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Megatrend 1:
   The hyper-connected world
   Our increasing online omnipresence is radically changing the way we do
   business on a global scale. Here’s the lowdown on some cyber-age effects



   W
                  ell, if you’re so out of the loop that
                  you need us to tell you about the
                  scale and rate of social media
   expansion worldwide, then you should consider                                    ‘To do business in a hyper-connected
   retirement. But exporting is partly about the           Twitter has 140            world you need to be more adept at
   numbers, so here are some for you to chew on.           million users and
   Twitter has 140 million users and 400 million             400 million             evaluating, meeting and responding
   messages sent each day. Facebook currently has           messages sent             to markets, so that people can find
   955 million monthly active users and 552 million            each day               what you do and interact with you’
   use it every day. That makes Twitter a potential
   marketplace about the size of the population of                                       – G r e n v i l l e m a i n, m a n ag i n g d i r e c t o r o f
   Russia, and means Facebook has one and a half                                    c u s t o m e r e x p e r i e n c e d e s i g n c o n s u lta n c y DNA
   times more users than the population of the US              Facebook
   – the world’s third largest country.                    currently has 955
      And there’s more: these websites transcend           million monthly
   national boundaries, even when those                    active users, and
   boundaries are otherwise heavily defended.              552 million use it
   But, as with all these mega-trends, rapid                     daily
   growth also brings with it intense competition.
   It’s all too easy with high-tech markets to              That makes Twitter a
   assume that they are something we ‘do to’ the           potential marketplace
   emerging economies of the world, when in fact            about the size of the
   these other countries are rapidly building their         population of Russia
   own capacity. The Chinese software industry,             and means Facebook
   for example, has exploded in the past decade,             has one and a half
   with revenue reaching US$11.1 billion in 2010,          times more users than
   growing at a rate of about 14 percent a year from          the population of
   2007. There are now more than 500 million                       the US
   people on Renren, China’s most active social
   network. It has 47 million registered users and
   31 million active users per month. Current                   China’s
   reports are even charting rapid expansion in
   ‘developing’ regions where you might not                most active social
   necessarily expect it, like Latin America.              network, Renren,
      The result is a rapidly and radically changing        has 500 million
   world, in which customers are increasingly              users, 47 million
   managing their own service experiences on               registered users,
   their own terms. In this world, monster-size              and 31 million
   markets can be born almost overnight and then              active users
   almost as suddenly change into something else              every month
   that operates by a different set of rules. This is
                                                                                                                                                 Grenville Main
   useful to understand for every business wanting



88 / idealog.co.nz
Idealog guide to exp orting




to use the internet, but it is absolutely vital for businesses that
want to make their mark by helping to shape its future.                Intellectual property
  TradeMe is our localised ebay, but where is our ebay, a
company that goes global on its big idea in this space? While we
salivate at the billions made by the likes of Mark Zuckerberg, or
                                                                       in the internet age
Google founders Larry Page and Sergey Brin, we should also be          You may well not be paying to read this right now, it’s up on the web
aware that behind and around those superstars there is a whole         somewhere, or somebody copied and pasted it for you. Check your music
industry sector full of folks making it big, if not colossal, behind   collection, your videos, and Google Samsung and Apple’s billion-dollar bunfight
brands you may never have heard of.                                    over smartphone designs and you will be aware that intellectual property in
  This is partly because a lot of the action happens business-to-      today’s inter-connected world is about as safe as opening an unattended bottle
business. According to a survey by the Concentrate marketing           store with an honesty box. But rather than abandoning legal protection
company, 88 percent of Kiwi high-tech businesses are selling to        altogether, or shying away from going global online, Idealog has some advice
other businesses, while business-to-consumer makes up only 8           from Mark Hargreaves, partner at intellectual property specialists AJ Park.
percent of sales and business-to-government only 4 percent.
  So how do we get in on the action? Grenville Main, managing           Q To what extent has intellectual property control evolved in the online

director of customer experience design consultancy DNA, says:          sector in the past few years?
“There are a lot of exporters and marketers who are still making        A The law is moving slowly compared to online business models. The speed at
that transition – from how we used to do things in terms of            which copyright works, in particular, can be published and distributed, which
product, distribution and marketing. But how we do this in a           makes it difficult for copyright laws to keep up. Businesses are adapting though,
hyper-connected world has become markedly different. You have          and software as a service is a fantastic example of using the network effect of
to be more adept at evaluating, meeting and responding to              the internet to grow markets while keeping IP controlled as a trade secret.
markets, so that people can find what you do, and interact with        Meanwhile, some businesses are taking the view that the opportunities available
you. You also need to be adept at expanding and evolving markets       justify exposing them to more risk of counterfeiting.
in a much smarter and more agile way. Hyper-connectivity makes
agility a requirement, but it also enables and facilitates it.”         Q Does the speed and flexibility of online business present specific

  A lot of this is more of an art than a science, Main explains:       challenges to IP protection?
“There are trends, things you can rely on and patterns of              A It makes patenting more difficult to manage because of the speed at which
behaviour that are evolving so there is a lot to draw on. But          new products and services are brought to market. I think branding assumes
there are some spontaneous and serendipitous things that               more importance for the same reason. Your brand can reach global markets
really go off. What is great about this is that unbridled              overnight, so ensuring it is protected is vital, given that so much product
creativity, opportunity or innovation out of leftfield is still a      differentiation online is about branding.
vibrant opportunity – and much of it is potentially quite
commercial. When we look at the local guys who have done                Q Has the scale of big players like Google and Facebook distorted the

good stuff, it has a hell of a lot to do with appetite and ability,    market for internet service businesses, where they simply want to get to
sure, but you can’t help but think that timing has had a hell of a     the point of selling out to one of the big guys?
lot to do with it, too. This means we have to be building an            A I think most start-ups have one eye on exits, regardless of whether they are in
army of creative thinkers ‘attuned toward opportunity’. Within         the internet space or not. The growth of major players in this area is good for
the entrepreneurial base in New Zealand we need to build an            local businesses if it means they can exit and plough their capital back into
innovation engine to be the place you will start to drop in the        new ventures.
right ideas – ideas that are what the world needs and wants.”
   There are already signs that Kiwis are finding the in-roads,        Q Is it hard for New Zealand businesses to pioneer ideas in this space,

especially in the US. Peta Conn, New Zealand trade                     without having your IP bought or stolen?
commissioner in New York, says, “New Zealand is punching                A I actually think the internet levels the playing field. Sure, it means ideas and
above its weight in the hyper-connected world. Both Silicon            designs are spread more easily and can be ripped off, but it also means those
Valley and New York are witness to an influx of New Zealand            ideas and designs are reaching large markets that New Zealand businesses
companies setting up to be closer to their customers.                  would have previously struggled to tap into. I know a number of local companies
Entertainment is also a focus of development, with NZ expertise        who receive unsolicited interest in their products or their business simply
cutting through areas like gaming from TV series and films, and        because more people are aware of what they do. The trick is to design a product
customised book soundtracks. The calibre of technology coming          or a process that allows you to retain critical pieces of the puzzle offline.
out of New Zealand is competing successfully on the world              Customers and competitors can whet their appetite online but you keep critical
stage, and fuelling our reputation for innovation.”                    IP in house to retain competitive advantage.


                                                                                                                   November-december 2012      / idealog / 89
The end of                                                        Succeeding in the

   the pipe dream
                                                                     online marketplace
                                                                     – or how to organise
                                                                     for chaos
   One thing that might limit our ability                            Timing is everything:
                                                                     good ideas dominate on
   to exploit hyper-connectivity is if New                           a global scale in the
   Zealand remains significantly less                                hyper-connected world,
                                                                     so you will need to create
   hyper-connected than its rivals                                   something genuinely new
                                                                     very quickly. Don’t get
                                                                     wedded to an idea too early,
   That is the long-term threat in the wake of Pacific Fibre’s       or stick with it too long.
   inability to raise the $400 million it needed to build a new
   13,000-kilometre high-speed fibre-optic cable connecting          Think globally: it’s the
                                                                     worldwide web, yeah? With
   New Zealand and Australia to California. Interestingly,           the right idea, skills and
   alongside familiar complaints about a lack of investment          personnel you can find
   cash in New Zealand and question marks over the viability         markets big enough to
   of competing head-to-head with the existing Southern              secure a happy retirement
                                                                     in the most unlikely places.
   Cross Cable, there was also a hint that the project had fallen
                                                                     You can also be blind-sided
   foul of diplomatic wrangles where the US was                      by competition if you don’t
   uncomfortable with Chinese investment in the project.             stay alert.
      Government ministers in the throes of pushing through
   the $1.5 billion ultra-fast broadband network by 2016             There is no point trying
   have said there is no lack of capacity in the existing            to compete with something
                                                                     that is already massive
   single cable, and Chris Brace, solutions architect at             and hyper-connected. If
   TelstraClear, agrees. But Rod Drury and Sam Morgan,
   who are behind Pacific Fibre, suggest that the
                                                                     you doubt this, go and
                                                                     check the activity on your
                                                                                                    The Auckland Waterfront
   development of Kiwi online offerings may be hobbled by
   a lack of bandwidth and the high cost of international
                                                                     Google+ account.
                                                                                                    Innovation Precinct
   data in New Zealand.                                              Integrity is the driving       The very fact that we have all heard of Silicone Valley
                                                                     force of hyper-connected
      Paul Brislen, chief executive of the Telecommunications        business. You need to have     is testament to the value, ironically, of having
   Users’ Association of New Zealand, says: “We have the             all your ducks in a row for    hyper-connected businesses close together in an
   Southern Cross network and that’s our lot, and Southern           an impeccable service          old-fashioned geographical sense. This is the kind of
   Cross will eventually need to be replaced. Given a 20-year        that’s totally in line with    success that Auckland Council is trying to replicate in
                                                                     your brand philosophy.
   lifespan, I’m guessing here, we’re already rapidly                If you screw up, or hide
                                                                                                    its rejuvenated Wynyard Quarter area. The idea is
   approaching its use-by date and planning for ‘Son of              something, you will be         that the precinct will consist of residential, retail and
   Southern Cross’ must be well advanced at the head office          found out, and word            office spaces where a cluster of companies, backed by
   in Bermuda.                                                       travels faster online than     government and business service providers, will
      “The real tragedy in all this is that we, of all the nations   anywhere else.                 accelerate the growth of high-tech ideas into
   on the planet, stand to gain the most from the digital                                           commercial success, and of new and emerging
                                                                     Get good old-fashioned
   economy. Instead of shipping our goods slowly and at              business advice. The           businesses alongside more established companies
   great cost to distant ports, we are as close to our markets       online world is not Oz or      with an eye on exporting.
   as anyone else. We need more competition on the                   Narnia. No matter how             The project has announced that it has already had
   international side of the equation to match our investment        whizz your new idea is         47 registrations of interest from companies, with 3D
                                                                     it will still need boring
   in the domestic setting. Without it, we’re left with a                                           modelling company Nextspace claiming first mover
                                                                     things like funding, a
   monopoly provider and no matter how well run a                    decent advisory board,         status after shifting into the upstairs section of a
   monopoly is, it’s still a monopoly.”                              an accountant and              sail-making company on Pakenham Street West.
      Brislen has called for government and superannuation           legal support.                    Grenville Main, managing director of customer
   support for an alternative scheme, and fears we might                                            experience design consultancy DNA, reckons the idea
   otherwise be doomed to create ‘the world’s fastest                Make friends and ask           makes a good fit with Kiwi commercial culture.
                                                                     them stuff. No idea is
   intranet’. If the Southern Cross cable breaks for any             so new and clever that            “If you look at the clusters and groups of smart,
   reason, which is not unheard of, we might all find                somebody else hasn’t           like-minded businesses in New Zealand, we are pretty
   ourselves trying to contact cloud services on dial-up.            tried something at least       good – we aren’t that precious. If you own something
      David Dickinson, service delivery consultant with              slightly similar before, or    you want to get the benefit from it, but there is this
                                                                     is not trying something
   TelstraClear, adds: “I think that costs are a bigger issue                                       collegiality where there are guys who are trying to get on
                                                                     hyper-connected to it
   here. We recently saw some downward price pressure                right now. Talk to industry    just like you, and they are willing to help you. They are
   come to bear under threat of competition in that market.          insiders and share problems    quite open to sharing their successes and always open to
   It will be interesting to see what happens now that the           and solutions.                 helping other people build the critical mass of people
   threat is no longer there.”                                                                      who want to live here but work all over the world.”



