‘They may be outnumbered 16 to one by sheep, but New Zealanders do not follow the flock. In economic policy they lead it.’
—The Economist, 16 October 1993
OVER THE LAST 20 YEARS, the business environment in New Zealand has changed dramatically. In the 1980s, business was conducted in a highly-regulated economy, with producer subsidies and tariff protection for inefficient industries. Many key service industries, such as the railways, electricity generation and distribution, and the post office, were owned and operated by the government. Successive governments have abolished subsidies, eliminated tariffs, privatised a whole range of service industries, and dismantled a large part of the regulatory framework. The jury is still out on whether the mantra ‘public ownership bad—private ownership good’ has been carried too far. New Zealand’s national airline, Air New Zealand, was privatised and then had to be reacquired by the government to save it from going bankrupt. To be fair, Air New Zealand enjoys the reputation of being an international airline of a high standard and it was not the only such carrier to be affected by international factors.
It is true however, that as a result of the reforms over the last two decades, the 2006 Economic Freedom of the World annual report has New Zealand in third place behind Hong Kong, Singapore, but ahead of Switzerland and the United States. What this means is that New Zealand is one of the least regulated economies in the Asia Pacific region, with very few restrictions on businesses establishing themselves in the country. Market forces, rather than regulations, govern the type, size and location of a business. If the business is foreign-owned or the New Zealand subsidiary of a foreign company, there are tax agreements between New Zealand and 35 countries to ensure a fair tax regime. There are no restrictions on the amount of funds that may be brought into New Zealand or taken out.
There are, of course, some consents that are required if foreign investors want to set up shop in New Zealand. They would have to apply to the Overseas Investment Office if, for example, they want to engage in commercial fishing inside New Zealand’s exclusive economic zone, or if they want to purchase more than five hectares of land. This required application also extends to investments that exceed NZ$ 100 million. Overall, however, the New Zealand business scene is largely deregulated and operating within an open economy. Because of its size, both in terms of population and in terms of its Gross Domestic Product (GDP), New Zealand will continue to be subject to fluctuations in the global markets. Nevertheless, government policies to control inflation, manage public debt and control public spending have produced a stable and favourable climate for business. The annual Corruption Perceptions Index, issued by Transparency International, consistently lists New Zealand within the top two or three countries in the world, together with Finland, Sweden, Denmark, Iceland and Singapore.
One of the features of New Zealand business is that it tends to focus on niche areas where the Kiwi’s natural ingenuity and inventiveness can be brought to bear. We do not have the economic or population base for large-scale business, which is why we do have branches or New Zealand partner institutions with a large number of global corporates, but the head offices are always offshore. For example, all but two of the 18 banks operating in the country are owned offshore. The New Zealand Stock exchange is, of course, very small when compared with its bigger sisters around the developed world. At the end of 2008 it has a market capitalization of just 37 billion dollars and listed 149 domestic companies.
The fact that most New Zealand businesses are small to medium scale does, of course, also have an upside. It provides for flexibility in meeting changing market needs and gives us the ability to keep the cost of short run, high-technology manufacturing to about a third of what they are in the United States, for example. Areas of strength and developing strength in New Zealand manufacturing are in electrical and electronic engineering, earthquake engineering, film production, wood processing (35 per cent of the world’s pinus radiata plantations are in New Zealand), biotechnology, call centres (our unique time-zone gives us access to the whole world for the processing of calls and data at convenient local times), tourism, and food and horticulture.
Our major strength, however, is our people and their Number-8-wire mentality that I have described in an earlier chapter. Did you know that New Zealanders invented disposable syringes, stamp vending machines, childproof medicine bottles, the electric fence, luggage carousels and the jet boat?
I still remember my first visit to my bank manager. True, that is now some years ago, but the basic attitudes have not changed. I dressed up for the occasion; I wore a jacket and tie and made sure that my shoes were shined and my hair combed. I fronted up to the bank ten minutes ahead of time, and the receptionist asked me to wait, a sure-fire way to increase my already considerable anxiety (after all, I was going to ask him for a loan!) At the appointed time, the receptionist, a kindly middle-aged lady, conducted me into the inner sanctum. Mr. Ward, the manager, came around from behind his desk; we shook hands and sat down. Of course I called him Mr Ward; not only was he older than me, but I was also the petitioner, as it were. (At least that is what I thought. Looking back now I realise that they were quite keen to give me a loan. I was a fairly good risk, and that first loan was the beginning of a very long customer relationship with the bank!) After I had explained my request and he had asked the relevant questions about my financial situation, I must at some stage have used the words ‘Mr Ward’ when addressing him, because he interrupted me and said, “Don’t worry about the ‘Mr’ stuff, just call me Bill.”
