As New Zealand's third biggest export sector, technology is the fastest growing sector of our economy, contributing $16.2 billion to national GDP annually and employing 98,900 workers across 28,749 firms.
In an economy historically dominated by its service, manufacturing and primary industry sectors, the technology industry presents a strong and exciting opportunity for New Zealand’s future economic growth and presence on the international stage – and there have been quite a number of inspiring New Zealand examples already.
So, what makes New Zealand such an attractive option for technology businesses?
1. Ease of doing business
Setting up a company is relatively quick and inexpensive. New Zealand's IP laws are more start-up friendly than those of many other jurisdictions. Our Privacy laws are also internationally recognised as offering a safe third country destination, for example under EU data protection law.
New Zealand is one of the most deregulated, and least corrupt, economies in the world and with a rich history of export and strong trade relationships with Asia, the Pacific, the Americas and the European Union, actively lobbies for free trade and the removal of anti-competitive restrictions. Almost entirely unprotected by import controls and subsidies, New Zealand also has a highly-skilled workforce, supported by a strong education system and university network, with relatively low marginal tax rates, when compared with many other nations.
Topping the World Bank Group’s annual ease of doing business ranking for both 2017 and 2018, New Zealand has consistently ranked within the top three of Transparency International's Corruption Perception Index since its inception in 1995.
2. Location, location, location
Between New Zealand's beautiful natural environment and relatively laid-back lifestyle, you can't get away from the fact that New Zealand is an attractive place to live. While our location on the map may influence freight costs for exporters of physical goods, digital distribution channels have side-stepped this issue for many technology companies. The technology sector can also be highly scalable without reliance on limited environmental or human resources for growth, making the industry a good fit within the New Zealand context.
New Zealand's unique location, being 12 hours ahead of GMT, also makes it perfect for a 24 hour "follow the sun" model when combined with a second office in the Northern Hemisphere. New Zealand is also in a similar time zone to Silicon Valley, the West Coast of the USA and APAC markets.
3. Kiwi ingenuity and entrepreneurial gusto
With a rich history of innovation, Kiwis tend to look at problems, and solve them, in a different way. As liberal adopters of new technology, this makes New Zealand a great spot to trial new products and bring emerging technologies to market. Facebook, LinkedIn, Google Loon and Rocket Lab have all tested new features in New Zealand before rolling them out to the global market.
Gartner's 2017 survey of global CIOs found that CIOs in the APAC region, including many New Zealand CIOs, are reporting higher rates of adoption of emerging technologies in business such as artificial intelligence, the internet of things and conversational interfaces, than their global peers.
4. A supportive Tech community and Government
New Zealand's technology community is established and forward-thinking, with many alliances, organisations and forums supporting the quality and success of technology enterprise generally, as well as research, development and thought leadership in specialist areas of the technology sector and related regulatory issues such as the protection of intellectual property and personal data. There are a host of government ministries and agencies working to build the profile of the New Zealand technology industry and provide resources, funding and support both within New Zealand and overseas. Our new Government has further announced a commitment to being innovative and modern, prioritising a national digital architecture, digital inclusion and strengthening digital rights.
The Government has invested heavily in IT infrastructure over recent years, having now secured the country world-class fast internet speeds and made strong progress in digital education and the digital transformation of public services.
The small size of New Zealand and its Government also makes it easy to gain access to, and communicate with, both regulators and Ministers, their officials and members of Parliament.
5. Investment opportunities
There is significant offshore liquidity looking for opportunities to invest in the technology sector and New Zealand has been the recipient of a steady flow of both overseas and local investment. It offers sound economic practices with good opportunities for solid growth, and since October 2015, implemented an “Investment Attraction Strategy” to attract more high quality foreign business investment to New Zealand.
Whilst the New Zealand funding environment is still relatively immature by certain world standards, there are a raft of local angel investors, high-net worth investors, government initiatives, incubators and accelerator programmes available, not to mention platforms for peer to peer funding and resource sharing, venture capital opportunities and more traditional funding options, such as traditional banking, but with an innovative twist.
Looking ahead, all signs point to New Zealand having a very bright future in this space and our thought leaders and industry participants are all working hard to make New Zealand a world-renowned destination for technology businesses, innovators and leading thinkers. All in all, there is a lot to like, but equally plenty of opportunity to do more.
A shorter version of this article from Liz Blythe, Special Counsel at Russell McVeagh specialising in ICT and corporate advisory and Timothy Wixon, Partner – Commercial at BNZ specialising in funding tech and high growth businesses, was originally published by CIO NZ.
As strong supporters of New Zealand's technology industry, we are always working hard to find new and better ways to support the sector and its participants. We would welcome your feedback on the matters described above and any thoughts you may have as to what more New Zealand could be doing in this space and how we, and other support service providers, might be able to help or see our Technology Start-ups: A Practical Guide for more information.