from an individual investor, but there is a limit of $2m on the total amount any company can raise through these facilities in any 12 months. 2. Small Personal Offers: This exemption allows companies to raise up to $2m within any 12 months, from up to 20 investors, without the need for a prospectus or an investment statement. The small personal offers exemption can be utilised without regard to what might be raised under other exemptions, but it does operate to
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reduce the amount that can be raised via crowd funding and peer-to-peer lending platforms during any 12 month period. 3. Employee Share Purchase Schemes (ESPS): Companies can now offer up to 10% of their shares in any 12 months to employees, directors or contractors with only a brief disclosure document outlining the details of the scheme, and copies of the company’s most recent annual report and financial statements (or information on how these can be obtained), and a prescribed warning statement. The accounts need not be audited. This is a significantly more liberal regime than previously available. 4. Same Class Offers of Quoted Financial Products: A listed issuer can now issue equity securities, or debt securities, of the same class as has already been quoted, using minimal documentation so long as it issues a cleansing notice confirming that it is up-to-date with its obligations for continuous disclosure and financial reporting. Listed issuers can use this new regime not only in relation to rights issues but
also in connection with placements to retail investors, sell downs and share purchase plans. This new regime could lead to companies seeking less funding at the IPO stage knowing it is now easier and more cost effective to go back to shareholders for further funds. New rules for disclosure and licensing
Phase 2 of the new regulatory regime is scheduled to come into effect on 1 December 2014. At that time the new wholesale investor regime, and the self-certification rules associated with it, will come into force. Two of the key planks to Phase 2 are the new disclosure regime, and the new regime for licensing financial product markets. Next month: Phase II and The New Market – will it work? Allan McRae is a partner of Lowndes Associates ( mcrae@lowndeslaw. com/ ph 373 7715). The views expressed here are brief and general in nature. You should take legal advice before acting on any matters dealt with in this article.
Raising capital
Raising capital - Three views EMA partners with Lowndes in producing the Business Intelligence content-rich series of workshops which this time focused on raising capital through a public offering (IPO) of shares on the stock exchange, and raising equity privately from investors. A record quantum issue of $4.6 billion was raised in the past two years, though Z Energy and Synlait account for most of it, said Jonathan Oram, director at Macquarie Capital in New Zealand. To date this year alone $300 million has been raised from IPOs, and while that’s not a lot, it’s an improvement on recent years. Four key drivers for issuing IPOs are: 1. Growth in KiwiSaver [making investment funds available]: only 9% goes to NZ equities, valued at $2bn, a large chunk but the potential is increasing. 2. Market valuation and confidence in the economy 3. Alternative bids: Private equity or an IPO represent the strongest bid? 4. IPO confidence IPO preparation requires: • A lead manager or adviser • Prepare for six to nine months, and form the right IPO board. • Financials: prepare at least three years of audited accounts • Get agreement with shareholders. • Investor feedback on recent listings advises those thinking of listing: • Raise your profile to ensure strong demand; • Dual listing? - NZX and ASX. • Vendor-retained stakes depend on the management. • Speed to market: it’s better to be well prepared before going public, not flap in the breeze too long • Offshore demand: NZ companies are attracting offshore interest.
invested in.” When they finally listed it was the year of the Rugby World Cup and elections. If the outcomes of those events had been different, would the capital situation have changed? “It’s absolutely important to get an adviser and board members right: the mix of people is vital.” Her other tips are: • Legal due diligence is a minefield. You need experienced people • Good broker relationships can’t be overestimated. • In setting the share price, don’t be too greedy. Sellers might leave money on the table for the next buyers. private equity
Matt Riley, co-founder of Waterman Capital, promoted the role of private equity (PE). Stepping up to continuous disclosure might be good for smaller companies but listing is a pretty demanding environment for them. The role of PE is to raise funds and grow value by accelerating growth and driving efficiency; to push management teams outside their comfort zones; to position the companies for the next step, and to
deliver returns of two to three times the money. PE can be a good stepping stone to issuing an IPO and listing, he said. He suggested why so few companies list are: • The process is too public for the NZ psyche • Listing can be very expensive, • It’s complicated and demanding • The availability of capital is constrained by the lack of a superannuation industry that underpins listing in Australia. A statistic at odds with market perception is private equity backed IPOs raising more than $100m returned 95% to shareholders over 10 years to 2014; but non PE-backed IPOs actually declined by 2.2%. “In the past 10 years about $2bn was raised by New Zealand PE managers.” He says PE brings more than capital. It also delivers objectivity, relativity, diligence, skills, alignment, governance, succession and liquidity. • The next Business Intelligence workshop will be held on Wednesday, August 6 on the topic “From Strategy to Results: Building Effective Boards and High Performing Organisations”.
Stopping and starting
Norah Barlow talked about her experience as CEO of Summerset retirement village developer when it undertook its IPO listing on the NZX in 2011 and the NZAX in 2013. Her key advice is: listing is about timing, timing, timing. “When we went to market in 2011 we wished we had done ASX at same time. Being there allows you to be
Allan McRay, Matt Riley, Norah Barlow and Jonathan Oram BusinessPlus
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EMPLOYMENT CHAT
Is this really constructive dismissal? Help, a ... someone accused of downloading porn! We initially refused to take ‘Sally’s’ resignation because, although we had investigated complaints against her, they weren’t major issues. She left in a huff anyway. Now our lawyer tells us she has made a personal grievance claim for being forced to resign. How can we minimise the damage from this? – Allan Dear Allan Your situation reminds me of a recent case at the Employment Relations Authority (ERA), which resulted in the claims being dismissed for having no substance. You might like to try mediation through your lawyer or EMA’s, or through the Government’s Mediation Service first. If Sally and you cannot agree to do this, or cannot come to a compromise at mediation, the ERA is the next step. In any case your predicament will be lessened if you have met the following sorts of good faith behaviours as an employer. If you investigated complaints fully and fairly, the fact there were several
activities that relax you personally; and public relations including any communication necessary with staff, other stakeholders and the public.
