Almost every businessperson considers a move into offshore markets at some stage in their career.
Exporting is exciting, and offers opportunities for growth beyond what is available in New Zealand. However, success in overseas trade is contingent on careful planning - you can't expect to simply fall on your feet when entering an unfamiliar market.
To help inform your export preparation, here are some top tips from the team at BDO New Zealand:
Tip 1: Understand your market
You and your team should go over the details of your potential export market with a fine-tooth comb before any trading begins. Failing to prepare properly is one of the most common mistakes New Zealand businesses make when they begin exporting.
Among the top things to look out for when gearing up to trade overseas are:
- Double taxation agreements - New Zealand has double taxation agreements with many countries. The arrangements allow tax paid in a foreign jurisdiction to be claimed in New Zealand. However, you need to know the details of the agreement in your chosen location.
- Foreign currency - While you can't remove the inherent risks of foreign currency exchange, with the correct steps they can be managed and mitigated. Your banker will play an important role here, so a close and cohesive working relationship is vital.
- Political risks - Not all countries are as politically stable as New Zealand, so it's worth understanding the local situation in your chosen market, and how it impacts trading.
Tip 2: Look to your support networks
In business we're always talking about competition, but the world of export markets can be surprisingly collegial. If you're in the process of short listing potential export markets, talking to New Zealand businesses that have already taken the plunge is a great way to find out more about the realities of operating there. Joint venture (JV) partners are another great source of inbound support, providing expertise on the local market and how things are done.
In addition to other companies, NZTE and Export NZ are highly regarded sources of knowledge that can help you navigate potential pitfalls such as currency exchange and managing political risk.
At BDO, we often find our clients benefit from talking to our in-country teams about any specific concerns or questions they may have. For example, if you wanted to know more about tax when exporting to India, our representatives in Mumbai can provide nuanced detail that can only be gained from full immersion in that particular market.
Tip 3: Find the right structure
The correct business model is vital for long-term export success. New Zealand is a small country located some distance from many global markets, so you need to think hard about how you want to approach them. For example, is your company well positioned with in-market distributors and (JV) partners, or would the passive approach of an e -commerce store be more suitable?
Key to such structural considerations is tax. One of the main ways that BDO helps New Zealand businesses get export ready is ensuring their structures are tax efficient from the very beginning. This covers crucial steps such as setting up transfer pricing, and minimising and mitigating any double taxation as much as possible. If a company fails to get the tax side of its export strategy right from Day One, this can quickly suck money from the value chain down the track.
BDO has extensive experience in helping New Zealand businesses bring their products and services to markets around the globe. If you're thinking about taking your business global, and what expert advice on making the move a success, get in touch with our team today.