Infrastructure: ICBC on lookout for projects (NZ Herald)

Tim McCready

It has been almost three years since the Industrial and Commercial Bank of China, the world’s largest bank by total assets, officially opened its New Zealand subsidiary in Auckland.

Karen Hou, executive director and CEO of ICBC New Zealand, says: “In the past three years, ICBC has worked hard to integrate into New Zealand. The ICBC head office is pleased with how our local customer and asset base in New Zealand is growing.”

ICBC NZ invests across a broad range of industry sectors. For example, ICBC NZ and its parent bank have provided significant financing support to the banking syndication for the 27km Transmission Gully motorway from MacKays to Linden and joined a funding facility for a telecommunications company. ICBC NZ is also investing heavily in another significant infrastructure project.

The local subsidiary recently received a further NZ$84 million in capital from its parent company to support its lending growth with infrastructure lending one of the key objectives. Hou says ICBC NZ is now looking across the country to identify the next projects to invest in.

Signalling head office’s vision and support for this region, ICBC’s new global chairman and executive director, Yi Huiman, who took over the role in June this year, came to New Zealand as part of his first international trip. While here, he met with government officials to discuss New Zealand’s infrastructure investment needs.

Yi’s visit followed the announcement of the joint plan between the Government and Auckland Council for Auckland’s transport priorities over the next 30 years, including motorway upgrades, new busways and upgrades to the rail network.

Outside of Auckland, big projects include Wellington’s Transmission Gully Motorway, Tauranga’s Northern Link road and several key pieces of infrastructure in the Christchurch rebuild.

Hou says that the clear strategy outlined by the New Zealand Government and Auckland Council on future infrastructure programmes is one of the reasons ICBC sees New Zealand as a priority.

“Yi’s visit demonstrated how important New Zealand is for our global business,” she says.

ICBC NZ considers itself a bridge that can encourage bilateral trade and economic co-operation. The bank’s experience with infrastructure projects across many countries means that it has the ability to add value beyond funding.

“We also bring experience and expertise across a range of infrastructure classes, such as bridges, railways, motorways, schools, power and water.

“There are very big Chinese companies, operating at very high international standards, that are increasingly interested in investment opportunities in the New Zealand market. Many of them are already ICBC’s customers in China.

“Helping to build a good relationship between the two countries provides great opportunities for ICBC NZ. We can help investors understand the market and how to be successful here,” Hou says.

Hou’s personal vision for Auckland is one where the city is well connected to other regional hubs, pointing to China’s strength in high-speed rail as an opportunity that could be leveraged here.

China leads the world in high-speed rail technology, with over 20,000km of tracks in service – a length that is more than the rest of the world’s high-speed railway tracks combined.

Earlier this year, the Chinese Government’s National Development & Reform Commission released their medium and long-term plan for China’s railways. The plan calls for expansion of the high-speed railway network by 2025 to 38,000km of passenger-dedicated lines. The volume of work means China is driving innovation in infrastructure development globally.

“Auckland is becoming increasingly concentrated, bringing with it a rapid growth in house prices and significant traffic congestion,” says Hou.

“Suppose there was a high-speed train between Auckland and Hamilton. A 30-minute commute between the two cities would encourage people to spread to the regions, and reduce the pressures Auckland currently faces. Working with China gives access not only to capital but access to innovation and experience in such projects.”

This has already happened in China. The Beijing Tianjin Intercity Railway is a passenger-only high-speed rail that runs 117km between Beijing and Tianjin – a comparable distance to Auckland and Hamilton. The line carries high-speed trains operating at up to 330km/h, bringing the travel time between the cities down from over an hour to just 30 minutes.

This route has proven so popular that it is already operating at capacity, and construction of a second line is under way.

John Dalzell, independent director at ICBC NZ and managing director of Silk Road Management Ltd, says that there are other Chinese SOEs looking to invest in New Zealand projects.

But while this interest offers much needed investment to supplement local capital, Dalzell cautions that if New Zealand wants balance sheet support from these enterprises, then it is essential to allow time for that process to occur.

“There is typically a 3-6 month process for Chinese SOEs to get the necessary approvals to bring additional funding and investment across, which can be a challenge as it is often too long for timeframes allowed on procuring New Zealand projects,” he says.

“There is no point saying we’re open for investment and putting a procurement plan out that requires an expression of interest within one or two months if we are looking to attract firms with this type of financial capacity to our projects.”

Hou reiterates the importance of New Zealand as a partner to China. “The interconnectivity of “One Belt and One Road” and the Asia-Pacific means that ICBC is likely to further increase financial support for the New Zealand market.

“New Zealand is one end of an important economic corridor, stretching from the South Pacific through Southeast Asia and into Europe.”

Mood of the Boardroom: CEOs fear children won’t own homes (NZ Herald)

Tim McCready

We fear our children won’t own homes, say the nation’s business leaders. Housing is one of the biggest issues in New Zealand at the moment — that was the response from CEOs in this year’s Mood of the Boardroom survey.

Cathy Quinn, chair of law firm Minter Ellison Rudd Watts, says “New Zealand is a comparatively good place in the world and our economy is doing well. But like many New Zealanders, I worry about housing affordability in Auckland for our staff and our children.”

When asked whether the Government should be doing more to dampen house price inflation, 70 per cent of CEOs agreed, while 18 per cent think the Government is doing enough, and 12 per cent are unsure.

Chris Gudgeon, chief executive of Kiwi Property, says the Government has been “lazy, naive, and negligent”.

He thinks it has lost sight of the crucial societal role that affordable housing plays.

“The Government has allowed housing to move from becoming a social good (when affordable) to a tax-effective investment that has only served to enrich investors at the expense of the next generation of talent we need to retain and attract,” he says.

The Government’s refusal to use both the demand lever as well as the supply lever has exacerbated the problem, Gudgeon says.

“The continued labelling of the problem as purely a supply issue is disingenuous, and blaming the Reserve Bank and Auckland Council is pure politics.

“Government should be imposing restrictions on non-resident investors until supply issue is resolved, and imposing a stamp duty on domestic investors to raise revenue to fund the infrastructure investment needed to support new supply and to disincentivise speculation,” he says.

The boss of one of New Zealand’s major banks thinks that “the Government has been far too hands-off around Auckland housing and the stresses and strains that the city’s infrastructure is under”.

Deloitte CEO Thomas Pippos says “while it is healthy for asset values like property to increase over time, the rate of recent change is unhelpful on a number of fronts, including exacerbating wealth and income disparity that will continue to raise challenges”.