“just plain stupidity isn’t a reason for termination”
instances does not in itself amount to bullying or ‘constructive dismissal’. In fact you would be at fault if you had not investigated the complaints and involved Sally in that process. If you tried to help Sally by offering training opportunities and additional support such as mentoring and guidance, this is in your favour. You also refused her resignation, which is holding out an olive branch that she declined to take. This all adds up to suggesting her resignation could not have been a reasonably foreseeable consequence of your actions. Unfortunately this will still cost you in legal fees and stress, and possibly reputational damage. Call on all your resources: legal, counselling or mentoring and other
We have an employee who’s been here two months, not on a trial period, and he has virtually wrecked two vehicles in that time. He’s costing us so much money we couldn’t bear a personal grievance claim, and we have no other positions for him (not that I’d trust him if we did….)! Can I fire him? – Gary Dear Gary You might think you can get rid of the problem so easily, but I’m afraid not - unless there is evidence of intentional damage to property, or disobeying rules or blatant disrespect for his employer. But just plain stupidity isn’t a reason for termination. If your employment agreement with him does not contain a valid trial period provision, manage the issue as a performance problem. You can start
Advice and Support when you need it! We’ve got a team of advisors, lawyers and consultants who’ll do more than take the case - they’ll help you build a workplace for the future.
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Don’t just get information – get advice you can rely on from industry specialists.
A library of knowledge, tested in the courts and all in one place.
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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
new staffer is wrecking our cars. that process with a meeting to discuss his careless or untrained actions and the results of that for your company. Perhaps you could require him to undertake more training, with a time limit on achieving particular outcomes. Throw in some precautions next time he needs to use a company vehicle, and if you do not already have a vehicle policy prepare one that covers the requirement to pay any insurance excess if he is involved in an accident found to be his fault.
We have been told by a client that an employee of ours must have used their computer to watch porn when he was there servicing their gear on the middle of the night after the recent storm. What can we do to stop it happening again and what’s a reasonable punishment? – Barry Dear Barry First of all be very sure that your employee is the person who may have, at a certain time and date, downloaded porn on that particular computer.
“If you believe there may be enough evidence that your employee was involved, you will need to follow a fair process”
Thus the agreement will probably specify the penalties for each type of misconduct. If he denies the allegation and if you are unable to reasonably conclude that he was the one watching the porn, you are back to square one with an unproven, unwitnessed allegation. You can of course advise him that such behaviour could lead to disciplinary action including dismissal for serious misconduct.
You need proof from the accuser to be sure he isn’t using your guy as a scapegoat! Someone else could have done it…if there were no witnesses. If you believe there may be enough evidence that your employee was involved, you will need to follow a fair process to deal with the issue, which will include giving the employee a full opportunity to respond to any allegations. If he admits it, that’s easier. His behavioiur is governed by his employment agreement and your company’s code of conduct. No matter where he is working for you he is representing your business and needs to be clear of your behaviour expectations.
• 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 09-367 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
Following the election road Our economy is in better shape than in many other places and business confidence is healthy as we approach the 2014 election. The challenge for political parties contesting this election will be to demonstrate their ability to continue to grow New Zealand and expand on our current success. Underpinning every decision, as always, is the desire to make New Zealand a great place to live and do business. For many businesses, success will mean having the freedom to grow without excessive regulations hindering progress. Poor quality,
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overly complex laws often translate into heavy compliance costs and hobble the companies they’re supposed to be supporting. Business would like to see party policies promising better lawmaking. Tax
Tax is a key issue. Companies here face a higher real rate of corporate tax than those in other developed countries. That’s because our business tax system is largely exemption-free. While New Zealand’s nominal business tax rate is fairly average, the real or actual rate of corporate tax paid by New Zealand firms is the highest in the OECD because our tax system is broad-based and comprehensive, with few exemptions. To offset this difference between tax systems, business would like to see the nominal rate of corporate tax in New Zealand set much lower than the current 28 percent. Many small businesses pay tax at the top personal rate rather than the corporate rate. They will favour lower income rates and would be unlikely to look with favour on promises to raise the top rate of personal tax. Interest rates and exchange are also a key concern. Knowing that these are deeply affected by
government debt levels, business wants to see political parties promise to keep spending and borrowing under control. Exports
Exporters appreciate the work done by Government on their behalf to achieve free trade agreements and would want to see any new government continue this work. Our exporter members would also like to see continued work and investment in overseas market assistance. Skills
Many firms are suffering from skill shortages – unable to find suitably qualified and experienced staff. Skills in short supply include IT, technical, sales and trades skills, as well as basic work-ready skills. Business would like to see more funding for training for in-demand skills and more focus on maths, science and technology in secondary and tertiary education, along with school careers advice that is better targeted at in-demand skills. R&D
More support for R&D is another big need, particularly in the manufacturing sector. We’re seeing
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BusinessPlus
Phil O’Reilly
to growth requests for greater funding for late-stage development costs, and incentives for research that will contribute strategically to New Zealand’s growth. Collaboration has proven itself to be highly beneficial. Having a high degree of vertical integration is a common feature in high growth firms, and there is strong evidence linking industry networks with advanced innovation and competition. With that in mind, we’d like to see policies that clear the way for greater interdependence, with more knowledge sharing, benchmarking and global partnering. Innovation
Innovation is proving important for many of our high performing businesses. Ultimately, innovation furnishes the ability to be
“The springboard to achieving this will be policies that create an environment in which businesses can attract and foster talent, and translate their skills into innovative products and services.”