I got the loan (and several loans since!), but the interview provides a model for having business meetings in New Zealand. It is always expected that you turn up on time. People will understand if you are late because of traffic problems, but these are comparatively rare, with the possible exception of central Auckland, and punctuality is appreciated.
Business attire tends towards the conservative: suits and ties for men, suits, formal dresses, or skirts or trousers paired with a blouse and jacket for women. This dress code however applies only to business meetings. Smart casual attire is fine for social occasions or if your New Zealand business partner takes you sightseeing. I remember taking Japanese colleagues out into the country and to the beach, both places that are not designed for dark suits, white shirts and ties and highly polished black city shoes. The opposite side of the coin is that New Zealanders may be dressed too casually when doing business in foreign countries. I remember once arriving for a visit to a partner university in Japan on a hot Sunday afternoon. I emerged from the aircraft wearing jeans and an open necked shirt, only to be met by a group of eight colleagues, all wearing their best suits. Perhaps some of my colleagues who are senior civil servants have found the answer. They work in their offices in open necked shirts, but on the back of their office doors they hang a tie and a coat, so that if they are called to meet their cabinet minister, they can get ‘dressed’ in no time at all.
On an initial meeting, New Zealand businesspeople will generally be very warm and friendly, but there is a certain formality. You will use titles, exchange business cards, and shake hands (firmly, and looking at the other person, as for the social occasions already mentioned). In New Zealand, as in most Western societies, the title is used with the second (family) name, so that Mr Christopher Hinton would be addressed as ‘Mr Hinton’, and not ‘Mr Christopher’. Women are addressed with either Mrs if married, or Miss if unmarried, although the title Ms (pronounced Miz), which does not indicate marital status, is preferred by many younger ones. Have a look at the business card, and if that is no help because it simply says ‘Christine Hinton’, without a title, it is perfectly in order to ask.
Once the talks get underway, your New Zealand counterpart will relax fairly quickly and may well go to first name terms sooner than in the more formal European setting. My suggestion would be to take your cue from your New Zealand conversation partner. By doing this, you will not appear to ‘force’ the pace or conversely to be too aloof and formal. During the conversation, New Zealanders maintain eye contact without staring at each other. If you avoid looking at your conversation partners, they may wonder whether you are trustworthy. However, if your conversation partner is Polynesian, do not be surprised if they avert their eyes when talking to you. In their culture, this is a mark of respect.
You will find that New Zealanders will be fairly direct when conducting a business conversation. They will get to the point quickly and not spend too much time on polite social conversation. This is not because they are rude, it is because business is business, and they reserve the social interaction for the informal gatherings.
In some countries, it is customary for partners in business discussions to exchange presents. This is not common in New Zealand, although business people with experience in markets where it is done, may give you a small present if you are from one of these countries. They will not expect a present in return, but will appreciate one if you have one. A small souvenir from your home country is fine. The important thing is to make sure that the present is not too large and expensive. This could be interpreted as an attempt to positively influence the outcome of the discussions and, in New Zealand, this may well have the opposite effect.
Occasionally, your New Zealand business partner will invite you to lunch to discuss business. Meals, however, are generally regarded as social occasions rather than working sessions. Certainly at dinner, small talk and general conversation is the rule, rather than negotiation and business. Incidentally, one of the worst conversational sins that you can commit when talking to a New Zealander, whether it be a business partner or a social contact, is to treat New Zealand as if it were part of Australia or to make comparisons between New Zealand and Australia to the detriment of New Zealand. If you are asked out to a social occasion, don’t forget my earlier advice about giving your partner plenty of personal space.
There are a few other pitfalls that should be avoided when making polite conversation. Never ask a woman her age or weight, and never ask your conversation partner how much money they earn, or what their house or items in their house cost. Money and personal finances generally are not subjects for conversation with New Zealanders. Such questions are embarrassing for them. I remember how much I had become a Kiwi when I returned to Switzerland some years back and attended a class reunion. Within ten minutes of talking to former classmates, they were telling me how much they earned and what (very exclusive) cars they were driving and wanted to know the same about me. I remember feeling very uncomfortable, not because I had anything to hide, but because among Kiwis, you simply don’t talk about these things unless you are very good friends.
Business Hours
Incidentally, when you are making appointments for business meetings, most businesses are open Monday to Friday, 8:30 am to 5:00 pm while banks are generally open from 9:00 am to 4:30 pm. In major cities, banks now also open on Saturdays and Sundays from 10:00 am to 4:00 pm. Retail stores open on Saturdays and in most larger centres and tourist resorts, on Sundays as well.