Independent director Dame Alison Paterson says all the initiatives announced are worthwhile, however they take too long to have an impact. “While the incentives are to invest for capital gain and not in productive industries, the position will not change.”

Another CEO suggested: “Get Nick Smith off the (housing) portfolio. The man is clueless and disinterested.”

Although most CEOs agree the Government must step up and do something to curb housing inflation, there is considerable debate over what that action should be, and an appreciation that perhaps there is no silver bullet.

“This is clearly not an easy issue to fix — otherwise it would have been done,” says Quinn. “Collapsing the housing market and having people lose their equity does not seem right.”

Pippos cautions that “what is unhelpful is that property will become even more of a political football that may result in populous measures rather than those that are effective in the long run.”

The chief executive of an Auckland law firm says “we need to assess what has and hasn’t been effective elsewhere. Australia has massive taxes and stamp duties, but rather than blindly follow we need to assess and tailor make something sensible”.

Many CEOs see housing as a personal issue. Not necessarily because of the effects it will have on them, but because it will affect the ability of their children or grandchildren to own property in Auckland. Just over 70 per cent of those surveyed are concerned that the New Zealand “dream” of owning property is becoming out of reach for younger generations, and 73 per cent are concerned that younger New Zealanders are being priced out of the Auckland residential property market.

“I think it is really sad to see so many young people — many of whom are well-educated and in good jobs — that don’t believe they will ever be able to afford their own home,” says one CEO.

Though only a third of those surveyed worry that the Auckland property market will stall, there is concern that any fall in property prices will most severely impact first-home buyers who are more at risk of falling into negative equity.

“I wouldn’t want to see my house value deliberately dropped by 20 per cent, but it’s not me that would hurt,” says one CEO. “It’s my niece, for example, who just climbed on to the property ladder with an ‘affordable’ first home in Avondale.”

Though CEOs think that the lack of supply is the most significant contributor to the rapid increase in Auckland house prices, the majority of those surveyed agree increased net migration, low interest rates, domestic speculation, foreign investment, and the absence of a full capital gains tax are all important factors.

Finding solutions
NZ Council for Infrastructure Development CEO Stephen Selwood thinks the Government should assist development by aggregating land and providing development opportunities to the market. “This will deliver subdivisions at scale adjacent to transport services,” he says.

The head of a real estate company thinks the supply of homes is the fundamental issue, and is not convinced that any new bans, taxes, or regulation will provide a solution. “The biggest issue is a lack of supply. All other issues add to the situation, but not as significantly as supply.

“We need to encourage developers and investors (both local and foreign) to acquire land and redevelopment projects and get on with building homes and apartments,” he says.

“Taxing residential investors and imposing LVR restrictions just discourages them from increasing supply to the rental market — this simply diminishes supply further and pushes rents upwards,” says the real estate boss. “Fix the supply issue and the value equation will begin to balance out.”

Beca chief executive Greg Lowe, says “empty houses owned by people who don’t want to either live in them or provide rental homes, or are being held by short-term speculators (if the reports are correct), creates an unhelpful distortion of demand”.

Although house price inflation is a supply issue, Mazda NZ’s Andrew Clearwater says the real issue is a lack of skilled tradespeople. “There needs to be a curb on foreign investment where it is at the expense of first time buyers.”

Lowe agrees, believing more skilled labour is needed in New Zealand — skilled migration will help meet this need, and also add to growth in domestic demand.”

The boss of an agricultural company says until supply catches up with demand, the Government needs to implement fairly drastic action in terms of immigration. “It needs to be Government-led, as immigration is a national choice, but Auckland is wearing most of the consequences.”

Other CEOs agree New Zealand needs much lower and far more targeted immigration — “we need a smaller number of highly skilled migrants.”

Auckland Chamber of Commerce chief executive Michael Barnett says: “We need to address the foreign buyer advantage.”

The chairman of an investment management firm says there should be no sales of existing homes to foreigners, and an energy company chief executive says the Government must contemplate new building rules for overseas buyers.

“I support a Government housing programme, but only for permanent residents who take up occupation and do not use the property for investment purposes,” says a real estate boss.

Are taxes the answer?
The Government has notably avoided an effective capital gains tax, instead implementing the two-year “bright line” test. Whether capital gains and other taxes should be implemented remains a contentious issue, with CEOs unsure whether it will make a difference.

The boss of a real estate company says “if we look overseas to countries that have capital gains tax, house prices have continued to increase”.

On the other hand, a manufacturing chief executive thinks “a capital gains tax is needed now on property other than the family home. Shifting speculative property investment into investment in productive capital markets would be a better economic outcome.”

Don Brash, chairman of ICBC (NZ), says if metropolitan urban limits were scrapped, and infrastructure on the fringe of major cities appropriately funded, local authorities wouldn’t have to do much else. “Bill English understands this, and so does Phil Twyford”.

Yet most chief executives believe the solution to the housing crisis shouldn’t be the sole responsibility of the Government, and that local authorities need to step up and take action. Just over 80 per cent of those surveyed think local authorities should establish satellite towns or cities to service major metropolitan areas, and 57 per cent think local authorities should apply a substantial differential rate to “banked land”‘ to incentivise owners to make it available for housing.

Port of Tauranga CEO Mark Cairns says “unoccupied land tax seems to be a no-brainer”.

Lowe says that there is plenty of land already in Auckland, but housing density is too low for the current and expected population.

“We waste the land we have on inefficient and unnecessary section sizes. Urban intensification, particularly around transport and retail hubs, has been a common solution overseas and provides for more efficient use of land that still allows a good urban lifestyle,” he says.

The head of a government agency agrees: “We must embrace intensification, and tackle the Nimbys in the leafy suburbs of Auckland.”

Another CEO suggests: “Build along the Auckland rail corridor. This will allow at least part of the growth to not impact on the roading network if rail continues to improve.”

Yet most CEOs agree that any intensification should not be at the expense of Auckland’s green space.

“I agree with selling off golf courses, but would not like to see all green areas gone,” says a real estate chief executive.

“We must not compromise the desired quality of life that Aucklanders are after, including parks and golf courses.”

CEO solutions:

  • 81 per cent want to see satellite cities/towns established to service major metropolitan areas
  • 39 per cent find it more difficult to attract staff to relocate to Auckland
  • 70 per cent believe Govt should do more to dampen house price inflation in NZ
  • 70 per cent are concerned the NZ dream of owning your own house is becoming out of reach for younger generations
  • 62 per cent are not concerned the Auckland housing market will stall

Mood of the Boardroom: Goff rated best for mayoralty by CEOs (NZ Herald)

When chief executives consider the candidates vying to lead Auckland, political experience seems to win out, as Tim McCready explains

Experienced national politician Phil Goff is rated by 43 per cent of respondents to the Herald’s survey as having the best attributes to be the next Mayor of Auckland.

