1. A SECTORAL APPROACH TO TRADE PROMOTION AANZFTA BUSINESS SEMINAR Dr Val Lindsay Victoria University of Wellington 1

2. Outline of Presentation What is meant by a sectoral approach? Why a sectoral approach? Benefits of a sectoral approach Sector Mapping - how does it work? Cross-border sector collaboration Conclusions 2

3. Defining a Sector A group of companies that represent similar or related product or service offerings May consist of a number of related industries Includes: food and beverage, tourism, education, advanced manufacturing, aviation – and many others 3

4. What is meant by a Sectoral approach An approach to a market opportunity that draws on a collection (package) of products and services offered by firms in the sector (Generally) involves collaboration between members of the sector 4

5. Benefits of Collaboration for Individual Firms and the Sector as a Whole SECTOR Specialisation – allows focus and innovation in specific areas Customisation – enables the ‘sector’ to be responsive to specific customer needs Scale – allows large (or small) volumes to be produced Flexibility – products and services can be added or subtracted, or combined/recombined, according to customer needs Integration – ‘packaging’ of technologies and IP to provide new and innovative offerings and ‘integrated solutions’ 5 FIRMS Information sharing: access to more information Cost savings for market entry Easier market access: customers recognise ‘larger’ supplier Sharing of resources: for many business activities (e.g. distribution, marketing) Higher innovation potential: combining ideas and technologies

6. Overall Benefits Through collaboration in the sector, companies gain access to business opportunities that they might not gain alone By working with a sector group of companies, customers have most, or all, of their requirements met. AND they may gain access to ‘integrated solutions’ or ‘packages’ of products and services that offer particular advantages to them relative to their competitors. 6

7. Why Consider a Sectoral Approach? Evidence and potential in New Zealand “We felt that there was great potential in India for airports and hospitals but these were two sectors we had never done any work in, nothing at all. And we were not going to get a job even with our ten years experience in India, because Indians want experience in airports and hospitals. So we partnered up informally with a company in New Zealand who has specialized in hospitals and airports.” (NZ manager) “China is a very, very difficult market and we would much rather learn with other New Zealand companies and share and pool our learning. And if we can go into those markets with collaborative activities, we think that’s going to be a smart way of learning - much quicker than we normally do.” (NZ manager) 7

8. Why Consider a Sectoral Approach? Businesses and customers in overseas markets suggest this approach for NZ firms “... if there is some specific focus for a sector - that will be a better way to present New Zealand than making it good at everything. Let’s face it, not every country is good at everything; it has its own competency and its own competitive advantage.” (Chinese manager) “First we do business with [XXX NZ firm] because of their technology and their equipment in the industry. But we also consider that we could use [XXX NZ firm] as a platform to engage with the New Zealand industry, so we could learn more from other people. So this a platform for us to have this opportunity to discuss with New Zealand counterparts.” (Chinese manager) 8

9. A Sectoral Approach Requires Collaboration “I mean, you’ve got a billion people who will consume the products, and that’s a very, very large market. So my point is that we’ve got to look at and identify collaborative areas - look at the sectors with opportunities for collaboration.” (NZ manager) “You could collaborate if there are big projects - you could come in consortiums, because you have a great strength.” (Indian manager) “Food, wine, meat, seafood. They have are our biggest competitors coming into here. We need to cooperate back at home to compete with others in China - you can create a demand up here if you do it together.” (NZ manager in China) 9

10. A Sectoral Approach: How Does it Work? Market-driven approach to sector development Involves researching and mapping the sector opportunity in the market and matching suppliers Example: An aviation park development, comprising, for example: – Airport buildings – Aircraft – Runways – Pilots and crew – Air traffic control – Security – Many others 10

11. Sector Mapping: Six Steps STEPS 1 - 3 IDENTIFY AND MAP THE OPPORTUNITY IN THE MARKET STEP 4 IDENTIFY AND MAP SUPPLIER COMPANIES (SECTOR) IN THE HOME COUNTRY STEP 5 COLLABORATION AMONG COMPANIES WITHIN THE SECTOR STEP 6 CROSS-BORDER COLLABORATION WITHIN THE SECTOR 11

12. SECTOR MAPPING: STEP 1 IDENTIFY THE OPPORTUNITY - IN THE MARKET 12

13. SECTOR MAPPING: STEP 2 MAP THE INDUSTRIES (AND INSTITUTIONS) INVOLVED - IN THE MARKET 13

14. SECTOR MAPPING: STEP 3 MAP THE SUPPLY CHAIN ACTIVITIES FOR THE INDUSTRIES INVOLVED – IN THE MARKET 14

15. SECTOR MAPPING: STEP 4 IDENTIFY AND MAP COMPANIES (IN THE HOME COUNTRY) ABLE TO DELIVER THE SUPPLY CHAIN REQUIREMENTS 15

16. SECTOR MAPPING: STEP 5 COLLABORATE TO PROVIDE INTEGRATED SOLUTIONS: SUPPLY CHAIN LEVEL 16

17. SECTOR MAPPING: STEP 5 COLLABORATE TO PROVIDE INTEGRATED SOLUTION: INDUSTRY LEVEL 17

18. SECTOR MAPPING: STEP 5 COLLABORATE TO PROVIDE INTEGRATED SOLUTION: SECTOR LEVEL 18

19. SECTOR MAPPING: STEP 6 CROSS-BORDER COLLABORATION 19

20. Sector Mapping Step 1: Identify the opportunity in the market (e.g. aviation development) Step 2: Map the industries (and institutions) involved in the opportunity Step 3: Map the supply chain activities involved in each of the industries Step 4: Identify and map companies in the home country able to deliver the supply chain requirements Step 5: Collaboration of these companies to provide an integrated approach to supplying these customer requirements – supply chain level; industry-level; sector-level Step 6: Seek cross-border collaboration to provide better solution 20

21. Aviation Sector – an example of a substantial opportunity “You’re going to see Mumbai airport coming, a new greenfield airport; three greenfield airports were commissioned this year, three. Which, collectively, would mean almost $7 or $8 billion of investment. Imagine the kind of work that those three airports require. They require consultants; they require safety experts. They require master planning. The airlines require pilots to be trained. So it’s a huge market.” (Indian manager) 21

22. SECTOR MAPPING: A NEW ZEALAND AVIATION SECTOR EXAMPLE 22

23. Opportunities for Cross-border Sectoral Collaboration within the AANZFTA Joint research and development Collaborative product / market developments Collaborating within supply chains to deliver sectoral-based solutions to member markets Leveraging of opportunities for joint access to other markets, e.g. – Collaborating within supply chains to deliver sectoral- based solutions to other markets – Access to other markets via member networks (e.g. to India and China via Singapore networks) 23

24. Conclusions A sectoral approach developed from the market opportunities allows for relevant and creative sectoral development in NZ Within-country and cross-border collaboration among firms in the sector allows them to collectively respond to market opportunities A sectoral approach provides a vehicle to unlock the potential for firms in NZ and AANZFTA more generally to enhance trade and build collective capabilities. 24

25. THANK YOU 25