Due to its small size and huge distance from major world markets aside from Australia, New Zealand has to depend on international trade and importing/exporting to fuel its economy and drive investment in the country. Indeed, New Zealand has faced significant challenges in its recent history – it cannot compete with countries like China on manufacturing prices nor with Latin America on agriculture prices, so it has created a unique offering that sets it apart from other nations and allows imports and exports in the country to thrive.
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Importing and Exporting – New Zealand
Today, exports are the foundation of the country’s economy, with a huge agriculture sector that is competing on quality, rather than price. A member of several key trade organizations, including the Asia-Pacific Economic Cooperation (APEC), World Trade Organization (WTO) and Organization for Economic Co-operation and Development (OECD), the country offers foreign investors a unique opportunity for long-term profitability, provided they enter into the right niche and spot a gap in the imports and exports market that can facilitate their growth.
Below, we’ve rounded up some tips for importing and exporting into and out of New Zealand.
Whether you’re based in New Zealand and want to take your business in a new direction, or you’re from the United Kingdom and are looking for import/export opportunities post-Brexit, one of the first things you should do is assess the level of demand for your products and services. Identify your target audience and conduct research to see whether or not importing or exporting will result in profit – and consider the long-term demand for your products.
If you are going to spend thousands of dollars on setting up an import business and paying for goods to import and export to countries around the world, you must have the confidence that your investment is sustainable and can deliver returns for years to come.
Calculate the Costs
Setting up an import or export business in New Zealand can be expensive, and you’ll need to consider Goods and Services Tax, any potential duties and levies, the cost of storing your goods in New Zealand or another country, and the cost of transport and insurance. Once you have weighed up these costs, you may decide that exporting is simply too expensive to be cost-effective, or that you want to go in a different direction with your global expansion plans.
Many businesses forget that importing and exporting businesses requires significant levels of capital – indeed, you’ll need to buy or manufacture stock months before it’s sold in New Zealand or another country, and most businesses that purchase import/export goods will ask for credit so that they can make a profit and keep their cash flow in order. Because of this, you will likely need to secure a business loan to ensure you stay out of the red. Do your own research and work with an accountant who can forecast potential profit, loss, and cash flows.
Understand the Law
Before you consider incorporating a business in New Zealand and getting started, make sure that you’re allowed to import the goods that you want to bring into the country. Importing and exporting from Australia, for example, is very different from importing from China or Latin America, and the country has restrictions in place for safety and competitive reasons. Some products, like medicines and chemicals, are banned from the country, whereas imports from some countries are restricted to ensure the safety of New Zealand citizens, particularly if you plan to import food or health goods from a nation where safety standards are not in line with New Zealand’s strict rules. Regulations can stifle your plans, so make sure you’re aware of them before you spend money on research and development – check with a local expert.
Think About Exchange Rates
Another major challenge that import and export businesses must overcome is exchange rate fluctuations, which can have a significant impact on your bottom line and leave you without a profit in some circumstances. Indeed, if you’re going to buy goods in a foreign currency, and then import them to New Zealand, you’ll have to consider the current exchange rate of your currency and the New Zealand Dollar and calculate the potential risks associated with this.
You could choose to import goods from other countries and pay in New Zeland Dollars, or you could choose the US Dollar and export goods to New Zealand using the currency. As a foreign investor, there are various ways to overcome exchange rate risks, but they should be a priority when considering whether or not to set up a firm that imports into New Zealand.
As we have already outlined, setting up an import and export business can be an expensive and time-consuming process, and as such you should weigh up the pros and cons before you get started. You will need to decide whether to enter New Zealand or take advantage of another opportunity, such as the growing trading relationship between Australia and Latin America. Of course, the answer to “should I set up a business in New Zealand?” depends on the niche, the number of competitors you’ll encounter, and the level of risk you’re willing to take as an entrepreneur.
Work with Biz Latin Hub
Importing or exporting goods into New Zealand can be tough, but it also represents some significant opportunities for businesses with the right strategy. Understanding demand and your audience, presenting the right products at the right price, and forging relationships with buyers in New Zealand and other markets will ensure your export business is a success.
If you need assistance with company incorporation, due diligence or recruitment, you can depend on the New Zealand business experts here at Biz Latin Hub. We’re on hand to help with a whole range of back-office services that can save you time, ensure your firm is fully compliant, and take your international business to the next level.
To find out more, contact us now and a personalized strategy will be designed based on your organization’s requirements. We look forward to working with you soon.