competitive in an increasingly fierce global market. The springboard to achieving this will be policies that create an environment in which businesses can attract and foster talent, from both within New Zealand and overseas, and translate their skills into innovative products and services. These are by no means the only areas to focus on. However, they
are central if we are to continue towards sustainable business growth. We will continue to advocate for policies that help grow New Zealand businesses and communities. Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz
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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
remuneration strategy By Lisa Goldsmith
Unblurring the lines One of the biggest pitfalls to avoid in remuneration is blurring the lines between the market, your budget and individual pay recommendations. While there is considerable overlap and interdependence between these elements, each should remain distinct in both definition and use. Some organisations blend them. For instance they review overall market trends (eg an average 2% movement) and, if affordable, apply that percentage to adjust pay ranges, increase the budget for salaries and wages, and apply an across-the-board increase for most (if not all) staff. Regardless of your approach, some things are common across all best practice models. These include: • There is no ‘going rate’ for a role. There will be trends and clusters in pay rates, but situations where everyone is paid the same is like Bigfoot or the Loch Ness monster. They might be out there but reliable witnesses and evidence are hard to find. Most collective agreements will contain graduated wage scales and even within the armed forces, each rank has a pay range not a set rate.
of market data to compare and adjust your ranges and/ or rates to align with what other employers are paying for similar roles (external relativity). Budget
“A new team that is growing and developing may need a higher proportion of the budget in order to progress salaries in line with performance.”
– refers to the amount your salary and wage budget will be increased by for the coming year. There are two main approaches or schools of thought on how budget is perceived and managed. Some organisations adjust their budgets prior to the wage and salary review with budget holders managing within set parameters. Others maintain a separate centralised budget for wage and salary reviews with adjustments made to departmental lines in order to reflect the outcomes. Affordability
Of course, the most significant element when reviewing your salary budget is affordability. A recent Robert Walters survey asked 650 hiring managers whether they expected to increase pay in the next six months. The “Situations where everyone results suggest only is paid the same is like 50% are planning to Bigfoot or the Loch Ness increase pay rates, 49% expect no change monster. They might be and 1% expected to out there but reliable decrease wages (mainly witnesses and evidence are in the retail sector). However, if you are hard to find. ” planning to increase pay, and have some flexibility in available funds, the relevance of the other • Appointment within the factors increases. range should be based on the If all your staff are paid ‘about right,’ experience and knowledge applying market as budget may not brought by the individual with create any issues per se. However, any review/adjustment based on what if you’re not one of the lucky a combination of performance few in that situation? Although a and current level of pay. pre-distributed budget places more accountability on the budget holder, Market vs. budget the approach rarely considers the needs Setting pay rates by the Market – refers to the sourcing and analysis of each work area and with many gaps
and inconsistencies in levels of pay. That is, a department with a new team that is growing and developing may need a higher proportion of the budget in order to progress salaries in line with performance. Budget vs. individual recommendations
Once your budget is set, the question of how it should be distributed arises. Common reasons for applying ‘across the board’ increases are perceptions of fairness, and a lack of clarity or understanding of the process of setting and reviewing pay. Fairness is often confused to mean everyone should receive the same increase. However, the most succinct argument against this school of thought is internal comparison based on performance. Best practice is to apply a consistent methodology which considers not only performance, but the level that the individual is currently paid. This usually involves splitting the pay range in to zones to reflect levels of competence and performance, with consistently good performers paid around the middle. This comparison and check of alignment provides a consistent basis for the review. Lisa Goldsmith is EMA’s specialist remuneration consultant Contact her at lisa.goldsmith@ema.co.nz 021 252 8519 BusinessPlus
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TAX TIPS Jo Doolan
GST and bodies corporate, Double tax, confiscation, an unfair tax grab, a compliance nightmare and no way to make tax law; these were just some of the responses to Revenue Minister Todd McLay’s announcement recently relating to bodies corporate and GST. On the face of it, not requiring bodies corporate to register for GST seems harmless. However, what happens, for instance, when they must deal with a leaky building, which is stressful enough without creating further uncertainty. One is left wondering what will happen to those who have received compensation payments calculated on the basis that the GST could be claimed back? There is also the debate around no longer treating bodies corporate as separate from their building owners, although this treatment was previously supported by the IRD’s chief tax counsel. Another perceived injustice is the changes are to apply from the date of the Minister’s announcement (6th of June), though the legislation has not yet been changed, and is in fact unlikely to be changed before the election. Meanwhile submissions can be made until the 18th of July. The accusation of changing the law by stealth and without going through the proper process has of course been rejected by the Minister. Provisional tax changes mooted
Other tax announcements that warrant mention are the potential changes to the provisional tax system, and the tax treatment of company administration costs One can be cynical about the timing of the announcement of a potential review of provisional tax as the review is at least a year away, and comes with the caveat “any changes need to be balanced by the needs of the Government”.