Survey responses indicate there is a sense of inevitability in the senior business community that Goff will take the title of mayor come the October 8 election.

Goff has, by far, more name recognition than any other candidate, and has been in the public eye since he entered Parliament 35 years ago as a Labour MP, rising to be party leader before being trounced by John Key at the 2011 election.

His campaign has focused on using his experience in central Government to solve Auckland’s housing affordability problems and public transport.

Westpac NZ boss David McLean had qualms about Goff’s plans to bring back trams saying that was genius for Melbourne — but Melbourne was designed for it. He questioned whether Auckland streets were wide enough: “It would take a huge change to put them back.”

Goff’s connectivity to Wellington — he is a former Foreign Affairs and Defence Minister — was consistently noted among CEOs as a capability that will help things get done. “Collaboration with government agencies will be critical to ensure government support”, says Hawkins Group CEO Geoff Hunt.

But with support at just 43 per cent of survey respondents he still has to build broad credibility with senior business.

The chief executive of a major bank says although Goff is far from perfect, he’s “the best of the lot”.

“He’s got plenty of substance but little flair — he’ll do a great and competent job and Auckland will progress.”

Vic Crone is ranked second by CEOs, with 19 per cent support. Crone is the centre-right front-runner; she has the backing of senior National Party MPs, and her corporate experience, including senior leadership roles with Telecom, Chorus, and Xero, provides a clear point of difference from Goff. Former National candidate Mark Thomas comes in third with just over 2 per cent.

Not one of the more than 100 survey respondents thinks businessman John Palino has the best attributes to become mayor. Palino was a mayoral candidate in the 2013 election coming second to Len Brown.

Cooper and Company chief executive Matthew Cockram says Crone and Thomas have robust and thought-through policy platforms that deserve a better airing.

But Cockram says Goff is “by default” the best politician of them all: “hopefully some of what they have suggested and pushed for will be picked up and developed by Goff.”

An energy company boss expressed dismay that the mayor and councillors hold such a vital role in creating and sustaining a successful economy, and yet on the whole fail to attract quality leadership.

Perhaps most surprisingly at this late stage of the campaign, 22 per cent of CEOs have indicated they don’t yet know who they will vote for — though some of this can be explained by respondents feeling uninspired by the candidates, and concern that no one has the depth of skill required.

The boss of an energy company expressed dismay that the mayor and councillors hold such a vital role in creating and sustaining a successful economy, and yet on the whole fail to attract quality leadership.

A further 16 per cent suggested other candidates should have emerged with one nominating Auckland Chamber of Commerce CEO Michael Barnett, who has previously been flagged as a potential mayoral candidate. Another business respondent nominated former New York mayor Michael Bloomberg — who earlier shied away from contesting the US presidential election as an independent candidate this year.

Top 5 priorities for next mayor
Chief executives overwhelmingly want the next Mayor of Auckland to improve public transport in the increasingly congested city,

Among their other top priorities for the mayoral agenda are getting large infrastructure projects funded; bringing Auckland Council spending under control; improving how council works alongside the government and implementing the Unitary Plan.

The New Zealand Council for Infrastructure Development says Auckland’s transport system is at a tipping point. Significant progress has been made since the mid-2000s, with record levels of investment. The completed western ring route, rail electrification, City Rail Link and other projects will make a difference, but in order to meet the needs of a further one million people by 2050, Auckland must accelerate progress.

NZCID chief executive Stephen Selwood says that Auckland’s current transport problems will be much worse unless we make a step change in investment into transport infrastructure. “Density must be strongly targeted around rail and bus way corridors, and future urban areas will need to be concentrated where new transport capacity can be provided with urgency. Additional funding through road user charging will be fundamental to achieving the level of investment required.”

“Are we spending enough? How can we finance the infrastructure we need?” questioned a company chair. “I would support the sale of local assets on the basis that money was used for infrastructure — the spend needed in Auckland is massive.”

Mayoral candidate Phil Goff’s own policy planks — city infrastructure bonds, expanding the Government’s $1 billion infrastructure fund, and public private partnerships to fund growth — obviously resonated with chief executives’ belief that rates and debt cannot be the only funding source for transport and infrastructure. There are also clear concerns that morning and afternoon gridlock in Auckland on main arterials are increasing to the point where it is significantly impacting on productivity.

ICBC (NZ) chairman Don Brash says there isn’t a problem with the adequacy of electricity or water infrastructure, but “roading in Auckland is seriously deficient — or, perhaps more accurately, is being inefficiently used because it is not being appropriately priced.

“There is also a huge need to improve our transport infrastructure and selling, for example, shares in the port would both provide funds for that purpose and improve the efficiency of the port (witness the Port of Tauranga).

“Why Auckland Council continues to own a minority stake in the airport also defies understanding — it is a purely commercial business, and the council should sell out now while the price is very high.”

Auckland Council is also seen by some as severely bloated with too many staff — and as a consequence those staff find myriad ways of obstructing development with pointless regulations and endless delays.

For her part, mayoral candidate Vic Crone sees public private partnerships and other investment tools as the way forward for Auckland’s infrastructure. She also wants to see the port moved to make better use of waterfront land.

Several of those surveyed — including Precinct Properties chairman, Craig Stobo — agree the best use of Port of Auckland’s land is for residential and commercial use, and not for shipping. “The next Mayor needs to lead the shift of the harbour port to an inland port serviced by other harbour ports,” says Stobo.

A consensus is unlikely in the short-term. Port of Tauranga chief executive Mark Cairns says it is simply unrealistic to move the port in the medium term.

“If ports simply priced and invested to achieve a cost of capital return, then a natural hierarchy of ports (international container hub, regional feeder, regional bulk) will emerge quite quickly.

“Ports are multi-million (often billion) dollar long-run infrastructure assets, not regional Economic Development Agency playthings.”

There is mounting concern among CEOs that without significant improvement in Auckland’s infrastructure — along with improving housing affordability — the city will lose staff to other centres around New Zealand where the cost of living and lifestyle are becoming more attractive.

  • 4 per cent of CEOs indicated they have had to increase salaries and offset the higher cost of living in Auckland in order to attract and retain talent;
  • 39 per cent have found it difficult to find staff willing to relocate to Auckland, and 17 per cent have already considered relocating some of their operations away from Auckland.