90 / idealog.co.nz
Idealog guide to exp orting




The land of the long list of                                                                           that many of the services advertised are
                                                                                                       actually quite different when you read the


cloud-based companies?
                                                                                                       small print that most of us ignore.
                                                                                                          “It may also be important to consider where
                                                                                                       your data is actually domiciled. For example, if
                                                                                                       you are using something like Microsoft Office
First there was the internet, then there was        platform (we call it the Marketplace Portal),      365, you may find that all the data is on servers
the cloud. Surprise! It’s the same thing – it has   choose the server spec they need and be using      in Singapore, which may have very different
just grown up and got a lot more businesslike.      it within hours. This is ideal for businesses      privacy laws than the ones you are used to.
   Chris Brace, solutions architect at              with seasonal data loads, who want to scale        You also don’t want to wake up one morning to
TelstraClear, lays down what this could             quickly to provide a development environment,      find there has been a security breach, blackout
mean for your business. “Cloud-based services       or who need additional server space for big        or system shutdown that may cripple
are essentially elastic; they can enable            data analysis. They unsubscribe the server         your business.”
businesses to scale and grow very quickly. So if    when they are done – it’s a pay-as-you-go             Dickinson agrees: “Any environment is only
you have a web-based sales business and you         environment that is really going to set the        as good as its weakest point so I would
suddenly take off and find your e-commerce          standard for some time                             caution against keeping critical business data
site is overwhelmed, you can go online and          to come.”                                          on internet-based services. You don’t know
purchase the use of extra infrastructure to cope       All the whizz-bangery won’t make up             where they are being hosted, they typically
with it very quickly.                               for a bad idea or a shonky business model          fall under US legal jurisdiction and there is
   “In the past, it might have taken months to      though, so the cloud should still be a tool        a long line, literally, of exposure between you
install what you need, whereas now it is more       you reach for after you have done the hard         and your services that is vulnerable
like a matter of hours. And as soon as you have     yards commercialising the hell out of              to attack.”
finished with the cloud capacity, you can shut it   your proposition.                                     This means having a back-up is as important
off again.”                                            And however much you may like to believe in     for the big internet players as it is for your
   David Dickinson, service delivery consultant     the magic of Google, there are still significant   personal computer, and reading the small print
working with TelstraClear, explains. “Someone       risks that need to be considered.                  is just as important before clicking the ‘I agree’
needing another server, maybe only for a               Brace explains: “Security is obviously an       button as it is on signing a contract that’s been
month or two, can now log into our cloud            issue. Also, legal experts are now pointing out    drafted by your own legal team.



                                                                                                                November-december 2012      / idealog / 91
Kiwi companies
   kicking it online
   The Hyperfactory
   Derek and Geoffrey Handley set up shop as The Hyperfactory in 2001,
   forming a combined agency and technology company for advertising to
   mobile devices. In the years that followed the irrepressible Derek picked
   up a slew of awards, including 2009 Ernst & Young Young Entrepreneur
   of the Year, being rated one of the 40 Most Influential People in New
   Zealand Telecommunications in 2005 and 2006, and the 2006
   Pricewaterhouse Young Achievement of the Year. He also received a
   nomination as one of the National Business Review Top 60 Innovators of
   2007, and was named as a New Zealand 2011 Leader by the Sir Peter
   Blake Trust. More importantly, the company picked up a range of
   top-drawer clients including Kraft Foods, Adidas, L’Oréal and Coca-Cola,
   and then sold out to US media company Meredith for something in the
   low seven figures. It has now closed its New Zealand operations in favour
   of a new head office in New York.
   kkthehyperfactory.com

   Group Commerce
   With print media bleeding away onto portable screens, Otago University-
   trained New Zealander Jonty Kelt, co-founder and CEO of New
                                                                                 Carnival Labs
   York-based Group Commerce, is helping to make online publishing pay           Guy Horrocks tuned in to the social media global mega-trend
   for some big names, including CBS, The Daily Telegraph and the New            when he co-founded Polar Bear Farm, the world’s first iPhone
   York Times. With 120 staff, the firm provides the smarts and technology       application development company, even before the App Store
   to power and curate media e-commerce and deal websites affiliated to          was up and running.
   major brands. It has just secured an additional US$21 million of capital         Now in his late 20s, he says it made a huge difference being
   funding to fuel its expansion into Europe and has reported a monthly          first to market. With his latest venture, Carnival Labs, he now
   growth of 30 percent in the past year.                                        has the ear of major US brands, and is currently coming up with
   kkgroupcommerce.com                                                           the goods for global players such as Dreamworks, Kraft Foods,
                                                                                 Intel, Estée Lauder, Pepsi and Nestlé. The firm originally
   Xero                                                                          specialised in casual gaming, entertainment and advertising
   Wellington-based Rod Drury’s cloud-based accounting software                  apps, and now employs 10 full-time staff in New Zealand.
   company is listed on the NZX and is within a sniff of getting a major            Horrocks is now the company’s roving ambassador, having
   percentage of a gargantuan market. Looking to top 300 employees in            expanded into the US, and is currently preparing to make New
   the next few weeks, it has not pumped profits out in its ongoing              York his permanent home. He reckons that most of the US
   establishment phase, but certainly looks to be making a serious challenge     action for his firm has now shifted from Los Angeles to New
   on its offshore rivals.                                                       York, but the investment cash is still in Silicon Valley.
   kkxero.com                                                                       The firm’s latest brainchild is the Core Push mobile
                                                                                 engagement platform. It includes a groundbreaking real-time
   Rakon                                                                         location-based analytics dashboard and aims to deepen the
   Most consumers will probably never have heard of the makers of                connection between a brand’s app and its customers. Carnival
   crystal-based frequency control components for electronics, but its           Labs already has 10 large brands using the system to send
   products are helping much of our everyday gadgetry, such as mobile            around four million notifications a month to customers, and is
   phones, telecommunications and GPS systems, to function. From its             set to open the taps wider in the next couple of months.
   beginnings in a Howick garage in 1967, sales revenue for the past financial      “Our turnover is in the low seven figures (US dollars) this
   year was $178.3 million. In August the company sealed a deal that will        year, but is growing around 200 to 300 percent on last year,
   quadruple its sales to Chinese electronics giant Huawei to US$56 million.     which is exciting,” Horrocks says.
   Last year, Rakon UK Limited also picked up the coveted Queen’s Award          kkcarnivallabs.com
   for Enterprise.
   kkrakon.com


92 / idealog.co.nz
Idealog guide to exp orting




Megatrend 2:
Healthy ageing
                                                                                                                       Baby boomers
                                                                                                                     thought that 79%
                                                                                                                     of TV advertising
                                                                                                                     and 89% of online


and the baby
                                                                                                                   advertising appeared
                                                                                                                       to be aimed at
                                                                                                                    somebody younger


boomers
                                                                                                                         than them
                                                                                                                     Sou
                                                                                                                           rc e                                                  dy
                                                                                                                                  :A2                                        Stu
                                                                                                                                        010 Go                         mer
                                                                                                                                                 ogle /Nielsen Consu




The term ‘boomers’ for those born between 1946 and 1964 is such a                                             Iain McLeod, BNZ national manager,
fitting one on so many levels. This significant jump in birth rates at the                                 international trade, offers further insight into
                                                                                                           the baby boomer brain: “The baby boomers are
end of World War II, combined with an era of relative world peace,                                         still the funders of the industrialised world but
natural resource abundance and technological advancement fuelled                                           they are shellshocked by the events in 2007 and
an era of unprecedented global affluence. The guns stopped booming,                                        2008. A considerable number have lost their
populations boomed and then the economy boomed                                                             retirement savings and are remaining in the
                                                                                                           workforce. And those who are still financially




S
                                                                                                           secure are struggling to find a safe haven for
        peak of a global phenomenon. According       advertising and 89 percent of online                  their investments as people endeavour to de-risk
        to the United Nations, the number of         advertising appeared to be aimed at somebody          their portfolios and look for investments with
        persons aged 60 or over increased three      younger than them. Some analysts suggest this         capital security.
and a half times from 1950 to 2009, to 737           is due to the average person working in                  “They are more conservative and risk-averse
million. By then there were 12 countries with        marketing being much younger than the baby            now in OECD countries, but in Asia they are
more than 10 million people aged 60 plus,            boomers, or that marketers make incorrect             still expansionary and tastes and wealth-based
including China (160 million), India (89             assumptions based on this generation.                 needs are expanding exponentially. It is still an
million), the United States (56 million), Japan         We are not, ahem, commenting on the age of         affluent group with far greater demands than
(38 million), the Russian Federation (25             Grenville Main, managing director of customer         previous generations, mainly because of the
million) and Germany (21 million). By 2050,          experience design consultancy DNA, but he             relative health of this population versus
the population aged 60 or over is expected to        sees the influence of baby boomers everywhere         previous generations. They live longer, have
triple, reaching a total of two billion.             he looks: “It’s a trend in direct terms but it also   greater expectations and tend to have more
  That’s a hell of a lot of grey spending power.     has a benefit and impact for everyone. If you         disposable income than other generations.”
Last year, the overall spending by the 116           are trying to target them as an audience you are         According to Main, this profile makes them
million US consumers aged 50 and older was           going to have the potential for a longer              well worth targeting if the product or service
$2.9 trillion, up 45 percent in the past 10 years.   relationship with them than you’ve ever had           is right. “What people are grappling with is
Meanwhile, the 182 million people younger            before, but on the other hand they are                that they, like lots of other consumers, are
than 50 spent $3.3 trillion last year, up just 6     definitely more discerning and may switch out         starting to want to take the control back from
percent during the same decade.                      on you. They are not like the generation above        the businesses supplying products and
  Mark Hargreaves, partner with intellectual         them, which is more conservative and tends to         services,” he says. “And this can be destabilising
property specialists AJ Park, says it has            stick to relationships. Baby boomers have             for businesses, because you are not quite sure
triggered growth in certain sectors: “The            changed the most in generational terms and            where they are going to go next and what is
pharmaceutical industry has developed                will basically suit themselves more than ever         driving the decision-making. That’s where
significant IP in the face of demand from baby       before, so if you aren’t providing something          insight builds toward intimacy, which is now
boomers and ageing populations. We only need         good then they will move on.”                         and essential factor for all businesses.”
to look at Viagra sales for that!”
  What’s weird is the extent to which this
massive cohort of the world’s population feels
                                                     ‘Baby boomers have changed the most in generational terms
ignored by marketing folks. Blog after blog on       and will basically suit themselves more than ever before, so if
the internet says it, and a 2010 Google/Nielsen      you aren’t providing something good, then they will move on’
Consumer Study found that 79 percent of TV           – – Grenville Main, MANAGING DIRECTOR OF CUSTOMER EXPERIENCE DESIGN CONSULTANCY DNA




                                                                                                                    November-december 2012                                            / idealog / 93
iP is about increasing potential




                                           If taking your idea, invention or business offshore is in        Over the last century, we have worked with clients to
                                           your strategy — then the right IP advice will increase           recognise great ideas and the best ways to protect
                                           your chances of success.                                         and commercialise them globally. Our team of
                                                                                                            commercialisation specialists and IP litigators can help
                                           Making it overseas takes more than a good idea and
                                                                                                            you understand the laws of your destination country,
                                           the will to succeed. At AJ Park we not only have a
                                                                                                            develop global commercial agreements and cover
                                           clear understanding of intellectual property laws in
                                                                                                            patent or trade mark protection, giving you and your
                                           New Zealand, but know what your rights and obligations
                                                                                                            business the best chance of making it overseas.
                                           are when the rules change for another country.
                                                                                                            For the right IP advice to help turn your Kiwi business
                                                                                                                                                                             AJP10360_IA




                                           0800 257 275 I www.ajpark.com I New Zealand + Australia          into a global asset, call us now.



AJ Park is about iP • intellectual property • igniting passion • ideas pervading • innovation protected • integrated processes • intelligent people • increasing potential
l                                                                                                                               Idealog guide to exp orting




                  Kiwi
                  companies
                  bringing it
                                                                                                NZTE’s Health High Impact Programme
                                                                                                This programme is focused on accelerating the growth of
                                                                                                New Zealand health technology and services companies. It



                  to the baby
                                                                                                supports business to target niche markets, build relevant
                                                                                                company capabilities, develop reference sites and evaluate
                                                                                                new market opportunities. It includes working with a
                                                                                                network of industry organisations, universities, researchers



                  boomers
                                                                                                as well as the Ministry of Health, the Ministry of Business,
                                                                                                Innovation and Employment and multinational enterprises.
                                                                                                To find out more, and for profiles of key health markets, go
                                                                                                to nzte.govt.nz.