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“The accusation of changing the law by stealth and without going through the proper process has of course been rejected by the Minister”
Despite what appears to be a “Claytons” moment, our provisional tax system is grossly unfair and unless businesses can afford to employ a very good clairvoyant, the chances of being penalised for getting it wrong are very high. Compared to other countries, our tax payment rules are harsh. If you get it wrong and underpay, you can be charged use of money interest at the rate of 8.4%; if you overpay you can only receive 1.75%. You can also be liable for late payment or shortfall penalties on underpayments. The penalties and interest can compound to 26.7% in the first year. In Australia this figure would be around 9.69% per annum. Taxpayers in my view are often too busy, or too afraid of stepping up to demand changes when something seems unfair. Our provisional tax system is unfair and it is time each political party stated what their intentions are to make life easier for taxpayers.
There are plenty of options that would not have a major cost, such as extending the threshold for those who can pay GST and provisional tax together. The discount for those that voluntarily pay provisional tax in their first year could also be extended to other taxpayers, as could a simplification of the system so everyone is required to pay provisional tax on an estimated basis and, providing the estimates are reasonable, no use of money interest is charged (unless the amounts are excessively understated). Meanwhile you need to work with the existing system. Using a tax pooling agent to reduce the interest costs is highly recommended, along with ensuring you actively manage your payments by making voluntary payments throughout the year if a top-up is needed. For taxpayers who previously in tax losses that are now fully utilised, this is especially important. Deductibility of certain admin costs
We also have a final draft of an interpretation statement on the deductibility, or otherwise, of company administration costs for things like costs associated with paying dividends, holding meetings and stock exchange listings. You are allowed a deduction for expenditure incurred in relation to authorising, allocating, or processing the payment of a dividend, or in relation to resolving a dispute concerning these matters. You are also allowed a deduction for the periodic fees of a recognised exchange incurred for maintaining
TAX TIPS
provisional tax unfair the registration of the company on the exchange, as well as expenditure incurred in holding an annual meeting of shareholders. Contrarily, you will not be allowed to deduct costs associated with holding a special or extraordinary meeting of shareholders. There is still a need to consider circumstances where costs need to be apportioned, due to the underlying transactions being capital or revenue in nature. This is an area often ignored, so ensure you are considering these issues prior to the payment of the invoices, as well as at the time you are calculating your tax position. IMF tick for NZ recovery
To end on a brighter note, the International Monetary Fund has given New Zealand a good mark for
“Our provisional tax system is grossly unfair and unless businesses can afford to employ a very good clairvoyant, the chances of being penalised for getting it wrong are very high”
the increasing embedding, as well as the broad-based nature of our economic expansion. Yes there were the usual comments on the risks, (such as a sharp slowdown in China’s growth, house prices, net external liabilities, our overvalued exchange rate, low household savings and financial market volatility),
however, given the current challenges of most other developed countries, let’s take this as a great result. Joanna Doolan is a Partner with EY the views expressed are her own and do not necessarily represent those of EY. Joanna.doolan@nz.ey.com
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learning
Facilitating the success of our SME’s through owner manager development With smaller businesses a very significant part of the New Zealand economy facilitating their increased success is essential. Some facts: • 30% of all employees are employed by a small business • Small businesses contribute 28% of NZ’s GDP • The majority of SME’s are owner-managed. 97% of all NZ enterprises are small businesses which are defined as enterprises having fewer than 20 employees. Their unique business challenges
Small to medium enterprises (SME’s) face particular growth and productivity challenges. The recent report by the NZ Productivity Commission* reported New Zealand’s productivity was 20% below the OECD average and suggested our poor productivity in part was a result of low investment in knowledge-based capital such as software, worker training, management capability and R&D. Added challenges for the owner manager
Many owner managers appreciate the value from investing in their knowledge base but where is the time? Most wear many hats in their business, juggling getting the work, coordinating the work, and doing the work. With a small team, the impact of one person being absent is significant, no matter how good the reason for the absence. So where does this leave the owner manager wanting to improve and grow their business? Introducing the Owner Manager ToolkitTM
EMA understands the business development challenges for owner managers and in conjunction with Activate Management Group, has
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BusinessPlus
developed a unique programme specifically designed to meet their needs. The Owner Manager ToolkitTM is a 14 week programme where owner managers work directly on their business, learning and applying proven techniques to improve and grow their business. Owner managers will see improved business performance from their investment of 2.5 hours each week working on their business, rather than in it. The Owner Manager ToolkitTM is tailored to the specific needs of owner managers by being:
Lisa Mandic, Activate Management
Convenient
The programme is delivered in practical, bite-sized blocks at convenient times for busy owner managers. This reduces their time away from their business, while empowering them to apply their learnings in their business as they move through the programme.
Practical
The programme facilitator, Lisa Mandic from Activate Management Group Limited, is a business owner and practitioner, with extensive on the ground experience in the day to day running of successful businesses and a clear understanding of applying proven principles to real situations.