A media boss noted it has been difficult to attract staff even at the senior management level because of reduced quality of lifestyle that would be offered.

“While ‘quality of lifestyle’ can reflect access to amenities and communities, the biggest factor is ability to afford to provide a comparable property to live in for their family.”

But Beca’s Greg Lowe said Auckland tended to provide good career opportunities and the scale of the market seemed to attract people to work there. “Those who place higher value on lifestyle than career opportunity, that is, considerations such as lower housing/living costs, easier transport, perhaps phase of life such as young children) may choose other locations.”

An exporter says salaries need to be higher and there are definite skill shortages in accounting and finance. “Perks like car parks are now gold.”

Another suggested Auckland had potentially become too dominant in New Zealand and would encourage some businesses to move out of Auckland — “some form of government programme?”

Mood of the Boardroom: Praise for Len’s Legacy (NZ Herald)

Tim McCready

Outgoing major Len Brown has been largely praised by CEOs for bringing together an amalgamated Auckland, passing the Auckland Unitary Plan, pushing rail to the forefront of a solution for Auckland’s transport, and persevering with the City Rail Link in the face of central government opposition.

  • The CEO of an Auckland Central law firm says “a big tick to Brown for persevering with the Rail Loop project in the face of central government opposition and playing a big role in getting it under way. That will be his legacy.”
  • “Despite his shortcomings he has been a force in helping to bring together Auckland,” says Joanna Perry, non-executive director for several large New Zealand businesses. “We are way better off with the amalgamated Auckland than we were before.”
  • The CEO of a telecommunications company says “to give him credit, he targeted the trains and he got the commitment needed to get going.”

Despite these accolades, more than 57 per cent of CEOs surveyed think Len Brown has performed below average for Auckland, and 63 per cent feel he has performed below average for business.

  • “Len has presided over a council which has helped drive the price of housing well below the reach of most New Zealanders who don’t already own property,” says ICBC NZ’s Don Brash.
  • “He has committed the city to an exorbitantly expensive piece of underground railway which does almost nothing to ease serious traffic congestion.”
  • “Len Brown lost all credibility when it was revealed that he was not as he had portrayed himself. He should have stepped down immediately,” says a chair of several major New Zealand companies. “It has been self-interest which has kept him in the role for the past three years.”
  • A real estate firm CEO summed up the general consensus that it is time for a change: “Aside from Len’s publicised incident, he has been a good mayor who took over the Super City concept and brought it together. But now is the time for a new mayor to start, and to deliver major changes required for Auckland.”

http://nzh.tw/11640197

The angel investment market in New Zealand is maturing and playing an important role in growing the economy, reports Tim McCready

The latest Young Company Finance Index, compiled by the New Zealand Venture Investment Fund, shows that angel networks and funds last year invested a record $61.2 million into 94 New Zealand companies across 132 deals.

Software and services received 39 per cent of the amount invested, followed by pharmaceuticals/life sciences (15 per cent), technology hardware and equipment (11 per cent), and food and beverage (8 per cent).

More than two-thirds of the investment last year were follow-on investment, indicating a maturing of the market and demonstrating that angel investment has become an important component in the patchwork of the New Zealand capital markets.

Angel investment often fills the gap in early-stage company development before venture capital kicks in. In addition to funds, angel investors can provide advice, introductions and access to networks and markets that would otherwise be unavailable.

Angel investors typically invest from a desire to help the country, the industry or an innovation they are passionate about — and hope that at least one will turn out to be the blockbuster that makes good on their investments.

“After I arrived in New Zealand I wanted to do something that would help the country grow long-term,” says Chris Sattler, lead investor with the ICE Angels and now active with the Flying Kiwi Angels.

“Property is one asset class but I strongly believe in investing in ‘more productive’ assets to provide interesting and high-value jobs for the future,” he says.

“Angel investment is a driven environment and it’s energising to work with the founders.

“Plus, it’s a great way to build a network of interesting, like-minded people.”

New Zealand can now point to global success stories — most notably Xero, Trade Me, and Orion Health, which provides confidence that world-leading companies can be developed from New Zealand.

Chris Twiss, Investment Director at the New Zealand Venture Investment Fund, says New Zealand is increasingly on the radar for international investors looking for opportunities.

“We are now seeing angel-backed companies successfully raising capital from overseas investors — including venture capital firms, angel groups and equity crowdfunding,” he says.

“Offshore investment brings capital and access to networks and markets, and widens the shareholder base.”

There are now eight crowdfunding operators licensed by the Financial Markets Authority in New Zealand. Alongside angel fund investment, four of those crowd funders Snowball Effect, PledgeMe, Equitise and CrowdCube — raised $14.9 million of retail investment for 27 companies.

“Crowdfunding platforms demonstrate the efficiencies that technology can bring to what has historically been a clunky and time consuming business, corralling multiple individuals into a single early-stage company investment,” says Twiss.

“In addition, the crowdfunding platforms in their own right have opened up this form of investment to entirely new audiences.”

Since the Young Company Finance Index began measuring activity in 2006, $414.7 million has been invested into young companies by angel groups.

Although the average deal size last year was $464,000 — down slightly on 2014 — the total amount of angel investment captured by the index in 2015 represents a 9 per cent increase on the previous record in 2014, and is certainly a jump from the $21.4 million invested back in 2006.

Although the index demonstrates that angel investment is growing, it is important to note that it only measures investment made through angel networks and funds.

The index reports that 76 per cent of deals last year were syndicated across angel groups.

These networks help shortcut the investment process, by linking start-ups with investors and providing access to deals, shared research and pooled investment capital.

Rowan Simpson, who was the third employee at Trade Me and is now a seasoned advisor and investor through his family office Hoku Group, says the flipside of these groups is that they can dilute the impact an angel can have in a company.

“If you have invested in 50 early-stage companies then the money, and much more importantly, the attention you can give to each one is unlikely to make any material difference,” he says.

“Risk is essentially broken down into smaller and smaller chunks, with no significant individual investors, and therefore no one with any real skin in the game.

“As activity by individuals and those outside formal networks isn’t recorded, an important question is: What portion of the market does the index capture?

“In our experience the best ventures choose their investors carefully — because they can,” says Simpson. “By just including those ventures Hoku Group are invested in directly that raised further capital last year, the numbers would increase significantly.”

Regardless of the number, it would be fair to say that significantly more capital is needed to create the number of globally-competitive businesses New Zealand so desperately needs. Investment figures have doubled in the eight years since 2007, but New Zealand only invests around $13 per capita through angel investment. Compare this to the United States, where some estimates of angel investment are north of US$70 per capita.