For a country that is a long way from anywhere with a small population and a high reliance on farm and primary production, New Zealand is remarkably technology-friendly and sophisticated in the use of technology. A whole number of international companies, such as Ericsson, Vodafone, BMW and IBM, use New Zealand as a test bed for new inventions and technologies before they become available globally. At my university, there was a computer on the desk of every staff member at a time when in much wealthier countries, computers in universities were still locked up in special ‘computer rooms’, and you had to get a key from the secretary of the department to be able to use one.
If you look at investment in information technology as a proportion of GDP, you will find that New Zealand has one of the highest percentages in the world. It is not surprising therefore to find that on a per capita basis, New Zealand has one of the highest interconnect rates in the world, with over 55 access lines and 60 mobile phones per 100 persons. Wellington, in particular, has been described as the most wired city in the world.
The New Zealand government has taken the lead in the technological revolution by introducing the ‘e-government programme’. Under this, it is moving to make government departments and their agencies available on the Internet 24 hours a day, seven days a week, 365 days a year. Most departments already have websites that provide information as well as application forms for various processes online. Many such websites are listed in the Resource Guide at the end of this book. The government itself has such a website, and the e-government portal is designed to help people find the right web page for their needs. It is already possible to register a company on the web (http://www.companies.govt.nz), and the project now makes it possible for New Zealanders to register a birth or death, renew their drivers licence or transact other kinds of business with the government online.
This willingness to adopt technologies is reflected both in everyday life and in the way we conduct business.
Earlier in this chapter, I made the point that New Zealand has been found to be the third freest economy in the world to do business, and that certainly is true as far as regulations and controls on establishing and running businesses in New Zealand are concerned. Perhaps the most prominent act of parliament governing business competition is the Commerce Act (1986). Administered and enforced by the Commerce Commission, the act regulates business acquisitions to ensure competition in the marketplace. Like all major New Zealand government ministries, departments and agencies, the Commerce Commission has an informative website. The listing can be found in the Resource Guide.
If you want to start a business in New Zealand, there are not many legal hurdles to overcome, as we have seen. One of the things you may want to consider, however, is the name under which you are going to trade. If your first language is not English, it would be helpful if you check with an English-speaking friend whether the name you have chosen is suitable. I recently saw a sign in a New Zealand town advertising the ‘Know-all Group Ltd’. A ‘know-all’ in New Zealand is a person who thinks that they always know everything better, in other words an unpleasant person who will always try to correct you. If the business was trying to attract Kiwi customers, the name would certainly put people off.
While the regulatory environment for business in New Zealand is free and helpful, there is a strong framework of legislation that protects the environment, the workers, and the consumers. Now don’t get me wrong! I am not a lawyer, and what I am giving you here is not legal advice, but simply a brief description of some of the legislation that applies to business in New Zealand.
The principal piece of legislation that protects the environment is the Resource Management Act (1991). This act gives local and regional government the responsibility of promoting ‘sustainable management of physical and natural resources’. This includes land-use management, noise control, water, soil and geothermal resource management, pollution control, protection against natural hazards, soil conservation and other aspects pertaining to land use. The purpose of the act is to maintain New Zealand’s clean and green environment so that it continues to be a reality and not just an image.
Workers’ rights are safeguarded in the Employment Relations Act (2000). It governs collective employment contracts negotiated between employers and unions, although individual contracts are also provided for. One of the underlying principles is that parties to an employment relationship must deal with each other in good faith, which means that they must deal honestly and openly with each other. Unions have ‘reasonable’ access to the workplace under the Act, and a mediation service to deal with disputes is put in place.
Other legislation to regulate workplace relationships include the Minimum Wages Act (1983), that provides for a minimum wage for workers over the age of 18, the Holidays Act (2003) that gives workers a minimum of four weeks’ paid annual leave after 12 months of employment. Workers are also entitled to the 11 days of statutory holidays.
Safety in the workplace is regulated by the Health and Safety in Employment Act (1992). The Parental Leave and Employment Protection Act (1983) allows primary caregivers up to 14 weeks’ paid leave. To receive this, you must have worked for the same employer for at least 10 hours per week for a whole year before the birth of the child. The various dollar figures to be paid out for maternity leave is subject to periodic revision and variation. More information about workers protection can be found on the websites of the Employment Relations Service and the Human Resources Institute of New Zealand. The websites are listed in the Resource Guide.
Finally, New Zealand law, namely the Human Rights Act (1993), prohibits discrimination against an employee or job applicant on the basis of sex, marital status, religion, colour, race, ethnicity, national origin, disability, age, political views, employment status, family status, sexual orientation or union involvement.
When interviewing candidates for a job in your firm, you will therefore have to be careful not to ask questions that could indicate an intention to discriminate on any of the prohibited categories in the Human Rights Act. For example, it is fine to ask somebody whether they would be available to work on Saturdays, but it is not acceptable to ask them whether they are Jewish, Muslim or Seven Day Adventist.