Relevant
The programme covers the essential business management skills every owner manager needs, from increasing sales, to leading and motivating their team. Owner managers wear many different hats, so the programme covers a broad range of business management topics in an integrated way. Hands-on
All learning is directly applied to the owner manager’s own business throughout the programme, with time allowed to address implementation questions as they arise. Tools-based
The programme includes a substantial toolkit of business management resources in the form of templates and processes so they that can be applied immediately.
A peer network
Growing a business can be lonely work, so having the opportunity to interact and learn with other likeminded owner managers is invaluable. owner managers also have rich and varied experiences, so sharing successes and learnings will be of benefit to each other. To protect the hands-on, practical nature of the programme, places are limited to 12. *New Zealand Productivity Commission Working paper 2014-01 ‘An International Perspective on the New Zealand Productivity Paradox To register: www.ema.co.nz/events/ calendar/Pages/The-OwnerManager-Toolkit.aspx Or contact: Craig Garner ph 09 3670907 or craig.garner@ema.co.nz
learning
Four reasons why ‘sustainability’ is not a dirty word It’s been on the ‘must do’ list for years, but a lot of SMEs still don’t understand what sustainability is all about, or what to do about it.
1. Win new customers
A strong point of difference goes a long way. Increasingly, tender processes are using sustainability criteria as a differentiator. Waikato Regional Council’s process puts a whopping 10-15% ‘sustainability weighting’ of non-price attributes for all contracts over $50,000. Feel-good marketing stories work too. Blanchetts, a premium furniture manufacturer in Palmerston North, saw sales growth of 20% in one year from a smart campaign that promoted their commitment to local suppliers, eco-certified materials and strong business values. And in 2007 Urgent Couriers built credibility by taking responsibility for
“Blanchetts saw sales growth of 20% in one year by promoting their commitment to local suppliers, ecocertified materials and strong business values”
3. Leverage design and innovation
Thinking differently means creativity and that means innovation. A solid understanding of sustainability issues will help you ask the right questions to keep your firm moving. How is your industry evolving? What innovations are needed, and how can you capitalise on them? 4. Wipe out costs
its biggest impact, vehicle emissions, and became the first certified carbon neutral courier company in New Zealand.
Focusing design solutions on reducing waste, energy and resource use always has the added benefit of bottom line savings.
2. Manage growth risks
If winning customers matters now, it will matter even more in the future. Gen Y will make up 24% of the consumer market within five years and, as they rise up the corporate ladder, their values-based decisionmaking will have a strong impact. What are you doing to anticipate and take advantage of this shift?
Visit www.addingsustainablevalue. co.nz to learn more, or contact Simon Harvey at addingsustainablevalue@op.ac.nz Or call him on 021 808 300.
Make sustainability make sense for your business. Adding Sustainable Value is the leading sustainability training programme in New Zealand. Why? Rather than adding costs and complication, you’ll discover how to add real value to your business, by unlocking opportunities, building your brand, improving your processes and more. Enrol now for our next programme, starting 21 August in Auckland.
Find out more at www.addingsustainablevalue.co.nz or call Simon Harvey on 021 808 300
J01811
We asked Simon Harvey, who runs the Adding Sustainable Value business improvement programme – described as being like ‘Lean’ on steroids – to tell us why SMEs should be considering sustainability issues. He gave us four good reasons.
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ADVOCACY
Taiwanese trade agreement offers low cost 3D printing The ANZTEC free trade agreement between New Zealand and Taiwan is being directly attributed with the supply of affordable 3D printers. A partnership with Taiwanese technology manufacturer XYZ Printing and local technology distributor Comworth is delivering the Da Vinci 3D printer, a plug n play device retailing for under $900, which makes it within reach of schools, small-scale manufacturers and home users.
INDONESIA 2014 Four city trade mission: MAKASSAR, SURABAYA, BANDUNG, JAKARTA 29 AUGUST / 11 SEPTEMBER 2014 Our commitment to your business success in Indonesia is underwritten by: • Dedicated pro-active business matching on your behalf with an NZTE appointed and managed in-market business support manager: • To organise your programme • Arrange travel and accommodation • Interpretation and facilitation for one on one business matching • Led by Sir Ken Stevens, NZ Ambassador to Indonesia HE David Taylor and NZ Trade Commissioner Tim Anderson • Third annual NZ/Indonesia Business Forum, Jakarta, 8 September • Concurrent with NZ F&B week in Jakarta 9/12 September • Experienced management Indonesia is about to become: • The world’s sixth largest economy by 2030 • With 150 million middle class, 244 million by 2030 • Strong drive for self-sufficiency.
Indonesia 2014 is being organised by ExportNZ and the ASEAN NZ Business Council in close co-operation with New Zealand Trade and Enterprise.