                  New Image
                  Colostrum: the first milk produced by cows that have just calved, is       Fisher & Paykel Healthcare
                  the latest superfood to take the health-conscious world by storm.          In the last financial year, F&P Healthcare made a healthy net profit of
                  Auckland-based NZX-listed New Image shifted $74.7 million worth            $64.1 million out of its range of products and systems for use in
                  of the stuff last year. Taiwan and Malaysia are key markets, sucking       respiratory care, acute care, and the treatment of obstructive sleep
                  up $55.9 million of New Image products. Unfortunately, a couple of         apnoea. However, a bidding war in the US looks set to reduce incomes
                  ailing brands and failed business partnerships, combined with the          and take the shine off the F&P market in the years to come.
                  relative strength of the New Zealand dollar, helped the company            kkfphcare.com
                  lose $6.1 million last year. However, according to senior managers, a
                  restructured New Image is now in a good shape.                             Orion Health
                  kknewimageasia.com                                                         The company that took out central Auckland billboards to brag about
                                                                                             recruiting throughout the recession has built an enviable offshore
                  Ecoya                                                                      market for its eHealth software, most notably in the US. The company
                  Based in Botany Bay, Australia, candle and skincare company Ecoya          now has offices in the US, Canada, United Kingdom, Spain, Australia,
                  is headed up by (among others) New Zealand’s own inimitable Geoff          New Zealand, Japan, Thailand, Singapore, Dubai and France. It also
                  Ross and Rob Fyfe. After swallowing rival skincare company Trilogy         buddies up to heavy-hitting partners, including Accenture, Philips,
                  last year, the company turned its first profits. It now makes more         Cisco, IBM, Agfa and Oracle Corporation.
                  than three quarters of its sales offshore and is focusing on expansion     kkorionhealth.com
                  into Asia, including an exclusive deal with a new Japanese
                  distributor, the Kinu Corporation.                                         Comvita
                  kkecoya.com.au                                                             Comvita’s busy bees are building a global reputation for natural health
                                                                                             and skincare products, including medicinal ‘Active UMF’ honey, with a
                                                                                             $35 million chunk of its annual sales now happening in Asia. This has
                                                                                             helped the company to notch up a 12 percent growth this year, and it
                                                                                             also shrugged off a $71.6 million takeover bid from Singapore-based
                                                                                             food conglomerate Cerebos.
                                                                                             kkcomvita.co.nz

                                                                                             Les Mills International
                                                                                             Right now thousands of people are probably gyrating to one of Les
                                                                                             Mills’ trademarked group fitness sessions, such as Body Attack and
                     Tech-savvy boomers driving e-health demand                              Body Jam. The pioneering Kiwi fitness firm now exports its exercise-
                     A report from KPMG and the Manchester Business School,
                                                                                             to-music programmes to 80 countries, where 90,000 certified
                     Accelerating Innovation: the power of the crowd, suggests that ageing
                     of the baby boomers, and this generation’s increased comfort with new   instructors teach classes through 14,000 licensed gyms and clubs. It has
                     technologies, is driving the demand for openness in healthcare          sold its patented workouts into about 11 percent of the world’s health
                     systems. Jan De Boer, global health IT lead for KPMG in the             clubs and employs 130 people across the group (80 of those are based
                     Netherlands, says: “Today’s smartphone user is tomorrow’s patient       in Auckland). This all adds up to seven figure revenue and a lot of
                     who wants greater access and control of their healthcare and their
                     medical records.”                                                       sweaty sportswear (which Les Mills now sells, too).
                                                                                             kklesmills.com
    AJP10360_IA




                                                                                                                                   November-december 2012      / idealog / 95
Who wants to    Aged between 48 and 66, baby
                boomers are looking forward to


live forever?
                a long retirement in the active
                and affluent style to which they
                have become accustomed, and
                they don’t want a nuisance like ill
                health spoiling their fun. That’s
                why they are spending a lot of
                what would have been their
                children’s inheritance on
                cosmetic surgery, vitamins,
                health foods, exercise,
                alternative medicines and
                a magnitude of therapies

                According to the market research firm Global
                Industry Analysts, the boomer-fuelled
                consumer base seeking to keep the dreaded
                signs of ageing at bay will push the US market
                for anti-ageing products from about $80
                billion now to more than $114 billion by 2015.
                   Main says: “That suggests the one industry
                that will have really overtly benefitted from
                this block of people because they do not want
                the party to end. Defying ageing in our own
                minds as a group of people more and more,
                they don’t seem to be wanting to grow old.
                That is probably the one thing that defines
                them. The key insight, we think, is around
                control, flexibility and individual choice being
                held longer – it’s not just about how you look,
                it’s how you truly feel.”
                   But Hargreaves warns of the regulatory
                complexities of dabbling in this marketplace.
                   “From an IP perspective it can be
                challenging identifying patentable aspects of
                natural health supplements as opposed to
                pharmaceuticals, or even nutraceuticals with
                proven health benefits. It is likely that, as
                regulatory hurdles increase for these types of
                products, there will be more IP developed
                around them because more R&D and testing
                will be required for regulatory approvals.
                   “At present, these products are regulated in
                New Zealand in an ad hoc way, which does
                present difficulties for manufacturers who may
                need to consider a range of legislation. This is
                compounded if the product is exported into
                other markets where different regimes exist.”
                   In short, think difficult, time-consuming
                and expensive, but with the potential for
                massive payoffs. Hargreaves’ advice is to seek
                out advice of those who have trodden this
                road before.
IN CHINA,
    A BUSINESS EXECUTIVE
    MAY CONSULT THE
    STARS, OR WAIT
    FOR A ‘LUCKY’ DAY
    BEFORE MAKING
    A DECISION.

    TRUE                                     FALSE




If you’re thinking about exporting to China, there’s no room for guesswork. New Zealand Trade and
Enterprise can give you the tips and tools you need to move your business into this market; from
country overviews and language and culture, to sales and marketing suggestions. That way, you’ll
know that the executive you’re dealing with hasn’t left for an impromptu holiday, he’s just waiting
for the right time to make his decision.

Visit www.nzte.govt.nz/answershere or call us on 0800 555 888.



Get the answers here. Succeed over there.
                                                                                                      T&E0028/B
i d e a l o g i n a s s o c i at i o n w i t h A J Pa r k




Crushing the
counterfeits
Whether it’s Armani, Adidas or Anchor, well-known brands are all
subject to imitation. All exporters need to be wary of their trade                                       Intercepted counterfeit
                                                                                                         Anchor goods.
marks being ripped off and make moves to protect their valuable IP




H
           andbags, watches, sunglasses and              “In this case, we were able to get a really
           electronics are among counterfeiters’      clean outcome. We worked with Carolyn Green
           favourite products. But virtually          and Gavin Scott from Fonterra’s legal team to
anything can be faked and passed off as               force the counterfeiter to agree to destruction
a recognised and respected brand.                     of the fake products. We then arranged for
  Often these rip-offs are found to be small-         Fonterra’s local agent to destroy all of the
scale opportunists, but internationally the           counterfeits – that was all done over a period
trend toward large-scale counterfeiting               of two days with the help of a giant digger. The   The destroyed
continues to grow. In late 2011, the world’s          counterfeiters had actually filed for their own    counterfeits.
largest dairy products exporter, Fonterra,            trade mark, but they accepted that they were
discovered and foiled a large-scale attempt           infringing Fonterra’s marks and gave away
to counterfeit one of its flagship products,          their application.”
Anchor milk powder.                                      This case demonstrates how important it
  The large shipment containing tens of               is to have your own trade mark protection in
thousands of tins of milk powder labelled             place and to enforce it, Potter says. And
‘Anhor’ and bearing a very close likeness             he’s not just talking about big organisations –
to Anchor’s famous red anchor logo was                exporters of any size with a system or product
intercepted by Fonterra’s representatives             that risks being copied should protect their
in the Middle East.                                   intellectual property.
  Carolyn Green, Fonterra’s Auckland-based
trade mark manager, says the counterfeit
products were on their way from the United
Arab Emirates to Somalia but were found
before they left their port of origin.
  “We’ve had a few instances where we’ve
been advised through Customs of infringing
products, but this was a particularly big one,”
says Green. “Anchor is one of our biggest
brands and is very popular in that part of the
world, so it’s a major target for counterfeiters.”
  Intellectual property expert AJ Park has
been advising Fonterra since the dairy
co-operative formed in 2001.
  Partner Alan Potter and senior associate
Emma McBride work closely with Carolyn
Green to help safeguard Fonterra’s valuable
trade mark rights.
  “Fonterra sends its products to more than
140 countries around the world,” says McBride.
“Because of all the valuable brands Fonterra
uses, it has a significant registered trade mark
portfolio, which we help to manage.
i d e a l o g .c o. n z / b u s i n e s s p l a n




   “It’s about taking the time to work out where         cost-effective. When you’re exporting, you
 you think you may be at risk and getting                need to have your trade mark registrations and
 protection in places close to your markets,             Customs notices in place.
                                                                                                                                  IN BRIEF
 where people might want to counterfeit your               “If you start off with weak rights because              Fonterra is the world’s largest diversified
 products,” says Potter.                                 you haven’t done your homework, things                    milk processing company and one of the
   “You may not always be able to register every         always end up more complicated.”                         world’s top producers of dairy nutrition for
 mark in every country, but you need to at least           Green is in daily contact with AJ Park to             export, including milk powders, cheese and
                                                                                                                 butter. The co-operative sells its products to
 think about it. Exporting branded goods                 help protect Fonterra’s trade marks and to                  more than 100 countries. Intellectual
 without trade mark protection is a bit like             manage cases like this one. She says the input           property expert AJ Park has been working
 running an uninsured business – it’s all fine           and advice she receives from both Potter and             with Fonterra since it was formed in 2001
 until something goes wrong, then you wish               McBride is extremely valuable.                             and recently helped the company with
                                                                                                                  a large counterfeiting case of Anchor milk
 you’d put adequate insurance in place.”                   “AJ Park is the liaison between Fonterra
                                                                                                                            powder from the UAE.
   Potter says that for smaller companies, it’s          and our lawyers in various countries and
 always a risk assessment – how big a risk are           maintains Fonterra’s trade mark database.                               CONTACT
 you willing to take?                                    We couldn’t do what we do without them.                           To find out more, contact:
   All exporters need to turn their mind to the          Sometimes we’re in touch several times a day.                              AJ Park
                                                                                                                                 0800 257 275
 risk they’re taking.                                    We talk about IP protection strategies across                          www.ajpark.com
   “In this case, Fonterra had its registered            our various markets; and when things like this
 protection in place, which led to a good                counterfeiting situation happen, we work as
 outcome that was both quick and very                    a team to deal with it.”




L-R: Gavin Scott, Carolyn Green, Emma McBride and Alan Potter.
Megatrend 3:
   Feeding the world’s
   middle classes
   You know all those years we have been calling huge swathes of the globe the ‘developing world’? Well guess
   what: a lot of them have developed. And as a result, now may be a good time for New Zealand to re-evaluate
   our position in the world economy. Experts in the field tell you how


   C
            hina is the most obvious example, where it is                                      Mark Hargreaves, partner at intellectual property
            reported that wages have quadrupled in the                                      specialists AJ Park, agrees, but adds that global supply is
            past decade and the World Bank estimates GDP                                    already rising to meet this new demand: “There are a lot
   will match the US by 2030. But it is also happening in                                   of global players developing protein supply which will
   Brazil, where the Fundacao Getulio Vargas economic                                       compete with our dairy and meat exports long term.
   think tank estimates that 40 million people have joined                                  Ultimately, our competitive advantage is more likely to
   the ranks of Brazil’s middle class between 2003 and                                      lie in high-quality, high-value food and ingredients
   2011. And in Africa, the African Development Bank says                                   produced in a clean environment. We have to strive to
   the middle class rose to 313 million people in 2010,           ‘New Zealand              produce that high-quality product and compete on
   which is just over a third of the continent’s population.   leads the world in           quality and brand. Perhaps one of the biggest
     Then there’s Indonesia, where Japanese banking              exports of dairy           competitive risks is that we lose our quality reputation,
   group Nomura reports that the middle class – those
   with a disposable income of at least $3,000 a year – now
                                                               and sheep and is a           meaning we’re reduced to competing on price, which
                                                                                            won’t be easy long term.”
   numbers about 50 million.                                   major exporter of               For the time being we appear to be holding our
     According to New Zealand Trade and Enterprise, half       beef, seafood, and           ground, but value-added propositions such as Burger
   a billion people in Asia currently earn ‘middle incomes’.      kiwifruit. But            Fuel, or the Dairy Collective’s successful expansion into
   By 2020 that will treble to 1.7 billion, and by 2030 the
   figure will be 3.2 billion. And according to The
                                                               when we consider             the UK, would seem to be the way to go, rather than
                                                                                            sheer volume.
   Economist, for the first time in history, more than         that New Zealand                Grenville Main, managing director of customer
   half the world’s population could be described as           is a similar size to         experience design consultancy DNA, explains why we
   middle class.                                                  Italy, and Italy          need to play it smart.
     One of the main things these people spend additional                                      “Even our big companies are tiny on a global scale.
   money on is food. At the bargain bucket end of the              feeds its own            I don’t think we are scratching the surface on what this
   market KFC is currently opening a new outlet in China           considerably             could be as a growth opportunity. That said, we are
   almost every day, with thousands springing up all over       large population            small and we are having trouble scaling up in all the
   the country. New Zealand’s own Burger Fuel is also
   expanding into the Middle East, with a combination of
                                                               and exports twice            established sectors – whether it’s through a lack of
                                                                                            talent, funding or resources. When you look at dairy, the
   halal certification and a brand based on high quality and   as much food and             drain on waterways and the impact on agricultural
   healthy eating. Alongside stores in the United Arab              beverage as             growth potential – there is only so much headroom left.”
   Emirates and Saudi Arabia, the company has also                New Zealand,                 He looks to examples like Leitissimo in Brazil, where
   starting flipping patties in Iraq, and is looking to add
   Libya to its post-warzone market share. According to a
                                                                 there is a sense           a Kiwi dairy team has set up a successful New Zealand-
                                                                                            style dairy farm (see Idealog #34), hooking up our
   report by the Carnegie Endowment for International           that we could be            country’s know-how with their cheap land, labour and
   Peace, their plan for dishing out 100 percent pure New           doing more’             burgeoning market for fresh milk. Big players such as
   Zealand ground beef in one-third pound slabs makes              – – M i k e A r a n d,   Federated Farmers, Fonterra and PGG Wrightson all
   good sense. The report states: “Demand for protein is        New Zealand Trade           have similar projects on the go in South America and
   expected to expand along with the global middle class,         Commissioner,             across the globe.
   which may be as large as 600 million people in G20                 Shanghai                 Fonterra is currently planning to create 25 new farms
   developing countries.”                                                                   in China alone, at a cost of $1 billion, in an attempt to
                                                                                                                                                    s




