Competitive incentives and high market-responsiveness drive foreign investment in New Zealand. The country is ranked best in the world to establish a business, according to the World Bank’s 2018 Ease of Doing Business index. With a diversified market and heavy international trade agenda, the scale of New Zealand’s production makes it an economic powerhouse for its size.
Investors looking into company formation in New Zealand have a range of thriving industries to choose from. Read on to learn how you could invest in and share the success of four major sectors in New Zealand.
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Business and foreign investment in New Zealand
Simply, New Zealand’s liberal approach to trade means it is welcome to foreign investment. Its options for market entry give variety to entrepreneurs seeking to access its highly productive population.
New Zealand experienced positive economic growth for 33 of the last 35 years. Its geography, human diversity, raw materials sectors and international relationships insulated the country from the 2008 global financial crisis. There are competitive conditions contributing to long-term success potential for foreign investment ventures in New Zealand.
Due to its size and relative geographic isolation, New Zealand heavily depends on international trade. Its openness to trade has seen the country secure a range of international trade agreements with partners worldwide. This includes major Asian markets such as China, Association of South East Asian Nations (ASEAN), Singapore, South Korea and Malaysia. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) grants New Zealand greater trade access to the ten other signatories: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, and Vietnam.
Its multicultural demography bolsters a diverse economy, giving investors a hard time choosing their desired sector to invest in. However, its most successful sectors offer investors several places to start for commercial success.
Agriculture and agricultural technology (agritech)
The agriculture sector is the bread and butter of its local and export economy, attracting a high degree of foreign investment in New Zealand. In spite of its size, the Pacific Island nation is the largest dairy exporter in the world. This is centralized by the country’s dairy-dealing kingpin, the Fonterra Co-operative Group. Additionally, the country’s red meat exports reached $6.7 billion in 2018.
New Zealand meat and dairy products are regarded as high-value, high-quality commodities. These commodities reach as many as 140 countries worldwide, and global demand is increasing. Demand for New Zealand meat and dairy in Asia, for example, is rising with the growing wealth of the region.
The nation’s agriculture expertise goes beyond quality dairy, meats and animal by-products. Its fruit and cereal production and innovative agricultural technology (agritech) sector present the country as a world-class hub for agricultural excellence.
Agricultural sustainability is a major focus, due to New Zealand’s globally-coveted food products and awareness of a growing global population. Generations of farming families and vast agribusiness opportunities have thus developed a complementary farming technology sector. Kiwi ingenuity is making waves internationally, as local agritech startups are successfully navigating the biology and technology intersection.
New Zealand is keen to maintain top billing as the world’s leading dairy exporter and enhance the future of farming. The agriculture sector will continue to dominate New Zealand’s economy. The sector’s exploration of sustainable farming makes it an ideal investment choice for interested investors.
Construction and engineering in hot demand
There are two main factors contributing to a booming construction sector, and attracting foreign investment in New Zealand.
The city of Christchurch is the focus of a major reconstruction project as a result of devastating earthquakes in 2011. This project involves a total rebuild of the city, creating consistent and significant demand for construction and engineering.
The other contributor to the construction boom is a corresponding population boom in New Zealand’s urban areas. People movement and immigration to New Zealand’s business and lifestyle hotspots has put a strain on housing availability. In particular, Auckland city is experiencing a housing crisis that the government is scrambling to address. Industry experts forecast that an additional 15,000 houses will need to be built per year to keep up with growth.
These two factors place both significant and long-term demands on the construction and engineering sector. Major contracts are on the table, and existing construction companies can find themselves tied up with heavy, sustained demand. New arrivals to the sector can offer New Zealand the supply boost it needs to meet its construction ambitions.
Tourism experiencing record growth
New Zealand supports an immense tourism sector by touting its picturesque landscapes and diverse adventure experiences. It is the country’s largest export industry with regard to foreign exchange earnings.
3.5 million people visited the country in 2018. For the financial year ending March 2018, total tourism revenue made up 6.1% of national GDP, totaling $15.9 billion. The sector employs 8% of the New Zealand population. This record growth is largely attributed to the increasing influx of affluent Chinese tourists.
Popular tourist destinations and activities spread right across the country. Adventurers head to the South Island for hiking and wilderness retreats; beach-goers journey further north for the sun and isolated stretches of sand; and food and culture enthusiasts visit New Zealand’s thriving cities for a taste of creative cuisine.
Its geographic isolation to other parts of the world does not diminish New Zealand’s appeal to holidaymakers or foreign entrepreneurs. There are many public and private organizations involved in the tourism sector in New Zealand. Together they promote the variety of landscapes and opportunities New Zealand has to offer.
This sector shows no signs of slowing, enjoying positive growth as word of New Zealand’s holiday potential continues to travel. This sector presents not only a promising option for foreign investors, but also a great way to experience New Zealand’s beauty.
Service sector a rising star
An up-and-comer on the list of New Zealand’s economic success stories is the nation’s fast-developing service sector. This sector makes up around 70% of the country’s GDP, with transport and logistics the largest industry. Local businesses are said to be spending, on average, around 40% more on services than wages and salaries.
Economists connect strong growth in retail, hospitality and wholesale services with the ever-growing tourism sector. Services are deeply connected with New Zealand’s other key sectors, and will therefore grow as they continue to grow. This economic co-dependence means the sector will remain a staple of the economy – a failsafe option for investors shopping around.
Despite its major contribution to GDP, the service sector is often overlooked for the more renowned manufacturing and primary sectors. The New Zealand Productivity Commission identifies that service quality currently lags behind other developed countries, which could be why.
New Zealand’s service sector watchdogs such as the Productivity Commission recommend encouraging competition to drive service quality up. This is great news for foreign investors. Though the sector continues to grow, there is a need for improved services. This need is backed by the government, posing a viable investment opportunity in a critical sector in New Zealand’s economy.
We can support your foreign investment in New Zealand
New Zealand’s hive of export and import activity makes it one of the most attractive markets in the world for investors. With a well-distributed success across a number of sectors, opportunities for new businesses are plentiful and diverse.
At Biz Latin Hub, we help navigate the market entry process for foreign investors doing business in New Zealand. Our team of local and expatriate professionals offers tailored support for firms expanding into New Zealand. This includes company incorporation, due diligence, accounting, and recruitment services.
To find out more, contact us now.
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