Andrew Charlesworth (Comworth) & Tsung Lung Shyu of Taiwan’s trade and investment agency, Taitra
Places are limited and this programme will sell out so you do need to register right away Indicative price 10 nights NZ$8,950 Complete application and lodge deposit of NZ$1,500 by 5pm July 31st
General Manager of Comworth Full programme and to register go to Mark Charlesworth said soon after the www.nztrademission.co.nz agreement went into force last December, the Taipei Economic and Cultural Office facilitated a trade mission to establish ties between technology companies in both geographies. “As a result Comworth secured to Taiwan increased from $342 distribution rights of 3D printers from million to $456 million, an Taiwanese manufacturer XYZ Printing increase of 33.3%. in New Zealand.” Eugene Chen, Director of the Dean Prebble, Director of the Trade Economic Division of the Taipei Development Centre in Taipei, said: Economic and Cultural Office in “Taiwan is an excellent place to find Wellington says the mutual benefit regional partners or engage with created by the ANZTEC is clear. world class technology companies “According to a Taiwanese and manufacturers. ANZTEC doesn’t study, after the implementation just give value to our exporters, period, ANZTEC is expected to trade agreements also allow for the result in an increase of Taiwan’s development of mutually beneficial relationships. GDP by US$303 million and add a total number of According to Statistics New Zealand, since ANZTEC 6,256 new jobs in the country. entered into force from December 2013 to April 2014, Taiwan exports to New Zealand increased from $300 million to $365 million, or 21.6% compared with the previous year. In the same period, New Zealand exports View the possibilities: www.xyzprinting.co.nz
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Letter from Australia
from Marketing Specialist Bella Katz
Niche networks are the way to go in Australia It goes without saying that networking is an important part of business development, but this year I’ve become a bigger proponent of it than ever. Like you, I have limited time and desire to attend networking functions for pleasure. (I’m sure we can all agree that some of these soirees could do with an injection of ‘fun’ back into their functions.) However, over the years and through trial and error, I’ve narrowed down the vast number of groups in Australia of value and found a few favourites I thought I’d share with you. In a way, I’ve come full circle from the massive industry associations, in my case the Australian Marketing Institute (AMI), and returned to the niche area my clients tend to come from. Industry associations are good for further education and I do love talking shop with my peers, but it makes no sense for me to pitch my services to people already in my profession. I now attend a handful of smaller, niche networks where there’s a connection apart from the broad industry we all work in. I’d like to share with you the New Zealand networks in Australia as they’re a great place for you to connect with there, for three reasons: 1. Expats tend to have a bond and expats from small countries have a stronger one. 2. New Zealanders enjoy working with other New Zealanders, especially on foreign soil (although for a lot of Kiwi expats in Australia, including me, being Aussie is a second skin.) 3. There are extraordinary Kiwis in extraordinary businesses everywhere and they are really good connectors.
New Zealand Victoria Business Group (NZVBG) http://nzvbg.org This group has been going since 2007 and is run out of Melbourne. As with many of these networks, there are multiple tiers to the membership and an impressive cross section of New
“Make things easier on yourself and get involved in the NZ networks here in Australia. The cultures are very similar, the languages are the same, the jokes are the same. But when it comes down to it, there’s a way of doing business with Kiwis that’s more familiar”
Zealanders across all levels. No matter your industry, once you get talking to someone at an NZVBG function, there’s no more than one degree of separation from someone with valuable local insight or contacts. Women of Australia and New Zealand (WOMANZ) http://nzvbg.org/womanz/ The rather catchy-named WOMANZ is also part of the NZVBG but as its name suggests, has mostly female members. Unlike many of the massive Australian organisations for women in business, it’s a more intimate way to network with professional women
in Australia who have a Kiwi connection. I’ve seen great speakers hosted by the group and always meet excellent women in senior positions around the country. Trans-Tasman Business Circle www.transtasmanbusiness.com Based out of Sydney, the TransTasman Business Circle tends to host government delegates and includes members from the large corporations. They run a series of events in Australia and New Zealand, often hosting speakers from the worlds of finance and government. Memberships are pricier (up to $35,200 annually), hence tend to attract the corporate members. They do have an impressive speaker selection and if your company has a corporate membership, it works out well. Make things easier on yourself and get involved in the New Zealand networks here in Australia. As I often say, the cultures are very similar, the languages are the same, the jokes are the same. But when it comes down to it, there’s a way of doing business with Kiwis that’s more familiar and gives your business a greater chance of success across the Tasman.
Bella Katz is an Australia-based brand and marketing consultant, and regularly advises New Zealand companies on how best to position in Australia. She specialises in marketing for the business to business sector. bella@bellakatz.com.au, LinkedIn. BusinessPlus
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EXPORT AWARD WINNERS
The Tegel Foods team – winner of the Supreme Award at the Auckland export awards
Superb exporters win top recognition Spectacular export growth of hundreds of chicken and turkey products won Tegel Foods the Supreme Award in the 2014 Air New Zealand Cargo Export NZ Auckland export awards. Prime Minister John Key presented the award at the Langham hotel in Auckland also attended by Auckland Mayor Len Brown and ‘Minister for Business’, Steven Joyce. The judges said Tegel has been an
iconic brand in New Zealand for more than 50 years and began developing export markets 11 years ago. Tegel products are grown and processed in New Zealand for the premium market. The company’s growth has come about following significant capital investment in plant and people, and adopting a structured export growth plan. Tegel also won the BDO Food & Beverage Exporter of the Year category award and was in competition
for the Supreme Award with the winners of the other six categories. Mr Key also presented the Exporters’ Champion Award to Ross Southcombe, the inaugural director of the Export Institute of NZ (197682) which in 2008 became Export New Zealand. Ross was honoured for his foundation role in driving the establishment of Export NZ in the 1970s when New Zealand was struggling to diversify as an exporter to many international markets. The other category award winners were: • Phitek Systems - QBE Insurance Exporter of the Year (total sales under $25m) and Baldwins Intellectual Property Commercialisation of Innovation Award • Southern Spars - Westpac Exporter of the Year (total sales over $25 million) • Intenza NZ - Quantium Solutions E-Commerce Exporter of the Year • 1907 Water Ltd - TNT Express Emerging Exporter of the Year • Straker Translations Endace ICT Exporter of the Year (total sales $1- $10m)
Surtees Boats take top honour at country themed Bay of Plenty awards
Photo credit: Wayne Tait Photography
History was made this year as Surtees Boats [with trophy] was the first company to win both the Emerging Exporter of the Year and the Exporter of the Year awards in consecutive years. The BNZ Bay of Plenty ExportNZ Awards have been running for 25 years. Ian Macrae, managing director at Page Macrae Engineering, was the surprised and humbled recipient of the Zespri International Service to Export award for his outstanding contributions
Lyn Parlane of Priority One, MC Te Radar and Jill Beedie of Priority One.