100 / idealog.co.nz
Idealog guide to exp orting




                                                                                                  Indian, Inc
                                                                                                  Indian food now rightfully receives a warm
                                                                                                  welcome almost everywhere in the world, but
                                                                        Say hello                 New Zealand tucker is slowly getting its own
                                                                         to halal                 back, as the subcontinent’s tastebuds seek out
                                                                      According to a recent
                                                                  estimate, 23 percent of the
                                                                                                  new flavours backed with an increasing ability to
                                                                   global population, or 1.57     pay top dollar for them.
                                                                 billion people, are Muslims,       Richard White, trade commissioner to New
                                                                  with a massive and rapidly      Delhi, India, says: “Wine is not a traditional
                                                                 growing Muslim population        beverage of choice in India but demand is steadily
                                                                 among our near neighbours
                                                                  in South East Asia. Halal in    growing, driven by increasingly international
                                                                  the Muslim faith is defined     consumer tastes. New Zealand labels are
                                                                   by the Quran as ‘allowed’,     positioning themselves to take advantage of growth
                                                                      ‘permitted’ or ‘lawful’.    in the Indian market, leveraging their international
                                                                         To be halal, certain
                                                                   activities must be done in
                                                                                                  reputation through active promotional activities
                                                                  accordance with a specific      with their local distribution partners.
                                                                     set of rules and guiding       “New Zealand apples are also becoming
                                                                 principles. This includes the    increasingly popular in India. This is on the back
                                                                   prohibition on consuming       of a strategy by the Kiwi apple industry dating
                                                                   certain animals, including
                                                                    pork, intoxicants such as     back to the 1990s to work closely with growers
                                                                  alcohol and blood or blood      and marketers in India. As a result, New Zealand
                                                                  products. It also stipulates    was the first country allowed to export apples to
                                                                 methods of slaughtering for      India. Consumer demand is growing steadily.”
                                                                 animals that are to be eaten.
                                                                      The good news is, if you
                                                                                                    Storage, transport and distributions networks
KFC is currently opening a new outlet in China on an almost
                                                                   get halal certification, you   in India still need to work to help make importing
 daily basis, and the middle classes are flocking to the feed.
                                                                    gain access to a massive      fresh produce really fly, but here, too, NZ firms
                                                                       export market at the       have sniffed out an opportunity.
                                                                 exclusion of companies that
                                                                             have not.

 Kiwi companies                                                         Fiona Acheson, trade
                                                                 commissioner for Malaysia,

 helping to feed
                                                                  Indonesia and Brunei, says
                                                                    halal food markets are of
                                                                     growing importance to

 the seven billion                                                         New Zealand.
                                                                         “In 2011, Indonesia,
                                                                 Malaysia and Singapore were
  Fonterra                                                         among the top five export
                                                                       destinations for halal          ‘Wine is not a traditional
  The big boy on the block is still a flagship
  exporter both in terms of its size and in its
                                                                   certified meat. Included in
                                                                 New Zealand’s top 10 export       beverage of choice in India but
  R&D prowess.                                                      destinations were China,        demand is slowly and steadily
  kkfonterra.com                                                    South Africa and France.
                                                                       “And the growth in the      growing, driven by increasingly
                                                                 global halal market, which is     international consumer tastes.
  Aotearoa Fisheries                                                  currently estimated at
  As one of New Zealand’s largest seafood                              US$2.3 billion, is not           New Zealand labels are
  businesses and one of the sector’s largest                     confined to meat. Fonterra’s
                                                                    exports to Indonesia and
                                                                                                      positioning themselves to
  exporters, Aotearoa Fisheries had $152 million                     Malaysia are also halal         take advantage of growth in
  of offshore sales last year, $63 million of which
  went to Asia and China. The company also
                                                                  certified, as are other New
                                                                    Zealand dairy products,
                                                                                                          the Indian market’
  owns 50 percent of Sealord Group.                                 health supplements and         ––Richard White, Trade Commissioner to
                                                                         processed foods.”                    New Delhi, India
  kkafl.maori.nz




                                                                                                                  November-december 2012     / idealog / 101
ward off the rapidly increasing competition there to meet
s




    what is effectively bottomless demand.
      Mike Arand, New Zealand trade commissioner in Shanghai,           Half a
    touches on similar ground.
      “New Zealand leads the world in exports of dairy and sheep
                                                                        billion
    and is a major exporter of beef, seafood and kiwifruit. But          people in
    when we consider that New Zealand is a similar size to Italy,           Asia
    and Italy feeds its own considerably larger population and           currently      ‘With the predicted growth in global
    exports twice as much food and beverage as New Zealand,
                                                                       earn ‘middle        population and the associated
    there is a sense that we could be doing more.
      “What is clear to me, first and foremost, is the need to         incomes’. By     growth in food supply, New Zealand
    develop the New Zealand Brand, to tell our New Zealand              2020 that             will become a smaller, less
    story more. Many in the trade and many consumers are totally       will treble to     significant cog in the global food
    unaware of New Zealand. We also need to better understand
                                                                                        system unless we have a clear vision
    the needs of the Chinese trade and consumers, and supply              1.7            for our agri-food sectors, focused
                                                                       billion,
    those needs – different packaging or presentation, different
    formulas and more.”                                                                  not just on exporting product but
      Hargreaves says these larger players are still doing most of     and by 2030          also on lightweight exports of
    the innovating and creating most of the new intellectual            the figure      industry know-how and innovation.
    property in this space, when there is plenty of scope for more
    small- and medium-sized companies, such as Leitissimo, to
                                                                          will be          We believe that the time is right
    get their snouts in the trough.                                       3.2                 for the development of an
      Main adds: “If it’s designed here, it’s innovative and there’s
                                                                        billion                    industry strategy’
    something about the Kiwi environment or attitude that has
                                                                                         – – I a n P ro u d f o o t, H e a d o f Ag r i b u s i n e s s a n d
    some brand power then let’s use it. But we don’t necessarily                            L e a d Pa rt n e r , C o n s u m e r a n d I n d u s t r i a l
    have to build it, fund it or even sell it here.”                                                          P ro d u c t s at KPM G




                                                                                                                                                                builds Business bu




                                                                                                                                                                                 F

102 / idealog.co.nz                                                                                                                                                              a




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i d e a l o g i n a s s o c i at i o n w i t h N Z T E




Turning milk
into money
Starting with the high-end consumer, and working back to the cow, a Canterbury
newcomer has turned the traditional New Zealand dairy industry model on its head



S
        ynlait Milk started as a smart idea for          Penno says Synlait kicked off with thorough     need not take years to establish a trusting,
        a primary sector exporter, but with           market research and worked back from there,        successful partnership.
        determined entrepreneurial drive,             figuring out what the consumer wanted and            Synlait used New Zealand Trade and
countered by steady and disciplined                   establishing its operation to meet those needs.    Enterprise’s networks to access other Kiwi
governance, it has grown its annual revenue              “We literally just jumped on the plane and      businesses operating in China and learn from
to $400 million in just four years.                   visited potential customers, refined a sales       their experiences.
  The Canterbury dairy company exploits the           strategy and formed a long-term view of how          Synlait has a coveted major partnership with
region’s abundant pastures, healthy livestock         to cater and develop markets,” Penny says.         China’s Bright Dairy, which is also one of its
and pure water supply to turn milk into money,        “We’ve had the privilege of building the           numerous Chinese customers. But Penno says
creating higher-value products for luxury             business backwards.”                               the global focus on China has left a vacuum in
offshore customers.                                      This is one example of Synlait’s point of       other markets. While competitors have
  Synlait makes nutritional powders that              difference in a dairy industry dominated by        scrambled to establish themselves in China,
directly target global demand for safe, reliable,     farmer co-operatives. The company nurtures         Synlait has picked up opportunities in Vietnam,
protein-rich foods. The leaders of its                a nimble, entrepreneurial spirit.                  the Philippines, Japan, North Africa and the
128-person team based in the small Canterbury            “We pride ourselves on learning very            Middle East.
town of Dunsandel doggedly pursue                     quickly and quickly killing the things that          The Synlait milk facility processes more than
opportunities presented by global mega-trends:        aren’t working.”                                   550 million litres of milk every August to May
China’s emerging middle class, protein demand            Right from its first season (2008/2009),        in milking season. It boasts three leading-edge
to fight global obesity and a particular focus on     more than 95 percent of Synlait’s product          milk powder dryers, one of which is the largest
both nutrition for infants and the swelling           were sold offshore. Today, it exports to around    and most sophisticated infant formula facility in
ranks of the elderly.                                 40 countries.                                      the Southern Hemisphere and can process up to
  Synlait’s products range from calcium-fortified        “Early on in our life, NZTE was enormously      seven tonnes of infant milk powder per hour.
powders for bone health to fully formed infant        helpful in connecting us with companies,” says       As a relatively small company with a tight
formulas designed to mimic mother’s milk, to          Penno, adding that the company’s global sales      cluster of suppliers whose geographic
a sideline in cream products made as a result         strategy is built on a three-way market focus:     proximity ensure a consistent taste profile,
of the powder manufacturing process.                  one-third of its business in China, one-third      Synlait is able to maintain absolute control over
  Chief executive John Penno, a scientist with        in the rest of Asia and one-third in the rest of   the quality of milk supply, milk processing and
an acclaimed career in dairy industry research,       the world.                                         market distribution to guarantee its customers
joined forces with commercial dairy farmers              “China’s the big opportunity for food           absolute food safety, security and traceability.
Ben Dingle and Juliet Maclean to establish            producers, as they fight to feed the swiftly         Penno says this level of product assurance
Synlait. Together Penno, Dingle and Maclean           ballooning middle class and satisfy growing        and accountability is a point of difference for
own the largest dairy farm in the country,            demand for high-quality animal protein. China      which luxury customers are willing to pay.
which is naturally one of Synlait’s 150-plus          is the biggest influence in the market, there’s      Synlait is determinedly focused on higher-
suppliers. Almost all of the company’s milk           no question about that.”                           value products, turning New Zealand milk into
suppliers, with an average herd size of 700              Penno says aspiring exporters cannot hope to    premium luxury goods offshore.
cows, are located within an 80-kilometre              build relationships by email. Solid foundations      “You need to be at the top end of the value
radius of the company’s Dunsandel base.               are built by social interaction, but he says it    chain,” Penno says. “Otherwise there’s no use.”
i d e a l o g .c o. n z / b u s i n e s s p l a n




‘You need to be at the top
end of the value chain,
otherwise there’s no use’




                                                         IN BRIEF
                                              Since operations began in 2008,
                                                 Synlait Milk has grown its
                                                revenue to $400 million, its
                                               supply base to more than 150
                                              farms and its staff to more than
                                              130. Synlait processes more than
                                                550 million litres of milk per
                                                 year to produce a range of
                                                nutritional milk powders that
                                                 are exported to more than
                                               40 countries. www.synlait.com

                                                        CONTACT
                                              New Zealand Trade & Enterprise,
                                                   www.nzte.govt.nz,
                                                      @NZTEnews
Megatrend 4:                                                                                                    For example, New Zealand Trade and
                                                                                                                Enterprise has identified significant