There is a lot more to do to develop and broaden the investor base in New Zealand, particularly outside the main centres.

“New Zealand needs to be one unified market for both starting and funding young technology and innovation companies,” says Twiss.

“The relatively recent formation of new angel investment networks in Canterbury, Taranaki and Southland is a step in the right direction.”

But the most important driver to take angel investing to the next gear will come from the demonstration of investment success.

“Active angel portfolio management and the development of tools and expertise to improve investment returns — both the number of exits and the quantum returned — for angel backed companies is definitely top of mind now for the industry,” says Twiss.

While angels understand that their investments are particularly high risk, it is without doubt essential to see financial returns for the ongoing health and development of the angel market — and ultimately of course, the New Zealand start-up sector.

Tripartite Summit: Infrastructure, housing, and transport – We can learn a lot from each other

  • Auckland, Guangzhou, and Los Angeles have strong and long-standing sister city relationships.
  • Auckland Los Angeles share similar challenges, particularly in transportation, the economy, international trade and innovation. Eric Garcetti believes these challenges come from our cities being “victims of our own success”.
  • Over the next decade, autonomous vehicles are expected to revolutionise transport. People won’t need to own their own cars, and cities won’t need the carparking infrastructure they have today.

“We have a lot to learn from each other, and we decided to formalise that relationship to improve the economy and the quality of life in each of the three cities.” – Eric Garcetti

While in Auckland, Los Angeles Mayor Eric Garcetti spoke of the strong and long standing relationship between the cities in the Tripartite Economic Alliance, the similar challenges Auckland and Los Angeles are facing, and the opportunities that can come from our longstanding relationship as sister-cities.

Los Angeles has been a sister city with Auckland for 45 years, and with Guangzhou for 35 years. “Two years ago in Guangzhou we realised there was so much we could share with each other, especially in transportation, the economy, international trade and innovation,” Garcetti said.

He believes that local governments are where the rubber hits the road and innovation takes place. “We have a lot to learn from each other, and we decided to formalise that relationship to improve the economy and the quality of life in each of the three cities.”

 

Although Garcetti acknowledged Auckland and Los Angeles share similar challenges, he believes they come from our cities being victims of our own success. “Both cities are learning from mistakes of the past, and undergoing massive transformation in infrastructure, housing, and transportation,” he said.

“Rents are going up, traffic is increasing. But on the other hand, we have a booming economy. People love Los Angeles – it is the northern capital of Latin America, western capital of the United States, eastern capital of the Pacific. In so many ways, people want to be there because it is such a creative place. We just have to solve what that does to people, so they can have a decent place to live, and not be stuck in traffic.”

Both Los Angeles and Auckland’s current housing affordability problem is driven by a lack of supply. Garcetti has been heavily criticised for removing historic buildings in order to build apartments, however he believes that city planning requires a careful balance of urbanisation and preservation.

Neighbourhoods can be preserved, as long as we put intensification around areas we have put public transportation in place. “It’s a supply and demand issue. You have to put buildings where you’re investing in transit, and in your downtowns,” Garcetti said.

Even more so than Auckland, Los Angeles is defined – and criticised – by its roads, and its transportation problems. Both cities removed their tram and streetcar networks in the 1950s and invested heavily in roading infrastructure.

“We want to have cars and we love cars, and we need to improve our roads, but there’s no space to build new freeways. What we have to do is lay down rail that allows people to get around,” said Garcetti.

Los Angeles residents are strongly supportive of increasing public transport. The city requires two-thirds of the population to vote in favour of tax increase, and yet eight years ago the city agreed to tax themselves a quarter-cent on every dollar of sales to initiate a US$35 billion construction programme.

“We literally have five lines underway, connecting the airport, and you will now be able to go from the skyline to the shoreline – Downtown to Santa Monica, for the first time in sixty years, just like our grandparents used to do,” said Garcetti.

Over the next decade, Garcetti believes that autonomous vehicles will revolutionise transport. Although Los Angeles has excellent roads, in Downtown Los Angeles, 81 per cent of space is taken up by car parking spaces. With autonomous vehicles, people won’t need to own their own cars, and won’t need carparking infrastructure.

“96 per cent of the time, cars are not driven – we own too many of them,” Garcetti said.  “Even at peak traffic – which is only 5 per cent of the day – 10 per cent of the roads have cars on them, 90 per cent don’t. It’s a spacing problem, and we’re right on that brink.

Infrastructure, housing, and transportation are challenges that Garcetti believes our cities can work with each other to share ideas and learn. The formal relationship that our sister city relationship and the Tripartite Economic Alliance provides means Los Angeles, Auckland – and Guangzhou – can innovate, grow, and solve these challenges, together.

Tripartite Summit: E-commerce – a world of opportunity

  •  The e-commerce industry is rapidly evolving and transforming the retail sector faster than ever before.
  • Although the customers might differ in their buying decisions, e-commerce is becoming an important player in all markets around the world.
  • China saw the opportunity New Zealand can provide to their e-commerce industry – many of the country’s largest e-retailers were present at the Tripartite Economic Summit in Auckland, seeking out products that would be in high demand.

“E-commerce is a very simple topic.” -Rob Freelen

“E-commerce is a very simple topic,” said Rob Freelen, Los Angeles Market Manager of Silicon Valley Bank at the Tripartite Economic Summit. “It boils down to connecting a product with the customer, including how you market and sell to the customer, and how you transact with the customer.”

While the customers might differ somewhat between Los Angeles, Auckland, and Guangzhou, the e-commerce industry is rapidly evolving and transforming the retail sector faster than ever before.

Freelen noted that the United States is seeing a large number of e-commerce companies operate in very specific niche sectors.

Thrive Market sells ‘the best healthy, natural, non-GMO, organic, vegan, raw, Paleo, gluten-free, and non-toxic items from the top-selling brands at wholesale prices’ – effectively a hybrid between Whole Foods and Amazon. They deliver specifically to those demographics that don’t have an easily accessible Whole Foods, and it’s a market that is growing very quickly.

Club W is a wine discovery platform targeted to 21-31 year olds. It has been designed to introduce younger consumers to new tastes they might like. The Dollar Shave Club sells very cheap disposable razors. Both of these business spurred a multimillion dollar business based on a couple of YouTube videos that went viral.

The US economy often leads the world in industries like e-commerce. Freelen has seen the industry rapidly shift from an information economy to an experience economy. “These companies are expected to not only go internationally, but to go after customers in a unique, innovative way, that will drive much faster sales increases,” he said.