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to the export community - in innovation in particular. The five winners of the BNZ Bay of Plenty ExportNZ Awards for 2014 were announced at a country themed Bay of Plenty Supreme Award winners Phil Sheaff of Surtees Boats, Kylie van Heerden of Sharp Tudhope Lawyers and Toni Palmer, Mel and Neil Surtees of Surtees awards evening Boats at ASB Baypark Stadium. Guests were entertained by The other category winners were: MC Te Radar and dined at a working • Miraka - United Travel Emerging Exporter of the Year saloon bar where a picnic hamper of Award local produce, a bucket of shrimps and • Douglas Creek - Page Macrae barbecued ribs was served. Engineering Innovation in Head judge Kelvin Trask commented Export Award that judges were very impressed by • Colin Baskin of Comvita the variety of industries represented: New Zealand, Bay of Plenty from milk, vanilla, roofing and luxury Tertiary Partnership Export fibre to solar energy, and with no two companies in the same sector. Achievement Award.
MEMBER NOTICEBOARD
Celebrating 30 years packaging success Thirty years ago Bonson Industrial began as a small start-up family business. Today the company’s innovative packaging design and manufacturing capability is partnering with international food industry majors. Celebrating 30 years of manufacturing success this year are David Tsui and his brother Johnny Chui, originally from Hong Kong. The family brought their injection moulding experience to New Zealand against the backdrop of uncertainty about what might happen when Hong Kong reverted to Chinese administration. The operation was first set-up in a small industrial unit where the business started out making plastic takeaway containers for Auckland’s food service industry. “Back then our management meetings used to take place around the family dinner table at night,” says Managing Director, David Tsui. Led by David, the business was built on a foundation of family values, a foundation which has supported and continues to fuels their exponential growth. Bonson Industrial’s
David Tsui believes continuous innovation to be the secret behind the company’s 30 year milestone.
investment focus to date has been on lifting its manufacturing capacity and capabilities. This has seen the company become a leading supplier of plastic packaging for food manufacturers. “I think what really gives us an edge over our competitors (including
low-cost Asia-based manufacturers) is our ability to come up with innovative food packaging designs, that are cost effective, but still stand-out on store shelves,” David says. The company decided early on they did not want success to come at a cost to the environment. So in 1990 Savpac Marketing was set up, a separate operation, to focus on the development of biodegradable products and the elimination of unnecessary byproducts or waste across the business. Emphasis on environmental reporting fits with Bonson Industrial’s strategy of continuous improvement and it has certainly helped the company streamline its operations. World class manufacturing capability
Today Bonson Industrial runs a 24/7 operation in one of the country’s most sophisticated food grade manufacturing facilities. Filled with the latest plastic injection, robotic and in-mold labelling (IML) technology, the facility is one continuous slab with no joins or seams. According to David it is dust proof and isolated from the outside environment by unique hygiene controlled transition areas. “We oversee the entire process, right from concept design, product prototyping, pilot sampling and tool design, through to mould creation and injection moulding,” David says.
Bonson Industrial •
Structure: Very much a family business
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Employees: 50
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Key markets: New Zealand, Australian and South Pacific
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Production facility: 6000m2, $10million invested.
