Are New Zealand exporters getting ambushed out there? Just look at the problems continuing to plague Zespri and Fonterra. If big businesses like these are having trouble, what chance have smaller exporters got?
Well, every chance actually. Those set-backs were self-inflicted, and could have been avoided if internal issues had been addressed at the right time. Fonterra has taken it on the chin, while Zespri continues to blame its Chinese ex-partner instead of taking responsibility for its poor control processes.
The principle remains the same for large or small exporters – don’t shoot yourself in the foot! Rather than blaming others, it’s better to think strategically before you put your business at risk.
Here’s another example. Cookie Time had decided to move into the Chinese market around 2011. They tried to register their brand in China but found a Chinese company had beaten them to it. Now Cookie Time can’t trade in China for at least 2 years while their trademark-squatting claim waits to be heard by a Chinese court. Cookie Time management seems to be taking the moral high ground about this, but isn’t it really all about their lack of forward planning?
The high water mark in this regard is owned by U.S. electric car maker Tesla Motors. Before it could trade in the lucrative Chinese luxury car market, Tesla spent 8 years and a lot of money retrieving its company name and logo, plus the Mandarin versions, from a young Chinese businessman. Mr Zhan said in interviews that he was an admirer of 19th century electrical engineer Nicolas Tesla, and sincere in his efforts to introduce an electric sports sedan into China. So why hadn’t Tesla seen this one coming?
We all know that New Zealand products are heavily traded in the Asian grey markets. Local entrepreneurs claiming to be authorised agents sell them under their own language versions of the New Zealand brands. Furthermore, organic-based New Zealand products are being sourced from New Zealand and at international trade fairs and reverse-engineered by overseas traders, just so they can patent the formulas.
New Zealand business owners are not used to having to deal with this level of aggressive commercial behaviour, but should appreciate that major damage can be avoided with the right strategy. If you intend to sell in foreign markets, the first step is to lay the foundations well in advance.
If you don’t have deep pockets, you should tailor your strategy to match and support your 1 year, 3 year, and 5 year plans. You must have everything in the way of intellectual property structured and locked down in New Zealand as a bottom line. This will at least give you a fall-back position for authenticating your business and products in global markets.
Events in the pipeline like the New Zealand-Korea Free Trade Agreement can stimulate predatory in-market behaviour. Korea, along with China, Taiwan and Japan, is known as a “first to file” country. Traditionally, these countries have had a “first come, first served” approach to intellectual property protection, effectively giving local entrepreneurs free rein.
Although this is starting to change now, if you have plans to sell in such markets, even if it’s in the longer term, you should think about getting a bulletproof vest on right now.
(From our Winter Newsletter 2014)