Recognition of the transformation to an experience economy was even echoed at the Tripartite Summit in a panel discussion on virtual and augmented reality. “The importance is not discounting; it’s about upselling experience,” said Dr Roy Davies, Founder of Imersia.

“The importance is not discounting; it’s about upselling experience.” -Dr Roy Davies

The Guangdong Cross-border E-Commerce Industry Association (GCEIA), an industry body that was formed by many of the leading Chinese e-commerce industry players reiterated China’s e-commerce interest in New Zealand.

GCEIA actively promotes New Zealand as a region and a source of products among its membership. When asked what they aimed to get from their attendance at the summit, GCEIA said “the Summit is a great opportunity to explore potential local suppliers. Many of our association members are interested in the opportunity for New Zealand products in China. We are here to seek out those goods that will be in high demand through our platforms.”

China’s E-mall platform provided by ICBC now has 680 million subscribers, which at more than the population of the European Union, ranks it as the largest e-commerce platform in the world. The internet industry has contributed to seven per cent of China’s total GDP, and this is expected to continue to grow.

China has seen such rapid development of the e-commerce industry because it corresponds to the growth of the middle class. China is being further and further urbanised, customers demand for better quality products is growing, and disposable income continues to increase. By working with top quality businesses, ICBC have established a solid brand in the marketplace, and are achieving a very good word of mouth reputation among customers and businesses.

ICBC’s New Zealand E-mall was launched in November 2015, and allows ICBC’s small and medium sized businesses to sell directly into the Chinese market through a secure sales channel. In the three months since the New Zealand E-mall went live, ICBC facilitated 4000 transactions on the platform. Leveraging the increasing demand from Chinese consumers for high quality, safe products, the majority of items on the New Zealand E-mall are personal health care and cosmetic products, and New Zealand made snacks.

“The next step for ICBC will be to expand their product lines into new products, including tourism and studying in New Zealand.” -Xiaoyan Chen

“The next step for ICBC will be to expand their product lines into new products, including tourism and studying in New Zealand,” said Xiaoyan Chen, ICBC Director. “We plan to provide information and solutions for people looking to visit and study in New Zealand. ICBC wants to become a strong bond. One that can link trade between our countries together, and provide a one stop cross-border solution.”

Vipshop, a Chinese ecommerce giant, is another Chinese company capitalising on the ecommerce shift. Working with around 18,000 brands, many of them at the premium end of the market, the company now has 180m registered members, including 13 million daily active users, with an 80% repeat purchase rate.

“You can really see how ecommerce is shaping the whole China retail market.” -Hillary Wang

To put the shift into ecommerce into perspective, 46% of all pairs of shoes sold in the Chinese market in 2015 were sold online. “You can really see how ecommerce is shaping the whole China retail market,” says Hillary Wang, Senior International Director at Vipshop.

E-commerce platforms like Vipshop are able to provide the suppliers whose products they feature with access to an increasingly large pool of data about buyers. For example, Vipshop can provide suppliers with information about where merchandise has been delivered to and who has been buying. New Zealand companies can then use this information to make strategic decisions when entering the Chinese market in a physical, offline sense.

These innovations open New Zealand retailers up to a potentially enormous customer demand, especially now that China has overtaken the US to become the world’s largest e-commerce market, and this is only anticipated to continue, with China’s strong domestic consumption and rapid urbanisation.

Tripartite Summit: The Economic Power of Arts and Culture

  •  The creation of networks of people is an important driver for economic development and can help to fully unlock creativity.
  • It can be argued that China is millennia ahead of the rest of the world in terms of understanding the role of networks, and cultivating them.

“The economic driver of the future isn’t a factory or a piece of technology or software. It’s actually networks.” – Sunny Bates

 Sunny Bates is CEO of Sunny Bates Associates and a director of Kickstarter and Creative Capital, an advisory board member of MIT Media Lab, and a Brain Trust member of TED Conferences. She advises big corporations including GE and Proctor & Gamble.

Bates is also an expert in human networks, and although she spoke at the Tripartite Economic Summit about how she spends her life with a fear of missing out, it seems she does everything but. Bates joked – though only half-heartedly – that her keynote address was organised thanks to a chance meeting in a hot tub on a boat with a New Zealand executive. Opportunities like these don’t seem all that uncommon in Bates’ life.

 

Networks redefined

Bates insisted the economic driver of the future won’t come from factories, technology, or even software. But it will instead come from networks – networks of people.

“The most important thing anyone can do to drive economic development and fully unlock creativity is to create networks of people,” she said.

Bates pointed out that art and culture are critical economic drivers. The cities and regions that understand this are consciously creating conditions to attract and retain people and support their networks. They will be the winners this century.

The Tripartite Alliance was highlighted throughout the Summit as an example of where cultural cross-pollination is occurring, with tangible benefits resulting. “There is a beautiful cultural exchange going on,” said Melanie Higgins, US Consul-General in Auckland. “Culture transcends the boundaries and the Pacific connects us.”

 

What are networks?

Guanxi is a Chinese word originating from the Chinese social philosophy of Confucianism, stressing the importance of mutual obligations, reciprocity, and trust with others in order to maintain social and economic order. It describes the importance of connections and networks that are formed between individuals – and the way that people find each other, and the way in which capital and ideas move.

Bates argues that China is millennia ahead of the rest of the world in understanding the role of networks, and cultivating them.

Most people think of a network as being something physical. But instead, Bates’ thinks of Rome.

In contrast to other big cities – particularly London’s Thames and the Seine in Paris – Rome has been strangely disconnected from the Tiber river. The river, although running through the heart of the city, has been neglected over the years, and people don’t use it.

For the revitalisation of the river, Rome didn’t build a stadium or a factory. Instead, they commissioned a massive art project. William Kentridge created a 550 metre frieze – Triumphs and Laments – running along one side of the embankment between Ponte Sisto and Ponte Mazzini. Rome’s largest piece of public art since Michelangelo’s Sistine Chapel wasn’t painted on the walls. Instead, large, figurative stencils were placed on the river’s embankment and the wall then power-washed around them – a process referred to in the industry as ‘reverse graffiti’.

This revitalisation of the heart of the city, although only opening last month, has already made the waterfront a place that people want to visit. Rome has become the go-to European destination this summer.

How did this happen?

We often talk about things ‘taking a village.’ But the modern day equivalent is that it takes a network – and often a global one.  Allowing arts and culture to flourish and become an economic driver requires funding, public policy, and infrastructure. You need support not only from government, but from the public.