   Sustainable
                                                                                      Global                    opportunities in Chile, where the
                                                                                                                government is expected to support the
                                                                                  investment in                 development of geothermal electricity
                                                                                    renewable


   energy
                                                                                                                generation with US$200 million over the
                                                                                 energy projects                next few years.
                                                                                   will rise from                  In the meantime, New Zealand has also
                                                                                                                nurtured smart sustainable energy start-ups
                                                                                   US$195                       like Aquaflow, which makes algae-based
                                                                                  billion in                    biofuels and the multi-award winning
                                                                                                                Lanzatech, which, among other things,
   How would you like 23,577 percent growth in                                     2010 to                      is doing pioneering research on ethanol-
   three years? That’s what Baltimore-based                                        US$395                       based biofuels.
   Astrum Solar has achieved since 2009,                                                                           Both are targeting the incredibly lucrative

   installing solar heating systems. This makes it                                  billion                     liquid fuels market against a background in

   the second-fastest growing company in the US,                                   in 2020,                     which Bloomberg forecasts that production
                                                                                                                of gasoline substitutes, mainly ethanol, is
   with a current revenue of US$26.9 million                                        and to                      projected to increase from 100 billion litres

                                                                                  US$460
                                                                                                                in 2010 to 190 billion and 300 billion litres in




   A
                                                                                                                2020 and 2030 respectively. The production
            2011 Bloomberg report forecasts that global investment in             billion by                    of diesel substitutes, the report predicts, will

                                                                                    2030.
            renewable energy projects will rise from US$195 billion in                                          double by 2020, reaching 100 billion litres
            2010 to US$395 billion in 2020, and then US$460 billion by                                          from roughly 50 billion today, and will
   2030.Over the next 20 years, this growth will require nearly $7 trillion       Over the next                 double again by 2030 reaching 200 billion
   of new capital. The explosive growth in this sector is backed by huge           20 years, this               litres. This is to meet fuel demands from the
   government subsidies and investment in research and development,                                             transport sector that is projected to rise by
   especially in the US.                                                            growth will                 20 percent by 2020 and 46 percent by 2030
     Mark Hargreaves, partner at intellectual property specialists                require nearly                based on 2010 levels.
   AJ Park, says: “IP development in this space is and will continue to
   be huge. It will become more mainstream.”
                                                                                 $7 trillion                       Aquaflow, as a purveyor of what are called
                                                                                                                ‘second generation’ or ‘advanced’ biofuels, is
     So, do you fancy a slice of that action?                                     of new capital                particularly well-placed for a future in which
     You’d think New Zealand companies that do would have a significant               Source: Bloomberg, 2011   there will be an increasing demand for fuel
   home advantage. About 70 percent of the country’s electricity supply is                                      sources that do not conflict with the stability
   renewably generated from our significant array of hydro-electric,                                            of our climate, nor human food sources.
   geothermal and wind power, all of which we have gained significant
   expertise over the years.
     Fiona Acheson, New Zealand trade commissioner for Malaysia,
   Indonesia and Brunei, says she is seeing this innovative pedigree
   starting to make in-roads there.
     “The current phase of the Indonesian government’s power
   infrastructure programme is dominated by geothermal energy,” she
   says. “The Indonesian government aims to have geothermal energy              Plugging in across the Tasman
   provide at least 9,500 MW, or five percent, of the nation’s electricity by   Dan Taylor, New Zealand trade commissioner in Australia, says
   2025, and has also selected geothermal energy as one of its major            Australia provides an interesting and potentially lucrative market for
   sources of alternative energy.                                               New Zealand companies involved in sustainable energy.
                                                                                “These opportunities relate not just to energy generation, but also
     “Geothermal New Zealand, a consortium of 40 plus New Zealand               energy-efficiency solutions. Australia has a Mandatory Renewable
   companies with a range of expertise in geothermal development, is            Energy Target (MRET) of having 20 percent of the electricity
   working with Pertamina, the Indonesian’s state-owned oil and gas             supply coming from renewable sources by 2020, and achieving this
   company, to scope opportunities in consultancy as well as engineering,       target will require major investment over the next few years.
                                                                                “Meanwhile, Australia has significant unharnessed renewable sources
   procurement and construction contracts.”
                                                                                where New Zealand has, or is developing, capability, including wind,
     Other major sites of activity are China, the US, India, Germany and        solar, geothermal, wave and biomass. New Zealand will be looking to
   Brazil, while renewable energy investment is also gathering pace             commercialise solutions around these sources in the near future and
   across Africa and Latin America as companies take advantage of the           funding support is available at both state and federal levels.”
   relatively abundant natural resources and growing domestic demand.



106 / idealog.co.nz
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
The Idealog guide to megatrends
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The Idealog guide to megatrends