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Certification: Quality, Environmental, Health & Safety, and Food Hygiene systems maintained through independent ISO 90012, ISO14001, AS/NS 4801 and HACCP certification
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Packaging Council of Australia Silver Award Winner
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New Zealand Pride and Print Gold Award Winner
Each container is made precisely to the customer’s specification so their products integrate seamlessly into the customer’s filling lines where food content is added to each container. One of Bonson Industrial’s most notable achievements is their partnership with Sealed Air Cryovac, through which Bonson supplies to major supermarket chains and multinational food processors – including Woolworths. Sealed Air Cryovac is well-known for its high standards in the international food industry and the partnership is a true testament to Bonson Industrial’s manufacturing success. www.bonson.co.nz
Bonson Industrial’s purpose built production facility has top hygiene standards
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Digital Marketing Summit By Mary MacKinven
Alan Dickman, Three Wise Monkeys
Reputation is key in the digital age of marketing
No one likes TV commercials, even though they are fun to make, began Al Dickman, director of Three Wise Monkeys at EMA’s Fresh Marketing Summit on the topic “Connecting to Customers in a Digital Age”, held in Auckland last month. People finds ads an intrusion and simply change channels or make coffee or use MySKy to avoid them, he said on the topic of key marketing trends and developments. So how do customers feel about advertising? A 2009 Nielsen Global Online Consumer Survey showed consumers trust recommendations most from people they know (90%) compared with 62% trusting TV ads (of which only 8% trust them completely), Mr Dickman said. “Now there are so many ways to make your mark instantly, such as Twitter and Facebook. “But your brand is only as good as your reputation. Brand scandals come up on Google years later. The arrogance of [some] manufacturers is amazing: did they talk to anyone before making their claims and refuting criticisms? [rather than admitting a truthful accusation and avoiding a media scandal] “When there’s an erosion of trust you are in real trouble.” Mr Dickman cited online examples: “The newspaper fooled me with pictures to get me to link to an article that was only selling. Amazon’s text saying ‘customers viewing this page may be interested in these sponsored links,’ and you find they are just ads…. “This is an erosion of trust, because we are there to read the content.” He also said that while data has been mined for years, “big data stinks”. “It’s about behvioural analytics – knowing too much about you from your buying behaviour to manipulate you further. Why would you do that, give out your information? Mobile marketing can enhance the in-store experience, such as by producing price comparisons and reviews, locations of
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competitors and e-commerce facilities. Apps can be very valuable. Mr Dickman said no medium was as powerful as TV at engaging on an emotional level, but with small budgets marketers could use YouTube. “You don’t need big money to have big impact. If your content is engaging you can freely compete with the biggest company in the world.” His new rules for marketing are: • Don’t exaggerate benefits of your product or service • Do everything you can to engage and build trust honestly • Inspire people; don’t just tell them how good you are Engagement with the market was key, agreed Massey University Associate Professor of Marketing Dr Valentyna Melnyk. And engagement is easy with social media, she said. She said recent research showed half of TV advertising had no effect on sales; search advertising had the highest return on investment. And innovation of an existing product was more powerful than advertising. She suggested three tips from a consumer psychology perspective to gain greater responses and sales:
To increase sales, for example, The Economist newspaper added a third subscription option to encourage signing up. No one chose the new price option but more selected one of the other two that were better deals. Prospect theory and framing
To take advantage of people buying an item to avoid the loss of a discount, frame a gain as a loss such as offering ‘three days to buy at this price,’ or pointing out the perceived scarcity with a ‘limited edition’.
Context effects
People are influenced by a product’s attributes but what else is out there in the market? Consumers’ choice is influenced by the composition of the choice set. A new item can increase favourable perceptions of similar, superior items.
Manage your brand associations
The advantages promoted must be unique to the product, or another producer might compete more strongly on the same attribute. Don’t promote an attribute that’s more closely associated with a competitor. Or let consumers create an association with your brand via an interactivity element, as Tui beer makers did by inviting consumers to suggest their own ‘yeah right’ slogan and be in for a prize.
offers you a holistic look at your business and the training needs you have. Whether it be standard training or specialized, we can meet with you, discover your needs, and structure a training plan specifically for you. Contact Deborah Carruthers
AUGUST
EMA Alert
deborah.carruthers@ema.co.nz Ph 09 367 0947 | Mob 021 636 799
www.ema.co.nz | learn@ema.co.nz
Out & About 8th Annual Fresh Marketing Summit - Connecting to Customers in a Digital Age, Auckland
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1 Rob Macgregor [Rheem NZ] and Gregg Walden [The Jungle Gym] | 2 Greg Adams [Hafele (NZ)] and Gerard Van Tilborg [Skin Shield Products] | 3 Warren Hellier, Sharon Pearce and Chris Jensen [SFP] | 4 Kendall Cochrane [Baby Factory (NZ)] and Jo Dickman [Potency Creative]
Air New Zealand Cargo ExportNZ Auckland Awards 2014
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1 Bruce and Di Goldsworthy [EMA] | 2 Tim Jackson, Natalie Harre and Richard Clement [Baldwins Intellectual Property] | 3 Bev Simpson, Maddie Walker, Lorna Henderson and Brenda Margot [Seedling] | 4 Bob Walters [Framecad], Barry Squires [Westpac Institutional Bank], Angela and Kim Campbell [EMA] | 5 Robert Auton, Lynne Sharp, Jo Clark, Nadia Costa, Claire Cozens and Erik Tams [Oob Organic] | 6 Greg and Maria Dodd [Quantium Solutions] | 7 Blair Gourdie [Air New Zealand Cargo], Graham Kearns and Andrew Seeley [ExportNZ Auckland] | 8 Neil Cousins, Karina Kayes, Elizabeth Lowe and Mike Kayes [QBE] | 9 Lady Glenice Stevens [Glidepath Group] and Catherine Beard [ExportNZ] | 10 Brent Nicholson [Chelsea Sugar], Catherine Lye (ExportNZ Auckland] and Ilya Ruppeldt (Golem Productions)
Lunch with Minister of Economic Development Steven Joyce, Hamilton
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1 Jeff de Leeuw [G J Gardner Homes] and MP Steven Joyce | 2 Kevin Chubb [Tidd Ross Todd] and Andy Grant [Fire Security Services] | 3 Oliver Amarasekera [Drake NZ] and Sandra Perry [Waikato Chamber of Commerce] | 4 David Maha and Matiu Dickson [Te Runanga O Kirikiriroa Trust] and Damian Fletcher [Rezlab Group Holdings]
How do you see your staff?
If your “human resources” are hardworking people who give their time and effort to make your company what it is, offering Southern Cross health insurance is the perfect way to reward them. But they’re not the only ones that benefit. Offering health insurance helps retain and maintain a productive workforce. Find out how some of New Zealand’s leading businesses see their staff at www.healthybusiness.co.nz