The project in Rome was created by a South African artist, commissioned by a Roman arts organisation, with funding through the US crowdsourcing website Kickstarter. The project raised over US$95,000 – easily surpassing the goal of US$80,000. Most backers for the project were based in America and will likely never see the artwork. But it doesn’t matter – because as Bates points out, networks know no borders. That is their power.

What is culture in an economic context?

Today, networks are immaterial. Moving beyond goods and services, networks still produce values and products – they just look different. Experiences, intangibles – a conference – these are all cultural products. They have intellectual property, a location where these experiences happen, and a process that leads up to them.

The recent hoverboard craze is another example of a network in action, Bates explained. They were born out of social network magnification and are now a global phenomenon. China’s Shenzhen has become the world capital of meme manufacturing – 600 manufacturers started producing hoverboards in the first six months of 2015. This idea of meme manufacturing typically starts in the west – an idea spreads through an elaborate social network. Tweets, likes on Facebook, and photographs posted onto Instagram have the power to shape the lives and economies of people and places on the other side of the world.

The economic power of culture and networks was also evident in a panel discussion on the ‘influencer economy’. “A lot of people underestimate the power of culture and how that actually impacts people’s buying decisions,” says Angelo Pullen, founder of 3BlackDot. Increasingly, YouTubers are “driving forces in culture for young men and women around the world.”

3BlackDot is essentially a network itself; the company has a number of YouTube stars under its umbrella, which Pullen describes as “a network of YouTube influencers.” Between them, these 22 influencers have some 70 million followers and receive around 700 million views each month.

Other examples of culture impacting economics that Bates spoke of included:

  • The Gates in New York were a group of gates comprising a site-specific work of art by Bulgarian artist Christo Yavacheff and French artist Jeanne-Claude. They installed over 7,500 vinyl gates along pathways in Central Park. Although this was initially rejected in the 1980s, it ultimately attracted many people, and helped to boost the arts scene in New York.
  • After a struggle spanning the seventies, eighties and nineties in Berlin, the wrapped Reichstag was completed in June 1995. For two weeks the building, the former centre of the German Empire, was shrouded in silvery polypropylene – highlighting the features and proportions of the imposing building. It helped shift Berlin into a celebratory mood with crowds gathering day and night and marking the beginning of the city’s twenty-year ascent to become the cultural mecca of Europe.
  • The 798 Art zone – or the Dashanzi Art District in Beijing – is a 50-year-old decommissioned military factory with a unique architectural style. It has been transformed into a thriving community for artists. The building brings together an eclectic mix of people that would otherwise not have an outlet.
  • The Lord of the Rings is a great New Zealand example of culture driving economics. The films helped to grow tourism by 40 per cent from 2000 to 2006. Six per cent of international visitors cited the films as their primary reason to visit New Zealand. The films continue to boost the New Zealand economy, estimated to be worth NZD$33 million a year.
  • The film and television industry in Los Angeles accounts for a significant amount of the US GDP, and is a critical mass for cultural migration. Furthermore, business in Hollywood tends to be done over drinks and a meal – which was fuelled a great culinary scene in the city.

Bates concluded her talk with an inspirational message that set the scene for day two of the Tripartite Summit.

“Networks are the structural basis for globalisation and for modernisation,” she said. “Networks know no boundaries, and cultural networks are powerful. They should be consciously created for the benefit of everyone. They can’t be violated, abandoned or ignored. Networks have power that can’t be explored without consequences.”

Tripartite Summit: Guangzhou – a hub for innovation

  • Guangzhou is China’s third-largest city. It has a GDP of similar size to Singapore and Hong Kong, and is undergoing massive transformation.
  • The city is moving away from low-cost manufacturing and exports and towards innovation, science and technology, and services for domestic consumption.
  • There are various opportunities for Los Angeles and Auckland to be involved in China’s new economic blueprint, and to access Chinese government funding where there is an alignment with the development priorities of each city.

“It is lucky that China has managed to tie all these things together. Seemingly by sheer luck, China has got the mix of timing, location, and people right.” – Derrick Xiong

Delegates to the Tripartite Summit will not have left uncertain of the scale of the opportunity offered by Auckland’s sister city status with Guangzhou.

China’s third-largest city economy is transforming. Even if it wasn’t, the size alone would be opportunity enough: at US$275bn, Guangzhou’s economy is almost the size of Singapore’s and Hong Kong’s in terms of GDP.

 

Importantly, in the face of growing fears of a slowdown in the Chinese economy, it’s a city which grew 8.3 percent in 2015. That made it the fastest growing of China’s three largest cities, outpacing Shanghai and Beijing by 1.5 and 1.6 percentage points respectively.

As outlined by Rebecca Needham, New Zealand Consul-General to Guangzhou, the Chinese economy as a whole is undergoing a transformation, but Guangzhou is “structurally one of the most advanced cities” on this path.

“What I mean by that is moving away from growth dependent on low-cost manufacturing and exports and moving very much towards growth based on innovation, science and technology, and services for domestic consumption,” explains Needham.

A Chinese government plan in 2008 confirmed plans to make Guangzhou an international hub for science and innovation. That goal is also prominent within the Guangzhou city government’s own five-year plan. Now, eight years into the original plan, and with four years left, Guangzhou has arguably already achieved that goal.

A hallmark of that process has been the development of the Guangzhou National Supercomputer Centre which holds Tianhe-2, the world’s fastest supercomputer. The result of USD$400m of investment by the Guangzhou, provincial, and central governments – and built in an impressively quick 18 months – the Centre offers a huge amount to the city.

“Now, we talk about a new industrial revolution,” said Professor Yuan Xue-Feng, the Centre’s Director. “Characterised by digitalisation, information, networks, intelligent prioritisation.”

Tianhe-2 has fast become the centre of the city’s innovation, with more than 1000 user groups. Applications include material engineering, computational biology and personalized medicine, digital manufacturing, energy-related activities, astronomy geoscience and environmental engineering, and smart-city activities.

The ultimate goal is to “create an ecosystem for research and innovation.”

There are various opportunities for NZ involvement in what Needham refers to as “China’s new economic blueprint”. These have included biomedicine, information technology (with scope for collaboration with the Supercomputer Centre), or even creating a virtual landing pad in Guangzhou through the Innohub connections Auckland has forged of late.

Rapid prototyping is another high-level sector where Guangzhou’s capabilities represent an opportunity for Auckland’s businesses. The Callaghan Institute is currently exploring this, along with scaling-up possibilities around manufacturing, as an option for young New Zealand companies.

“There are also possibilities for Auckland and Los Angeles to access Chinese government funding where there is an alignment with the city’s development priorities,” says Needham.

