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Businesses with no current overseas income

As a large proportion of New Zealand businesses did not generate any income from overseas, the survey also asked these businesses why their focus was purely domestic. Tables 9 and 10 relate to this chapter.

Of all businesses surveyed, 80 percent indicated they did not generate any income from overseas. Of these, the majority (77 percent) had never generated overseas income. The remaining 3 percent made up a small group of businesses that had not generated overseas income in the last financial year but had in previous years. Information to help understand more about both types of business is included in this section.

Businesses with previous overseas income

While this is a small group, their motivations are of interest. The most common reason given by businesses for stopping generation of overseas income was due to specific orders or jobs being completed. Just over one-third of these businesses gave this as a reason, possibly suggesting their income was generated through unsolicited orders rather than a conscious decision to enter overseas markets. Most other reasons suggested the business had withdrawn due to other factors becoming less favourable. Table 4.01 shows results for this group.

Table 4.01
Businesses with Previous Overseas Income

By reason for stopping generation of overseas income
Last financial year at August 2007

Reason for stopping generation of overseas income Percent(1) 
Adverse exchange rate movements 26
Increasing competition or falling market demand 18
Change in ownership/strategic direction 7
Specific orders or jobs completed 34
Profitability lower than expected 11
Increase overseas government regulations or tariffs 5
Other 25
Interested in generating overseas income in future 55

(1) Percentages are of New Zealand businesses with previous overseas income, but none currently.

Interestingly, more than half of these businesses indicated that they were interested in generating income from overseas in the future. This may indicate some businesses export only when certain conditions make it worthwhile to do so.

Businesses considering future overseas income

In addition to businesses with previous overseas income who are interested in generating this again in the future, some businesses that have never generated overseas income may be interested in considering it. The survey looked at these two groups combined in order to find out how actively they were considering future overseas income, what their motivations were for doing so, and what barriers they saw.

The most common reason for considering overseas income was a strategic decision to grow the existing business into new markets. This was followed by market opportunities opened up through new business contacts or alliances, and the desire to obtain economies of scale from existing capacity.

There were many barriers perceived by businesses considering overseas income, although no single barrier stood out as being more significant than others. This may be because less than one-third of these businesses had progressed to the point of actively pursuing options or had initiatives underway. Most businesses maintained merely an interest in exploring options.

Businesses not suitable for, or interested in overseas income

Of the remaining businesses, the most common reason they gave for not being interested or suitable for overseas income was that the nature of the business relies on physical proximity to its customers (63 percent). Of the other possible reasons, 37 percent indicated that the New Zealand market was sufficient, 23 percent indicated that their goods or services satisfied demand specific to New Zealand, while 11 percent were limited by the business structure to the New Zealand market. A small proportion (8 percent) felt the cost, risks or barriers were prohibitive.

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