Consumers are looked after principally by two acts. The first is the Fair Trading Act (1986), which deals with misleading or deceptive advertising or claims, false representations, unfair practices, consumer information and the safety of products or services. The second, the Consumer Guarantees Act (1993), sets up a series of warranties that apply to any product. Under this act, the consumer has a right to compensation if an article or service contains defects or is unfit for the purpose for which it was purchased.
While these acts are there for the protection of workers and the public, they are invoked comparatively rarely by people like me. My daughter recently saw a poster advertisement in a shop window for a dinner set that was reduced quite considerably ‘while stocks last’. When she tried to purchase the set, the salesperson told her that the ‘special’ had expired at the end of the month and that if she wanted the set (yes, it was on the shelf and she was standing in front of it), she would have to pay the full price. My daughter only had to politely murmur “Fair Trading Act!”, and the salesperson went to the telephone to talk to the manager of the shop, who agreed that she could have the set at the reduced price. When she went to pick it up, the poster had been removed from the shop window!
While we are on rules and regulations, I might as well deal with a subject that is not universally liked, but of universal interest: tax.
Company tax for resident and non-resident companies is 30 per cent. Personal tax is levied at source (i.e. your employer deducts it from your pay cheque before you get the loot), and currently is 12.5 per cent for the income bracket of NZ$ 0–14,000, 21 per cent for income between NZ$ 14,001–48,000, 33 per cent if you earn between NZ$ 48,001–70,000, while any income above NZ$ 70,001 is taxed at 38 per cent. The Government is currently planning further tax cuts, so check the website listed in the Resource Guide. This system of taxing income at the source is called PAYE (pay-as-you-earn) in New Zealand, and it is administered by the Inland Revenue Department (IRD). As soon as you begin to earn income in New Zealand (even if it is only interest on a bank account), you will need an IRD number. The IRD website, listed in the Resource Guide, will give you details of how to go about getting one.
In addition to income tax, New Zealand has a Goods and Services Tax of 12.5 per cent that is levied on just about anything and that I have already talked about when discussing shopping. The only major exemptions from GST are financial services, services performed as an employee, and residential rental accommodation.
In New Zealand, these are the taxes you will pay as an individual (and the rates are, of course, changed from time to time by successive governments). There is no capital gains tax, no estate duties, and apart from local government rates (dues for water, refuse collection, and civic amenities that are levied as a percentage of the assessed value of your property), there are no local taxes.
And with this, you have the bad news. The good news is that the New Zealand government is using these taxes to ensure that you and your business have adequate infrastructure and support to be successful and prosper.
You may be in New Zealand to work, and a few words about workplace etiquette may be helpful. Fellow workers, workmates in Kiwi English, will almost always address each other by their first names. The work atmosphere is usually pretty relaxed.
In the first few weeks, your workmates will probably tease you a bit or send you on meaningless errands. This could be a problem for people from Asian cultures because of the possible loss of face. Usually it is just a bit of harmless fun and the best way to deal with it is to have a bit of a laugh at yourself with them. What they are really testing is whether you ‘fit in’. It is some kind of humourous induction and often expresses a degree of affection as well. So try not to take offence; normally none is intended.
Depending on the business you work in, you will work an eight-hour day, Monday to Friday, with an hour off for lunch and two short breaks for morning and afternoon tea, sometimes called ‘smoko’, particularly in the manual trades. Tea is usually provided by the employer, but in most cases you will have to bring your own lunch or buy it from a nearby dairy or lunch bar. Don’t forget that the main meal in New Zealand is in the evening, so lunch is usually a quick snack. There is also no lengthy siesta, as there is in some countries. Really large factories and businesses may have their own staff cafeteria for their employees.
If you are required to do shiftwork, a roster will be set. There are strict rules in law about how many breaks you should have, how long the shifts may be, and how much time off you must have. The same applies, incidentally, to drivers of trucks and other public service vehicles. They are required by law to keep a log book recording their driving, work and rest hours to ensure that they do not become a danger to other road users and themselves.
If you are having problems settling in, if your workmates tease you too much or beyond what you are prepared to tolerate, you can discuss the matter with your superior and ask him or her to take steps to help. Freedom from harassment is one of your rights under New Zealand law. If the matter gets really serious and your employer cannot or will not help, you can ask the New Zealand Human Rights Commission to handle your complaint. Its website is listed in the Resource Guide.
Let me reassure you however. In my long and full working life I have been a student, a manual labourer, a shop assistant, an academic and an independent contractor. In my experience, most New Zealand employers and fellow workers are prepared to give you the ‘fair go’ I mentioned in one of the earlier chapters. It is therefore highly likely that you will not need to make use of these last resort services. You will enjoy working in New Zealand and we Kiwis will appreciate your contribution to our workforce.