How to Do Business in New Zealand
Cultural ties between the UK and New Zealand have resulted in a strong mutual trust, which provides rich opportunities to do business. Let’s explore some of the benefits and risks that come with doing business in New Zealand.
Business Culture in New Zealand
Business culture in New Zealand is very similar to that of the UK - professional, conservative and structured. The dress code is generally formal in all business settings. Punctuality and respect for time are important, so meetings are to the point and don’t take longer than necessary.
Gifts aren’t expected if you’re having meetings in a professional business environment, but a small gesture, such as flowers or wine, is necessary if you are invited to a business contact’s home.
Avoid sharing too much personal information or asking personal questions beyond anything volunteered.
Pros of Doing Business in New Zealand
Here are some of the advantages of doing business in New Zealand.
1. Free trade agreements
The UK and New Zealand have a free trade agreement in place that allows for duty and tariff-free imports and exports between the two countries, which makes it much simpler to conduct business.
2. Ideal market
New Zealand has a population of about 5 million people. 80% of adults are well-educated, and 77% are fully employed. The country also ranks highly on the OECD better life index and the World Bank’s ease of doing business index. The higher quality of life and income levels make for high potential demand.
3. Efficient financial system
New Zealand has a well-developed financial system. The vibrant financial market infrastructure allows for efficient trading, clearing, settlement and reporting services for transactions involving payments, securities and derivatives
In addition, there are no restrictions on capital flows to overseas investors, so you can quickly transfer your profits to the UK.
4. Straightforward tax regime
New Zealand is one of the few countries in the world with a simplified tax system. There are fewer taxes to pay overall, for example, there is no payroll or social security tax and often no capital gains tax.
5. Similarities with the UK
New Zealand’s legal system is similar to the UK’s - King Charles III is head of state, and there is a parliamentary government led by a Prime Minister. Most of the country’s laws are derived from English and Australian law. There are strong legal frameworks against organised crime, bribery and corruption.
In addition, New Zealand uses the English language as the official mode of communication and business documentation.
Challenges of Doing Business in New Zealand
The drawbacks of doing business in New Zealand include:
1. Logistical challenges
The geographic distance between the UK and New Zealand comes with a wide range of logistical challenges, including:
- The distance - it takes around 24 hours to travel to New Zealand from the UK by plane.
- Higher expenses and longer time for shipping goods.
- 12 to 13-hour time differences.
2. Product standards
New Zealand has enacted laws such as:
- The Consumer Guarantees Act, which stipulates minimum quality standards for all products and services sold within the country.
- The Fair Trading Act, which is designed to promote product safety.
These laws mean that you may have to change certain aspects of your product design and packaging to conform to the New Zealand trade standards and regulations for your goods to be allowed through customs.
3. Exchange rate risks
The official currency of New Zealand is the New Zealand dollar (NZD) which is not a commonly used currency in international trade. This introduces one of the major risks of doing business in New Zealand - exchange rate risks and fluctuations.
Here at Clear Currency we can provide assistance on some of the tools and products you can use to mitigate exchange rate risk when dealing in the New Zealand Dollar. Learn more about foreign exchange risk mitigation here.
4. Cross-border administration
The paperwork involved in foreign investment and doing business internationally is more demanding than that of domestic business dealings. In order to do business in New Zealand, you must draw up international standard contracts with acceptable terms and conditions.
In addition, your contracts must comply with standard commercial practices that clearly stipulate the responsibilities of the parties involved. You will also have to prepare international trade paperwork for arranging transport, customs clearance, and regulatory financial information.
5. Getting set up
It takes about three months to complete if you plan to set up a branch or warehouse for operations in New Zealand. Dealing with utility providers is also time-consuming. Setting up electricity usually requires about five procedures spanning over 50 days.
Doing business in New Zealand is highly advantageous for UK companies, mainly due to the similar political and economic systems, and the free trade agreement in place. However, be prepared to face obstacles, including logistical challenges, headaches involving documentation and customs procedures for your goods and services, and exchange rate risks.
Send Money to or from New Zealand with Clear Currency
On the whole, New Zealand is a lucrative and relatively straightforward market to access. To make it even simpler, speak to Clear Currency to get some clarity on some of the tools and products you can use to help you manage currency risk. Create an account with us today and start reaping the benefits of the New Zealand export market.
How to Mitigate Foreign Exchange Risk
Currency risk can have a significant effect on the efficiency and profitability of any international business. Each exchange rate movement affects how much you receive from sales and what you pay to suppliers.
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