  • 1. Megatrend 1: The hyper-connected world Our increasing online omnipresence is radically changing the way we do business on a global scale. Here’s the lowdown on some cyber-age effects W ell, if you’re so out of the loop that you need us to tell you about the scale and rate of social media expansion worldwide, then you should consider ‘To do business in a hyper-connected retirement. But exporting is partly about the Twitter has 140 world you need to be more adept at numbers, so here are some for you to chew on. million users and Twitter has 140 million users and 400 million 400 million evaluating, meeting and responding messages sent each day. Facebook currently has messages sent to markets, so that people can find 955 million monthly active users and 552 million each day what you do and interact with you’ use it every day. That makes Twitter a potential marketplace about the size of the population of – G r e n v i l l e m a i n, m a n ag i n g d i r e c t o r o f Russia, and means Facebook has one and a half c u s t o m e r e x p e r i e n c e d e s i g n c o n s u lta n c y DNA times more users than the population of the US Facebook – the world’s third largest country. currently has 955 And there’s more: these websites transcend million monthly national boundaries, even when those active users, and boundaries are otherwise heavily defended. 552 million use it But, as with all these mega-trends, rapid daily growth also brings with it intense competition. It’s all too easy with high-tech markets to That makes Twitter a assume that they are something we ‘do to’ the potential marketplace emerging economies of the world, when in fact about the size of the these other countries are rapidly building their population of Russia own capacity. The Chinese software industry, and means Facebook for example, has exploded in the past decade, has one and a half with revenue reaching US$11.1 billion in 2010, times more users than growing at a rate of about 14 percent a year from the population of 2007. There are now more than 500 million the US people on Renren, China’s most active social network. It has 47 million registered users and 31 million active users per month. Current China’s reports are even charting rapid expansion in ‘developing’ regions where you might not most active social necessarily expect it, like Latin America. network, Renren, The result is a rapidly and radically changing has 500 million world, in which customers are increasingly users, 47 million managing their own service experiences on registered users, their own terms. In this world, monster-size and 31 million markets can be born almost overnight and then active users almost as suddenly change into something else every month that operates by a different set of rules. This is Grenville Main useful to understand for every business wanting 88 / idealog.co.nz
  • 2. Idealog guide to exp orting to use the internet, but it is absolutely vital for businesses that want to make their mark by helping to shape its future. Intellectual property TradeMe is our localised ebay, but where is our ebay, a company that goes global on its big idea in this space? While we salivate at the billions made by the likes of Mark Zuckerberg, or in the internet age Google founders Larry Page and Sergey Brin, we should also be You may well not be paying to read this right now, it’s up on the web aware that behind and around those superstars there is a whole somewhere, or somebody copied and pasted it for you. Check your music industry sector full of folks making it big, if not colossal, behind collection, your videos, and Google Samsung and Apple’s billion-dollar bunfight brands you may never have heard of. over smartphone designs and you will be aware that intellectual property in This is partly because a lot of the action happens business-to- today’s inter-connected world is about as safe as opening an unattended bottle business. According to a survey by the Concentrate marketing store with an honesty box. But rather than abandoning legal protection company, 88 percent of Kiwi high-tech businesses are selling to altogether, or shying away from going global online, Idealog has some advice other businesses, while business-to-consumer makes up only 8 from Mark Hargreaves, partner at intellectual property specialists AJ Park. percent of sales and business-to-government only 4 percent. So how do we get in on the action? Grenville Main, managing Q To what extent has intellectual property control evolved in the online director of customer experience design consultancy DNA, says: sector in the past few years? “There are a lot of exporters and marketers who are still making A The law is moving slowly compared to online business models. The speed at that transition – from how we used to do things in terms of which copyright works, in particular, can be published and distributed, which product, distribution and marketing. But how we do this in a makes it difficult for copyright laws to keep up. Businesses are adapting though, hyper-connected world has become markedly different. You have and software as a service is a fantastic example of using the network effect of to be more adept at evaluating, meeting and responding to the internet to grow markets while keeping IP controlled as a trade secret. markets, so that people can find what you do, and interact with Meanwhile, some businesses are taking the view that the opportunities available you. You also need to be adept at expanding and evolving markets justify exposing them to more risk of counterfeiting. in a much smarter and more agile way. Hyper-connectivity makes agility a requirement, but it also enables and facilitates it.” Q Does the speed and flexibility of online business present specific A lot of this is more of an art than a science, Main explains: challenges to IP protection? “There are trends, things you can rely on and patterns of A It makes patenting more difficult to manage because of the speed at which behaviour that are evolving so there is a lot to draw on. But new products and services are brought to market. I think branding assumes there are some spontaneous and serendipitous things that more importance for the same reason. Your brand can reach global markets really go off. What is great about this is that unbridled overnight, so ensuring it is protected is vital, given that so much product creativity, opportunity or innovation out of leftfield is still a differentiation online is about branding. vibrant opportunity – and much of it is potentially quite commercial. When we look at the local guys who have done Q Has the scale of big players like Google and Facebook distorted the good stuff, it has a hell of a lot to do with appetite and ability, market for internet service businesses, where they simply want to get to sure, but you can’t help but think that timing has had a hell of a the point of selling out to one of the big guys? lot to do with it, too. This means we have to be building an A I think most start-ups have one eye on exits, regardless of whether they are in army of creative thinkers ‘attuned toward opportunity’. Within the internet space or not. The growth of major players in this area is good for the entrepreneurial base in New Zealand we need to build an local businesses if it means they can exit and plough their capital back into innovation engine to be the place you will start to drop in the new ventures. right ideas – ideas that are what the world needs and wants.” There are already signs that Kiwis are finding the in-roads, Q Is it hard for New Zealand businesses to pioneer ideas in this space, especially in the US. Peta Conn, New Zealand trade without having your IP bought or stolen? commissioner in New York, says, “New Zealand is punching A I actually think the internet levels the playing field. Sure, it means ideas and above its weight in the hyper-connected world. Both Silicon designs are spread more easily and can be ripped off, but it also means those Valley and New York are witness to an influx of New Zealand ideas and designs are reaching large markets that New Zealand businesses companies setting up to be closer to their customers. would have previously struggled to tap into. I know a number of local companies Entertainment is also a focus of development, with NZ expertise who receive unsolicited interest in their products or their business simply cutting through areas like gaming from TV series and films, and because more people are aware of what they do. The trick is to design a product customised book soundtracks. The calibre of technology coming or a process that allows you to retain critical pieces of the puzzle offline. out of New Zealand is competing successfully on the world Customers and competitors can whet their appetite online but you keep critical stage, and fuelling our reputation for innovation.” IP in house to retain competitive advantage. November-december 2012 / idealog / 89
  • 3. The end of Succeeding in the the pipe dream online marketplace – or how to organise for chaos One thing that might limit our ability Timing is everything: good ideas dominate on to exploit hyper-connectivity is if New a global scale in the Zealand remains significantly less hyper-connected world, so you will need to create hyper-connected than its rivals something genuinely new very quickly. Don’t get wedded to an idea too early, That is the long-term threat in the wake of Pacific Fibre’s or stick with it too long. inability to raise the $400 million it needed to build a new 13,000-kilometre high-speed fibre-optic cable connecting Think globally: it’s the worldwide web, yeah? With New Zealand and Australia to California. Interestingly, the right idea, skills and alongside familiar complaints about a lack of investment personnel you can find cash in New Zealand and question marks over the viability markets big enough to of competing head-to-head with the existing Southern secure a happy retirement in the most unlikely places. Cross Cable, there was also a hint that the project had fallen You can also be blind-sided foul of diplomatic wrangles where the US was by competition if you don’t uncomfortable with Chinese investment in the project. stay alert. Government ministers in the throes of pushing through the $1.5 billion ultra-fast broadband network by 2016 There is no point trying have said there is no lack of capacity in the existing to compete with something that is already massive single cable, and Chris Brace, solutions architect at and hyper-connected. If TelstraClear, agrees. But Rod Drury and Sam Morgan, who are behind Pacific Fibre, suggest that the you doubt this, go and check the activity on your The Auckland Waterfront development of Kiwi online offerings may be hobbled by a lack of bandwidth and the high cost of international Google+ account. Innovation Precinct data in New Zealand. Integrity is the driving The very fact that we have all heard of Silicone Valley force of hyper-connected Paul Brislen, chief executive of the Telecommunications business. You need to have is testament to the value, ironically, of having Users’ Association of New Zealand, says: “We have the all your ducks in a row for hyper-connected businesses close together in an Southern Cross network and that’s our lot, and Southern an impeccable service old-fashioned geographical sense. This is the kind of Cross will eventually need to be replaced. Given a 20-year that’s totally in line with success that Auckland Council is trying to replicate in your brand philosophy. lifespan, I’m guessing here, we’re already rapidly If you screw up, or hide its rejuvenated Wynyard Quarter area. The idea is approaching its use-by date and planning for ‘Son of something, you will be that the precinct will consist of residential, retail and Southern Cross’ must be well advanced at the head office found out, and word office spaces where a cluster of companies, backed by in Bermuda. travels faster online than government and business service providers, will “The real tragedy in all this is that we, of all the nations anywhere else. accelerate the growth of high-tech ideas into on the planet, stand to gain the most from the digital commercial success, and of new and emerging Get good old-fashioned economy. Instead of shipping our goods slowly and at business advice. The businesses alongside more established companies great cost to distant ports, we are as close to our markets online world is not Oz or with an eye on exporting. as anyone else. We need more competition on the Narnia. No matter how The project has announced that it has already had international side of the equation to match our investment whizz your new idea is 47 registrations of interest from companies, with 3D it will still need boring in the domestic setting. Without it, we’re left with a modelling company Nextspace claiming first mover things like funding, a monopoly provider and no matter how well run a decent advisory board, status after shifting into the upstairs section of a monopoly is, it’s still a monopoly.” an accountant and sail-making company on Pakenham Street West. Brislen has called for government and superannuation legal support. Grenville Main, managing director of customer support for an alternative scheme, and fears we might experience design consultancy DNA, reckons the idea otherwise be doomed to create ‘the world’s fastest Make friends and ask makes a good fit with Kiwi commercial culture. them stuff. No idea is intranet’. If the Southern Cross cable breaks for any so new and clever that “If you look at the clusters and groups of smart, reason, which is not unheard of, we might all find somebody else hasn’t like-minded businesses in New Zealand, we are pretty ourselves trying to contact cloud services on dial-up. tried something at least good – we aren’t that precious. If you own something David Dickinson, service delivery consultant with slightly similar before, or you want to get the benefit from it, but there is this is not trying something TelstraClear, adds: “I think that costs are a bigger issue collegiality where there are guys who are trying to get on hyper-connected to it here. We recently saw some downward price pressure right now. Talk to industry just like you, and they are willing to help you. They are come to bear under threat of competition in that market. insiders and share problems quite open to sharing their successes and always open to It will be interesting to see what happens now that the and solutions. helping other people build the critical mass of people threat is no longer there.” who want to live here but work all over the world.” 90 / idealog.co.nz
  • 4. Idealog guide to exp orting The land of the long list of that many of the services advertised are actually quite different when you read the cloud-based companies? small print that most of us ignore. “It may also be important to consider where your data is actually domiciled. For example, if you are using something like Microsoft Office First there was the internet, then there was platform (we call it the Marketplace Portal), 365, you may find that all the data is on servers the cloud. Surprise! It’s the same thing – it has choose the server spec they need and be using in Singapore, which may have very different just grown up and got a lot more businesslike. it within hours. This is ideal for businesses privacy laws than the ones you are used to. Chris Brace, solutions architect at with seasonal data loads, who want to scale You also don’t want to wake up one morning to TelstraClear, lays down what this could quickly to provide a development environment, find there has been a security breach, blackout mean for your business. “Cloud-based services or who need additional server space for big or system shutdown that may cripple are essentially elastic; they can enable data analysis. They unsubscribe the server your business.” businesses to scale and grow very quickly. So if when they are done – it’s a pay-as-you-go Dickinson agrees: “Any environment is only you have a web-based sales business and you environment that is really going to set the as good as its weakest point so I would suddenly take off and find your e-commerce standard for some time caution against keeping critical business data site is overwhelmed, you can go online and to come.” on internet-based services. You don’t know purchase the use of extra infrastructure to cope All the whizz-bangery won’t make up where they are being hosted, they typically with it very quickly. for a bad idea or a shonky business model fall under US legal jurisdiction and there is “In the past, it might have taken months to though, so the cloud should still be a tool a long line, literally, of exposure between you install what you need, whereas now it is more you reach for after you have done the hard and your services that is vulnerable like a matter of hours. And as soon as you have yards commercialising the hell out of to attack.” finished with the cloud capacity, you can shut it your proposition. This means having a back-up is as important off again.” And however much you may like to believe in for the big internet players as it is for your David Dickinson, service delivery consultant the magic of Google, there are still significant personal computer, and reading the small print working with TelstraClear, explains. “Someone risks that need to be considered. is just as important before clicking the ‘I agree’ needing another server, maybe only for a Brace explains: “Security is obviously an button as it is on signing a contract that’s been month or two, can now log into our cloud issue. Also, legal experts are now pointing out drafted by your own legal team. November-december 2012 / idealog / 91
  • 5. Kiwi companies kicking it online The Hyperfactory Derek and Geoffrey Handley set up shop as The Hyperfactory in 2001, forming a combined agency and technology company for advertising to mobile devices. In the years that followed the irrepressible Derek picked up a slew of awards, including 2009 Ernst & Young Young Entrepreneur of the Year, being rated one of the 40 Most Influential People in New Zealand Telecommunications in 2005 and 2006, and the 2006 Pricewaterhouse Young Achievement of the Year. He also received a nomination as one of the National Business Review Top 60 Innovators of 2007, and was named as a New Zealand 2011 Leader by the Sir Peter Blake Trust. More importantly, the company picked up a range of top-drawer clients including Kraft Foods, Adidas, L’Oréal and Coca-Cola, and then sold out to US media company Meredith for something in the low seven figures. It has now closed its New Zealand operations in favour of a new head office in New York. kkthehyperfactory.com Group Commerce With print media bleeding away onto portable screens, Otago University- trained New Zealander Jonty Kelt, co-founder and CEO of New Carnival Labs York-based Group Commerce, is helping to make online publishing pay Guy Horrocks tuned in to the social media global mega-trend for some big names, including CBS, The Daily Telegraph and the New when he co-founded Polar Bear Farm, the world’s first iPhone York Times. With 120 staff, the firm provides the smarts and technology application development company, even before the App Store to power and curate media e-commerce and deal websites affiliated to was up and running. major brands. It has just secured an additional US$21 million of capital Now in his late 20s, he says it made a huge difference being funding to fuel its expansion into Europe and has reported a monthly first to market. With his latest venture, Carnival Labs, he now growth of 30 percent in the past year. has the ear of major US brands, and is currently coming up with kkgroupcommerce.com the goods for global players such as Dreamworks, Kraft Foods, Intel, Estée Lauder, Pepsi and Nestlé. The firm originally Xero specialised in casual gaming, entertainment and advertising Wellington-based Rod Drury’s cloud-based accounting software apps, and now employs 10 full-time staff in New Zealand. company is listed on the NZX and is within a sniff of getting a major Horrocks is now the company’s roving ambassador, having percentage of a gargantuan market. Looking to top 300 employees in expanded into the US, and is currently preparing to make New the next few weeks, it has not pumped profits out in its ongoing York his permanent home. He reckons that most of the US establishment phase, but certainly looks to be making a serious challenge action for his firm has now shifted from Los Angeles to New on its offshore rivals. York, but the investment cash is still in Silicon Valley. kkxero.com The firm’s latest brainchild is the Core Push mobile engagement platform. It includes a groundbreaking real-time Rakon location-based analytics dashboard and aims to deepen the Most consumers will probably never have heard of the makers of connection between a brand’s app and its customers. Carnival crystal-based frequency control components for electronics, but its Labs already has 10 large brands using the system to send products are helping much of our everyday gadgetry, such as mobile around four million notifications a month to customers, and is phones, telecommunications and GPS systems, to function. From its set to open the taps wider in the next couple of months. beginnings in a Howick garage in 1967, sales revenue for the past financial “Our turnover is in the low seven figures (US dollars) this year was $178.3 million. In August the company sealed a deal that will year, but is growing around 200 to 300 percent on last year, quadruple its sales to Chinese electronics giant Huawei to US$56 million. which is exciting,” Horrocks says. Last year, Rakon UK Limited also picked up the coveted Queen’s Award kkcarnivallabs.com for Enterprise. kkrakon.com 92 / idealog.co.nz
