Since our earliest days, New Zealand has been a trading nation. We do not - and cannot - produce everything that we want to consume and enjoy. So international trade plays a key role in our economic growth - on which social development depends - and is a vital contributor to New Zealand’s well-being and progress and our enjoyment of life.
It means though that we are also subject to the ups and downs of the international marketplace. Understanding this impact, helps us to do business better and data is an important component of that understanding. Data can help improve the customer’s digital experience and deliver insights on potential economic trends, identify timely issues and help benchmark performance.
We have looked at anonymised, aggregated data drawn from hundreds of thousands of Xero’s subscribers in NZ and consolidated the findings. We focused on those which have traded in a foreign currency in a given month and then calculated the month-on-month percentage movement in the total value of foreign currency transactions resulting in an amount coming in or going out of a bank account.
The data shows that, from May 2018 to June 2018, the change in the total dollar value of imports and exports for New Zealand small businesses was a decrease of 7.5 percent. Overseas markets provide the opportunity for New Zealand businesses to grow to a scale that simply could not happen in New Zealand alone. But our small businesses are also highly sensitive to domestic and international fluctuations.”
It could be these fluctuations that seem to be prompting small businesses to diversity and trade in multiple markets. A closer look at the data shows that during the last 13 month period (June 2017 to June 2018), the number of organisations trading in more than one currency rose 11.3 percent.
The import data tells a similar story with an overall rise in the number of organisations importing from different countries during the same period. The growing number of organisations importing and exporting in more than one currency suggests that small businesses are moving away from putting all their eggs in one basket when it comes to relying on buying products they need and expanding the markets they sell to.
Another finding from the data is an increase in the number of organisations exporting to Australia. This could be attributed to small businesses being buoyed by the Government’s announcements regarding closer economic relations with Australia and progress towards a Trans-Tasman Single Economic Market. The commitment by the Prime Minister in March to specifically look at the challenges holding SMEs back when it comes to Trans-Tasman trading must be music to the ears of small businesses. Despite our close proximity and historic relationship, small businesses haven’t always been able to fully reap the benefits from doing business with our neighbours. The recent announcement by the New Zealand and Australian Trade Ministers to carry out joint work on growing the digital market and maximising opportunities for SMEs has also got to be encouraging.
We believe harnessing digital technology is one of the most important things that small enterprises can do to help future-proof their business. Establishing a strong online presence (website and social media) is now commonplace and what’s expected by today’s consumer. The ability to access and link in with global platforms such as Amazon and Alibaba is also crucial as it allows small businesses to expand their reach and compete for a bigger slice of the pie.
This article was prepared by Xero using Xero Small Business Insights data, for the purpose of informing and developing policies to promote small business in New Zealand. It contains general information only and should not be taken as taxation, financial, investment or legal advice. Xero recommends that readers always obtain specific and detailed professional advice about any business decisions.