  • 6. Idealog guide to exp orting Megatrend 2: Healthy ageing Baby boomers thought that 79% of TV advertising and 89% of online and the baby advertising appeared to be aimed at somebody younger boomers than them Sou rc e dy :A2 Stu 010 Go mer ogle /Nielsen Consu The term ‘boomers’ for those born between 1946 and 1964 is such a Iain McLeod, BNZ national manager, fitting one on so many levels. This significant jump in birth rates at the international trade, offers further insight into the baby boomer brain: “The baby boomers are end of World War II, combined with an era of relative world peace, still the funders of the industrialised world but natural resource abundance and technological advancement fuelled they are shellshocked by the events in 2007 and an era of unprecedented global affluence. The guns stopped booming, 2008. A considerable number have lost their populations boomed and then the economy boomed retirement savings and are remaining in the workforce. And those who are still financially S secure are struggling to find a safe haven for peak of a global phenomenon. According advertising and 89 percent of online their investments as people endeavour to de-risk to the United Nations, the number of advertising appeared to be aimed at somebody their portfolios and look for investments with persons aged 60 or over increased three younger than them. Some analysts suggest this capital security. and a half times from 1950 to 2009, to 737 is due to the average person working in “They are more conservative and risk-averse million. By then there were 12 countries with marketing being much younger than the baby now in OECD countries, but in Asia they are more than 10 million people aged 60 plus, boomers, or that marketers make incorrect still expansionary and tastes and wealth-based including China (160 million), India (89 assumptions based on this generation. needs are expanding exponentially. It is still an million), the United States (56 million), Japan We are not, ahem, commenting on the age of affluent group with far greater demands than (38 million), the Russian Federation (25 Grenville Main, managing director of customer previous generations, mainly because of the million) and Germany (21 million). By 2050, experience design consultancy DNA, but he relative health of this population versus the population aged 60 or over is expected to sees the influence of baby boomers everywhere previous generations. They live longer, have triple, reaching a total of two billion. he looks: “It’s a trend in direct terms but it also greater expectations and tend to have more That’s a hell of a lot of grey spending power. has a benefit and impact for everyone. If you disposable income than other generations.” Last year, the overall spending by the 116 are trying to target them as an audience you are According to Main, this profile makes them million US consumers aged 50 and older was going to have the potential for a longer well worth targeting if the product or service $2.9 trillion, up 45 percent in the past 10 years. relationship with them than you’ve ever had is right. “What people are grappling with is Meanwhile, the 182 million people younger before, but on the other hand they are that they, like lots of other consumers, are than 50 spent $3.3 trillion last year, up just 6 definitely more discerning and may switch out starting to want to take the control back from percent during the same decade. on you. They are not like the generation above the businesses supplying products and Mark Hargreaves, partner with intellectual them, which is more conservative and tends to services,” he says. “And this can be destabilising property specialists AJ Park, says it has stick to relationships. Baby boomers have for businesses, because you are not quite sure triggered growth in certain sectors: “The changed the most in generational terms and where they are going to go next and what is pharmaceutical industry has developed will basically suit themselves more than ever driving the decision-making. That’s where significant IP in the face of demand from baby before, so if you aren’t providing something insight builds toward intimacy, which is now boomers and ageing populations. We only need good then they will move on.” and essential factor for all businesses.” to look at Viagra sales for that!” What’s weird is the extent to which this massive cohort of the world’s population feels ‘Baby boomers have changed the most in generational terms ignored by marketing folks. Blog after blog on and will basically suit themselves more than ever before, so if the internet says it, and a 2010 Google/Nielsen you aren’t providing something good, then they will move on’ Consumer Study found that 79 percent of TV – – Grenville Main, MANAGING DIRECTOR OF CUSTOMER EXPERIENCE DESIGN CONSULTANCY DNA November-december 2012 / idealog / 93
  • 7. iP is about increasing potential If taking your idea, invention or business offshore is in Over the last century, we have worked with clients to your strategy — then the right IP advice will increase recognise great ideas and the best ways to protect your chances of success. and commercialise them globally. Our team of commercialisation specialists and IP litigators can help Making it overseas takes more than a good idea and you understand the laws of your destination country, the will to succeed. At AJ Park we not only have a develop global commercial agreements and cover clear understanding of intellectual property laws in patent or trade mark protection, giving you and your New Zealand, but know what your rights and obligations business the best chance of making it overseas. are when the rules change for another country. For the right IP advice to help turn your Kiwi business AJP10360_IA 0800 257 275 I www.ajpark.com I New Zealand + Australia into a global asset, call us now. AJ Park is about iP • intellectual property • igniting passion • ideas pervading • innovation protected • integrated processes • intelligent people • increasing potential
  • 8. l Idealog guide to exp orting Kiwi companies bringing it NZTE’s Health High Impact Programme This programme is focused on accelerating the growth of New Zealand health technology and services companies. It to the baby supports business to target niche markets, build relevant company capabilities, develop reference sites and evaluate new market opportunities. It includes working with a network of industry organisations, universities, researchers boomers as well as the Ministry of Health, the Ministry of Business, Innovation and Employment and multinational enterprises. To find out more, and for profiles of key health markets, go to nzte.govt.nz. New Image Colostrum: the first milk produced by cows that have just calved, is Fisher & Paykel Healthcare the latest superfood to take the health-conscious world by storm. In the last financial year, F&P Healthcare made a healthy net profit of Auckland-based NZX-listed New Image shifted $74.7 million worth $64.1 million out of its range of products and systems for use in of the stuff last year. Taiwan and Malaysia are key markets, sucking respiratory care, acute care, and the treatment of obstructive sleep up $55.9 million of New Image products. Unfortunately, a couple of apnoea. However, a bidding war in the US looks set to reduce incomes ailing brands and failed business partnerships, combined with the and take the shine off the F&P market in the years to come. relative strength of the New Zealand dollar, helped the company kkfphcare.com lose $6.1 million last year. However, according to senior managers, a restructured New Image is now in a good shape. Orion Health kknewimageasia.com The company that took out central Auckland billboards to brag about recruiting throughout the recession has built an enviable offshore Ecoya market for its eHealth software, most notably in the US. The company Based in Botany Bay, Australia, candle and skincare company Ecoya now has offices in the US, Canada, United Kingdom, Spain, Australia, is headed up by (among others) New Zealand’s own inimitable Geoff New Zealand, Japan, Thailand, Singapore, Dubai and France. It also Ross and Rob Fyfe. After swallowing rival skincare company Trilogy buddies up to heavy-hitting partners, including Accenture, Philips, last year, the company turned its first profits. It now makes more Cisco, IBM, Agfa and Oracle Corporation. than three quarters of its sales offshore and is focusing on expansion kkorionhealth.com into Asia, including an exclusive deal with a new Japanese distributor, the Kinu Corporation. Comvita kkecoya.com.au Comvita’s busy bees are building a global reputation for natural health and skincare products, including medicinal ‘Active UMF’ honey, with a $35 million chunk of its annual sales now happening in Asia. This has helped the company to notch up a 12 percent growth this year, and it also shrugged off a $71.6 million takeover bid from Singapore-based food conglomerate Cerebos. kkcomvita.co.nz Les Mills International Right now thousands of people are probably gyrating to one of Les Mills’ trademarked group fitness sessions, such as Body Attack and Tech-savvy boomers driving e-health demand Body Jam. The pioneering Kiwi fitness firm now exports its exercise- A report from KPMG and the Manchester Business School, to-music programmes to 80 countries, where 90,000 certified Accelerating Innovation: the power of the crowd, suggests that ageing of the baby boomers, and this generation’s increased comfort with new instructors teach classes through 14,000 licensed gyms and clubs. It has technologies, is driving the demand for openness in healthcare sold its patented workouts into about 11 percent of the world’s health systems. Jan De Boer, global health IT lead for KPMG in the clubs and employs 130 people across the group (80 of those are based Netherlands, says: “Today’s smartphone user is tomorrow’s patient in Auckland). This all adds up to seven figure revenue and a lot of who wants greater access and control of their healthcare and their medical records.” sweaty sportswear (which Les Mills now sells, too). kklesmills.com AJP10360_IA November-december 2012 / idealog / 95
  • 9. Who wants to Aged between 48 and 66, baby boomers are looking forward to live forever? a long retirement in the active and affluent style to which they have become accustomed, and they don’t want a nuisance like ill health spoiling their fun. That’s why they are spending a lot of what would have been their children’s inheritance on cosmetic surgery, vitamins, health foods, exercise, alternative medicines and a magnitude of therapies According to the market research firm Global Industry Analysts, the boomer-fuelled consumer base seeking to keep the dreaded signs of ageing at bay will push the US market for anti-ageing products from about $80 billion now to more than $114 billion by 2015. Main says: “That suggests the one industry that will have really overtly benefitted from this block of people because they do not want the party to end. Defying ageing in our own minds as a group of people more and more, they don’t seem to be wanting to grow old. That is probably the one thing that defines them. The key insight, we think, is around control, flexibility and individual choice being held longer – it’s not just about how you look, it’s how you truly feel.” But Hargreaves warns of the regulatory complexities of dabbling in this marketplace. “From an IP perspective it can be challenging identifying patentable aspects of natural health supplements as opposed to pharmaceuticals, or even nutraceuticals with proven health benefits. It is likely that, as regulatory hurdles increase for these types of products, there will be more IP developed around them because more R&D and testing will be required for regulatory approvals. “At present, these products are regulated in New Zealand in an ad hoc way, which does present difficulties for manufacturers who may need to consider a range of legislation. This is compounded if the product is exported into other markets where different regimes exist.” In short, think difficult, time-consuming and expensive, but with the potential for massive payoffs. Hargreaves’ advice is to seek out advice of those who have trodden this road before.
  • 10. IN CHINA, A BUSINESS EXECUTIVE MAY CONSULT THE STARS, OR WAIT FOR A ‘LUCKY’ DAY BEFORE MAKING A DECISION. TRUE FALSE If you’re thinking about exporting to China, there’s no room for guesswork. New Zealand Trade and Enterprise can give you the tips and tools you need to move your business into this market; from country overviews and language and culture, to sales and marketing suggestions. That way, you’ll know that the executive you’re dealing with hasn’t left for an impromptu holiday, he’s just waiting for the right time to make his decision. Visit www.nzte.govt.nz/answershere or call us on 0800 555 888. Get the answers here. Succeed over there. T&E0028/B
  • 11. i d e a l o g i n a s s o c i at i o n w i t h A J Pa r k Crushing the counterfeits Whether it’s Armani, Adidas or Anchor, well-known brands are all subject to imitation. All exporters need to be wary of their trade Intercepted counterfeit Anchor goods. marks being ripped off and make moves to protect their valuable IP H andbags, watches, sunglasses and “In this case, we were able to get a really electronics are among counterfeiters’ clean outcome. We worked with Carolyn Green favourite products. But virtually and Gavin Scott from Fonterra’s legal team to anything can be faked and passed off as force the counterfeiter to agree to destruction a recognised and respected brand. of the fake products. We then arranged for Often these rip-offs are found to be small- Fonterra’s local agent to destroy all of the scale opportunists, but internationally the counterfeits – that was all done over a period trend toward large-scale counterfeiting of two days with the help of a giant digger. The The destroyed continues to grow. In late 2011, the world’s counterfeiters had actually filed for their own counterfeits. largest dairy products exporter, Fonterra, trade mark, but they accepted that they were discovered and foiled a large-scale attempt infringing Fonterra’s marks and gave away to counterfeit one of its flagship products, their application.” Anchor milk powder. This case demonstrates how important it The large shipment containing tens of is to have your own trade mark protection in thousands of tins of milk powder labelled place and to enforce it, Potter says. And ‘Anhor’ and bearing a very close likeness he’s not just talking about big organisations – to Anchor’s famous red anchor logo was exporters of any size with a system or product intercepted by Fonterra’s representatives that risks being copied should protect their in the Middle East. intellectual property. Carolyn Green, Fonterra’s Auckland-based trade mark manager, says the counterfeit products were on their way from the United Arab Emirates to Somalia but were found before they left their port of origin. “We’ve had a few instances where we’ve been advised through Customs of infringing products, but this was a particularly big one,” says Green. “Anchor is one of our biggest brands and is very popular in that part of the world, so it’s a major target for counterfeiters.” Intellectual property expert AJ Park has been advising Fonterra since the dairy co-operative formed in 2001. Partner Alan Potter and senior associate Emma McBride work closely with Carolyn Green to help safeguard Fonterra’s valuable trade mark rights. “Fonterra sends its products to more than 140 countries around the world,” says McBride. “Because of all the valuable brands Fonterra uses, it has a significant registered trade mark portfolio, which we help to manage.
  • 12. i d e a l o g .c o. n z / b u s i n e s s p l a n “It’s about taking the time to work out where cost-effective. When you’re exporting, you you think you may be at risk and getting need to have your trade mark registrations and protection in places close to your markets, Customs notices in place. IN BRIEF where people might want to counterfeit your “If you start off with weak rights because Fonterra is the world’s largest diversified products,” says Potter. you haven’t done your homework, things milk processing company and one of the “You may not always be able to register every always end up more complicated.” world’s top producers of dairy nutrition for mark in every country, but you need to at least Green is in daily contact with AJ Park to export, including milk powders, cheese and butter. The co-operative sells its products to think about it. Exporting branded goods help protect Fonterra’s trade marks and to more than 100 countries. Intellectual without trade mark protection is a bit like manage cases like this one. She says the input property expert AJ Park has been working running an uninsured business – it’s all fine and advice she receives from both Potter and with Fonterra since it was formed in 2001 until something goes wrong, then you wish McBride is extremely valuable. and recently helped the company with a large counterfeiting case of Anchor milk you’d put adequate insurance in place.” “AJ Park is the liaison between Fonterra powder from the UAE. Potter says that for smaller companies, it’s and our lawyers in various countries and always a risk assessment – how big a risk are maintains Fonterra’s trade mark database. CONTACT you willing to take? We couldn’t do what we do without them. To find out more, contact: All exporters need to turn their mind to the Sometimes we’re in touch several times a day. AJ Park 0800 257 275 risk they’re taking. We talk about IP protection strategies across www.ajpark.com “In this case, Fonterra had its registered our various markets; and when things like this protection in place, which led to a good counterfeiting situation happen, we work as outcome that was both quick and very a team to deal with it.” L-R: Gavin Scott, Carolyn Green, Emma McBride and Alan Potter.
  • 13. Megatrend 3: Feeding the world’s middle classes You know all those years we have been calling huge swathes of the globe the ‘developing world’? Well guess what: a lot of them have developed. And as a result, now may be a good time for New Zealand to re-evaluate our position in the world economy. Experts in the field tell you how C hina is the most obvious example, where it is Mark Hargreaves, partner at intellectual property reported that wages have quadrupled in the specialists AJ Park, agrees, but adds that global supply is past decade and the World Bank estimates GDP already rising to meet this new demand: “There are a lot will match the US by 2030. But it is also happening in of global players developing protein supply which will Brazil, where the Fundacao Getulio Vargas economic compete with our dairy and meat exports long term. think tank estimates that 40 million people have joined Ultimately, our competitive advantage is more likely to the ranks of Brazil’s middle class between 2003 and lie in high-quality, high-value food and ingredients 2011. And in Africa, the African Development Bank says produced in a clean environment. We have to strive to the middle class rose to 313 million people in 2010, ‘New Zealand produce that high-quality product and compete on which is just over a third of the continent’s population. leads the world in quality and brand. Perhaps one of the biggest Then there’s Indonesia, where Japanese banking exports of dairy competitive risks is that we lose our quality reputation, group Nomura reports that the middle class – those with a disposable income of at least $3,000 a year – now and sheep and is a meaning we’re reduced to competing on price, which won’t be easy long term.” numbers about 50 million. major exporter of For the time being we appear to be holding our According to New Zealand Trade and Enterprise, half beef, seafood, and ground, but value-added propositions such as Burger a billion people in Asia currently earn ‘middle incomes’. kiwifruit. But Fuel, or the Dairy Collective’s successful expansion into By 2020 that will treble to 1.7 billion, and by 2030 the figure will be 3.2 billion. And according to The when we consider the UK, would seem to be the way to go, rather than sheer volume. Economist, for the first time in history, more than that New Zealand Grenville Main, managing director of customer half the world’s population could be described as is a similar size to experience design consultancy DNA, explains why we middle class. Italy, and Italy need to play it smart. One of the main things these people spend additional “Even our big companies are tiny on a global scale. money on is food. At the bargain bucket end of the feeds its own I don’t think we are scratching the surface on what this market KFC is currently opening a new outlet in China considerably could be as a growth opportunity. That said, we are almost every day, with thousands springing up all over large population small and we are having trouble scaling up in all the the country. New Zealand’s own Burger Fuel is also expanding into the Middle East, with a combination of and exports twice established sectors – whether it’s through a lack of talent, funding or resources. When you look at dairy, the halal certification and a brand based on high quality and as much food and drain on waterways and the impact on agricultural healthy eating. Alongside stores in the United Arab beverage as growth potential – there is only so much headroom left.” Emirates and Saudi Arabia, the company has also New Zealand, He looks to examples like Leitissimo in Brazil, where starting flipping patties in Iraq, and is looking to add Libya to its post-warzone market share. According to a there is a sense a Kiwi dairy team has set up a successful New Zealand- style dairy farm (see Idealog #34), hooking up our report by the Carnegie Endowment for International that we could be country’s know-how with their cheap land, labour and Peace, their plan for dishing out 100 percent pure New doing more’ burgeoning market for fresh milk. Big players such as Zealand ground beef in one-third pound slabs makes – – M i k e A r a n d, Federated Farmers, Fonterra and PGG Wrightson all good sense. The report states: “Demand for protein is New Zealand Trade have similar projects on the go in South America and expected to expand along with the global middle class, Commissioner, across the globe. which may be as large as 600 million people in G20 Shanghai Fonterra is currently planning to create 25 new farms developing countries.” in China alone, at a cost of $1 billion, in an attempt to s 100 / idealog.co.nz
  • 14. Idealog guide to exp orting Indian, Inc Indian food now rightfully receives a warm welcome almost everywhere in the world, but Say hello New Zealand tucker is slowly getting its own to halal back, as the subcontinent’s tastebuds seek out According to a recent estimate, 23 percent of the new flavours backed with an increasing ability to global population, or 1.57 pay top dollar for them. billion people, are Muslims, Richard White, trade commissioner to New with a massive and rapidly Delhi, India, says: “Wine is not a traditional growing Muslim population beverage of choice in India but demand is steadily among our near neighbours in South East Asia. Halal in growing, driven by increasingly international the Muslim faith is defined consumer tastes. New Zealand labels are by the Quran as ‘allowed’, positioning themselves to take advantage of growth ‘permitted’ or ‘lawful’. in the Indian market, leveraging their international To be halal, certain activities must be done in reputation through active promotional activities accordance with a specific with their local distribution partners. set of rules and guiding “New Zealand apples are also becoming principles. This includes the increasingly popular in India. This is on the back prohibition on consuming of a strategy by the Kiwi apple industry dating certain animals, including pork, intoxicants such as back to the 1990s to work closely with growers alcohol and blood or blood and marketers in India. As a result, New Zealand products. It also stipulates was the first country allowed to export apples to methods of slaughtering for India. Consumer demand is growing steadily.” animals that are to be eaten. The good news is, if you Storage, transport and distributions networks KFC is currently opening a new outlet in China on an almost get halal certification, you in India still need to work to help make importing daily basis, and the middle classes are flocking to the feed. gain access to a massive fresh produce really fly, but here, too, NZ firms export market at the have sniffed out an opportunity. exclusion of companies that have not. Kiwi companies Fiona Acheson, trade commissioner for Malaysia, helping to feed Indonesia and Brunei, says halal food markets are of growing importance to the seven billion New Zealand. “In 2011, Indonesia, Malaysia and Singapore were Fonterra among the top five export destinations for halal ‘Wine is not a traditional The big boy on the block is still a flagship exporter both in terms of its size and in its certified meat. Included in New Zealand’s top 10 export beverage of choice in India but R&D prowess. destinations were China, demand is slowly and steadily kkfonterra.com South Africa and France. “And the growth in the growing, driven by increasingly global halal market, which is international consumer tastes. Aotearoa Fisheries currently estimated at As one of New Zealand’s largest seafood US$2.3 billion, is not New Zealand labels are businesses and one of the sector’s largest confined to meat. Fonterra’s exports to Indonesia and positioning themselves to exporters, Aotearoa Fisheries had $152 million Malaysia are also halal take advantage of growth in of offshore sales last year, $63 million of which went to Asia and China. The company also certified, as are other New Zealand dairy products, the Indian market’ owns 50 percent of Sealord Group. health supplements and ––Richard White, Trade Commissioner to processed foods.” New Delhi, India kkafl.maori.nz November-december 2012 / idealog / 101
  • 15. ward off the rapidly increasing competition there to meet s what is effectively bottomless demand. Mike Arand, New Zealand trade commissioner in Shanghai, Half a touches on similar ground. “New Zealand leads the world in exports of dairy and sheep billion and is a major exporter of beef, seafood and kiwifruit. But people in when we consider that New Zealand is a similar size to Italy, Asia and Italy feeds its own considerably larger population and currently ‘With the predicted growth in global exports twice as much food and beverage as New Zealand, earn ‘middle population and the associated there is a sense that we could be doing more. “What is clear to me, first and foremost, is the need to incomes’. By growth in food supply, New Zealand develop the New Zealand Brand, to tell our New Zealand 2020 that will become a smaller, less story more. Many in the trade and many consumers are totally will treble to significant cog in the global food unaware of New Zealand. We also need to better understand system unless we have a clear vision the needs of the Chinese trade and consumers, and supply 1.7 for our agri-food sectors, focused billion, those needs – different packaging or presentation, different formulas and more.” not just on exporting product but Hargreaves says these larger players are still doing most of and by 2030 also on lightweight exports of the innovating and creating most of the new intellectual the figure industry know-how and innovation. property in this space, when there is plenty of scope for more small- and medium-sized companies, such as Leitissimo, to will be We believe that the time is right get their snouts in the trough. 3.2 for the development of an Main adds: “If it’s designed here, it’s innovative and there’s billion industry strategy’ something about the Kiwi environment or attitude that has – – I a n P ro u d f o o t, H e a d o f Ag r i b u s i n e s s a n d some brand power then let’s use it. But we don’t necessarily L e a d Pa rt n e r , C o n s u m e r a n d I n d u s t r i a l have to build it, fund it or even sell it here.” P ro d u c t s at KPM G builds Business bu F 102 / idealog.co.nz a BNZ721
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  • 17. i d e a l o g i n a s s o c i at i o n w i t h N Z T E Turning milk into money Starting with the high-end consumer, and working back to the cow, a Canterbury newcomer has turned the traditional New Zealand dairy industry model on its head S ynlait Milk started as a smart idea for Penno says Synlait kicked off with thorough need not take years to establish a trusting, a primary sector exporter, but with market research and worked back from there, successful partnership. determined entrepreneurial drive, figuring out what the consumer wanted and Synlait used New Zealand Trade and countered by steady and disciplined establishing its operation to meet those needs. Enterprise’s networks to access other Kiwi governance, it has grown its annual revenue “We literally just jumped on the plane and businesses operating in China and learn from to $400 million in just four years. visited potential customers, refined a sales their experiences. The Canterbury dairy company exploits the strategy and formed a long-term view of how Synlait has a coveted major partnership with region’s abundant pastures, healthy livestock to cater and develop markets,” Penny says. China’s Bright Dairy, which is also one of its and pure water supply to turn milk into money, “We’ve had the privilege of building the numerous Chinese customers. But Penno says creating higher-value products for luxury business backwards.” the global focus on China has left a vacuum in offshore customers. This is one example of Synlait’s point of other markets. While competitors have Synlait makes nutritional powders that difference in a dairy industry dominated by scrambled to establish themselves in China, directly target global demand for safe, reliable, farmer co-operatives. The company nurtures Synlait has picked up opportunities in Vietnam, protein-rich foods. The leaders of its a nimble, entrepreneurial spirit. the Philippines, Japan, North Africa and the 128-person team based in the small Canterbury “We pride ourselves on learning very Middle East. town of Dunsandel doggedly pursue quickly and quickly killing the things that The Synlait milk facility processes more than opportunities presented by global mega-trends: aren’t working.” 550 million litres of milk every August to May China’s emerging middle class, protein demand Right from its first season (2008/2009), in milking season. It boasts three leading-edge to fight global obesity and a particular focus on more than 95 percent of Synlait’s product milk powder dryers, one of which is the largest both nutrition for infants and the swelling were sold offshore. Today, it exports to around and most sophisticated infant formula facility in ranks of the elderly. 40 countries. the Southern Hemisphere and can process up to Synlait’s products range from calcium-fortified “Early on in our life, NZTE was enormously seven tonnes of infant milk powder per hour. powders for bone health to fully formed infant helpful in connecting us with companies,” says As a relatively small company with a tight formulas designed to mimic mother’s milk, to Penno, adding that the company’s global sales cluster of suppliers whose geographic a sideline in cream products made as a result strategy is built on a three-way market focus: proximity ensure a consistent taste profile, of the powder manufacturing process. one-third of its business in China, one-third Synlait is able to maintain absolute control over Chief executive John Penno, a scientist with in the rest of Asia and one-third in the rest of the quality of milk supply, milk processing and an acclaimed career in dairy industry research, the world. market distribution to guarantee its customers joined forces with commercial dairy farmers “China’s the big opportunity for food absolute food safety, security and traceability. Ben Dingle and Juliet Maclean to establish producers, as they fight to feed the swiftly Penno says this level of product assurance Synlait. Together Penno, Dingle and Maclean ballooning middle class and satisfy growing and accountability is a point of difference for own the largest dairy farm in the country, demand for high-quality animal protein. China which luxury customers are willing to pay. which is naturally one of Synlait’s 150-plus is the biggest influence in the market, there’s Synlait is determinedly focused on higher- suppliers. Almost all of the company’s milk no question about that.” value products, turning New Zealand milk into suppliers, with an average herd size of 700 Penno says aspiring exporters cannot hope to premium luxury goods offshore. cows, are located within an 80-kilometre build relationships by email. Solid foundations “You need to be at the top end of the value radius of the company’s Dunsandel base. are built by social interaction, but he says it chain,” Penno says. “Otherwise there’s no use.”
  • 18. i d e a l o g .c o. n z / b u s i n e s s p l a n ‘You need to be at the top end of the value chain, otherwise there’s no use’ IN BRIEF Since operations began in 2008, Synlait Milk has grown its revenue to $400 million, its supply base to more than 150 farms and its staff to more than 130. Synlait processes more than 550 million litres of milk per year to produce a range of nutritional milk powders that are exported to more than 40 countries. www.synlait.com CONTACT New Zealand Trade & Enterprise, www.nzte.govt.nz, @NZTEnews
  • 19. Megatrend 4: For example, New Zealand Trade and Enterprise has identified significant Sustainable Global opportunities in Chile, where the government is expected to support the investment in development of geothermal electricity renewable energy generation with US$200 million over the energy projects next few years. will rise from In the meantime, New Zealand has also nurtured smart sustainable energy start-ups US$195 like Aquaflow, which makes algae-based billion in biofuels and the multi-award winning Lanzatech, which, among other things, How would you like 23,577 percent growth in 2010 to is doing pioneering research on ethanol- three years? That’s what Baltimore-based US$395 based biofuels. Astrum Solar has achieved since 2009, Both are targeting the incredibly lucrative installing solar heating systems. This makes it billion liquid fuels market against a background in the second-fastest growing company in the US, in 2020, which Bloomberg forecasts that production of gasoline substitutes, mainly ethanol, is with a current revenue of US$26.9 million and to projected to increase from 100 billion litres US$460 in 2010 to 190 billion and 300 billion litres in A 2020 and 2030 respectively. The production 2011 Bloomberg report forecasts that global investment in billion by of diesel substitutes, the report predicts, will 2030. renewable energy projects will rise from US$195 billion in double by 2020, reaching 100 billion litres 2010 to US$395 billion in 2020, and then US$460 billion by from roughly 50 billion today, and will 2030.Over the next 20 years, this growth will require nearly $7 trillion Over the next double again by 2030 reaching 200 billion of new capital. The explosive growth in this sector is backed by huge 20 years, this litres. This is to meet fuel demands from the government subsidies and investment in research and development, transport sector that is projected to rise by especially in the US. growth will 20 percent by 2020 and 46 percent by 2030 Mark Hargreaves, partner at intellectual property specialists require nearly based on 2010 levels. AJ Park, says: “IP development in this space is and will continue to be huge. It will become more mainstream.” $7 trillion Aquaflow, as a purveyor of what are called ‘second generation’ or ‘advanced’ biofuels, is So, do you fancy a slice of that action? of new capital particularly well-placed for a future in which You’d think New Zealand companies that do would have a significant Source: Bloomberg, 2011 there will be an increasing demand for fuel home advantage. About 70 percent of the country’s electricity supply is sources that do not conflict with the stability renewably generated from our significant array of hydro-electric, of our climate, nor human food sources. geothermal and wind power, all of which we have gained significant expertise over the years. Fiona Acheson, New Zealand trade commissioner for Malaysia, Indonesia and Brunei, says she is seeing this innovative pedigree starting to make in-roads there. “The current phase of the Indonesian government’s power infrastructure programme is dominated by geothermal energy,” she says. “The Indonesian government aims to have geothermal energy Plugging in across the Tasman provide at least 9,500 MW, or five percent, of the nation’s electricity by Dan Taylor, New Zealand trade commissioner in Australia, says 2025, and has also selected geothermal energy as one of its major Australia provides an interesting and potentially lucrative market for sources of alternative energy. New Zealand companies involved in sustainable energy. “These opportunities relate not just to energy generation, but also “Geothermal New Zealand, a consortium of 40 plus New Zealand energy-efficiency solutions. Australia has a Mandatory Renewable companies with a range of expertise in geothermal development, is Energy Target (MRET) of having 20 percent of the electricity working with Pertamina, the Indonesian’s state-owned oil and gas supply coming from renewable sources by 2020, and achieving this company, to scope opportunities in consultancy as well as engineering, target will require major investment over the next few years. “Meanwhile, Australia has significant unharnessed renewable sources procurement and construction contracts.” where New Zealand has, or is developing, capability, including wind, Other major sites of activity are China, the US, India, Germany and solar, geothermal, wave and biomass. New Zealand will be looking to Brazil, while renewable energy investment is also gathering pace commercialise solutions around these sources in the near future and across Africa and Latin America as companies take advantage of the funding support is available at both state and federal levels.” relatively abundant natural resources and growing domestic demand. 106 / idealog.co.nz