“There are also possibilities for Auckland and Los Angeles to access Chinese government funding where there is an alignment with the city’s development priorities.” -Rebecca Needham

This new wave of economy for China was reiterated in the Advanced Manufacturing and Automation panel at the Tripartite Summit. Derrick Xiong, of Ehang Inc. referred to the Chinese saying throughout his presentation – “timing, location, and people”.

“It is lucky,” said Xiong, “that China has managed to tie all these things together.” Seemingly by sheer luck, China has got the mix of timing, location, and people right, which has allowed companies like Ehang Inc. to be part of the new era of made in China”.

For New Zealand businesses to be a part of this emerging opportunity will require looking beyond Guangzhou as simply a market for exports, but instead seeing it as an area to form innovative partnerships that add value.

Tripartite Summit: High Value Foods – Mega Trends & Opportunity

  • The food industry is undergoing massive change. Farming systems and sources of food are being transformed around the world, new retail models are emerging in the food sector, and consumer demand is rapidly changing.
  • Reinvention of New Zealand’s food industry is critical to the country returning to the forefront of exporting and developing food and agribusiness products.
  • The global challenges in the food industry are so urgent that it is no longer alright to focus on research for research sake – there must be a connection between research and the adoption routines of the marketplace.

“It is a fast moving world and no longer alright to focus on research for research sake. The problems we face are so urgent that there must be a continuing connection between research and the adoption routines of the marketplace.” – Rohit Shukla

The challenge faced by New Zealand

Since the 1970s, New Zealand’s economic performance has drifted, and we are no longer at the forefront of exporting and developing food and agribusiness products. Over the last fifteen years, New Zealand has doubled exports in food and agribusiness – but that is largely down to increasing volumes of commodity products, which are currently more volatile than ever.

“What got us here will not get us there – reinvention is critical,” said Buckley, Executive Chairman of KPMG New Zealand. The New Zealand Government has set a target to double our exports in food and agribusiness through until 2025. “If we are going to succeed with that goal, the help of America and China is essential to make this happen,” he said.

New Zealand produces enough food to feed 20 million people – around five times its population. A real challenge for us is that we must not rush off to feed the first 20 million people we come across, said Buckley. “For New Zealand to get the best returns, we need to look at the top 800,000 affluent customers, and feed just a portion of their diet.”

The food industry is undergoing massive change. Farming systems and sources of food are being transformed around the world, new retail models are emerging in the food sector, and consumer demand is rapidly changing. New Zealand needs to be aware of this evolution in order to leverage it.

 

Changes in farming

  • The use of drones for precision agriculture has made crop management explode around the world. Drones can provide live data, with a range of sensors, to provide in-depth information.
  • The Climate Corporation was founded in 2006 by two former Google executives. It examines weather data to farmers, who can then gain insurance and lock in profits in the case of droughts and adverse weather conditions. Monsanto acquired this business in 2013 for US$930 million.
  • Farmers are using data for ‘smart farming’. Sensors are being integrated into irrigation systems that can provide ground water information.

Reinventing our food source

  • Wayback Burgers in the United States offered customers the chance to increase their protein intake by offering the Oral Mud Pie Cricket Protein milkshake, with 24 grams of protein – or 96 crickets.
  • Impossible Foods is producing plant matter that is made to look like beef, taste like beef, bleed like beef – but is not beef. The Impossible Burger is promoted as having the look, feel, smell, sizzle and taste of a great burger, but made from plants.
  • Fearlife provides milk products with superior nutrition, less sugar, more protein and calcium, and no lactose. It is owned 50 per cent by Coca-Cola.
  • SmartFish source their fish from Mexico, and deliver to top restaurants in California and Texas. The company places emphasis on quality, efficiency and responsibility, with a focus on sustainability and social, economic, and environmental returns.

Emergence of new retail models

  • Food wastage is a big issue worldwide. Wefood is a charity-based organisation operating in Denmark, and has opened the first ever food surplus food market. Although it is 30 – 50 per cent cheaper than normal supermarkets, it is not only aimed at low-income shoppers. A large number of shoppers are those who are concerned about the sheer amount of food waste. The charity hopes to reduce 700,000 tonnes of food that Denmark wastes each year.
  • MyFoodBag is a homegrown example from New Zealand, which was formed three years ago. Weekly dinners are ordered ahead of time, delivered on Sunday with innovative, healthy recipes. This business model avoids typical supermarket supply chains, and has already grown from $0 to $100 million in turnover.
  • Eat My Lunch is a great success in New Zealand. People order a healthy lunch for $12, and at the same time Eat My Lunch provide a free lunch to an underprivileged child who would have otherwise missed out.

Consumer demand

  • There is increasing consumer awareness, and demand for traceability and transparency of food and the way it is produced and distributed, and yet the frequency of food contamination is increasing. This is just as important for large economies as it is for those rapidly developing countries.
  • Consumers are becoming more aware of what they are eating and there is a growing trend for organic products. While the payout for dairy farmers is less than $4 per kilogram milk solids, Fonterra – New Zealand’s largest milk cooperative – has just offered $9.20 per kilogram of milk solids if farmers can provide organic milk.
  • Sugar levels in food is a big issue dominating headlines at the moment. As a result, people are changing their diets, and some economies are imposing sugar taxes. Nutritional facts is a trend nowadays. Consumers are spending considerable time looking at labels and nutrition levels before buying a product.
  • Driscoll’s is a very large producer of berries in the United States. Their supply chain innovation strategy is built around delighting their consumers. As soon as berries are packaged, a unique barcode is attached to each box that can be used by the consumer through a smartphone app to report on their level of delight with the berries. Through this, Driscoll’s can track the field the berries were grown in, and the time it took for the berries to go through every step of the supply chain before reaching the consumer. Driscoll’s has begun rewarding individual growers that produce the best berries and create delight for their customers. This simple connection with traceability of foods has reduced input costs by significant amounts, and an increased level of ‘delight’ for their consumers.

New Zealand must protect its natural resources, Buckley told the audience. He used Ireland’s ‘Origin Green’ as a model. Origin Green is a sustainability programme that operates on a national scale, and unites government, the private sector, and food producers through the Irish Food Board. It sets targets for farmers and food producers to meet on sustainability, resulting in a positive impact on the environment, local communities, and Ireland’s natural resources.

 

Rohit Shukla, chief executive of the Larta Institute in Los Angeles agreed with Buckley, and believes New Zealand could – and should – be a truly global player in the high-value nutrition sector.

“The great thing about New Zealand is that you can collaborate on a research basis,” he said. “New Zealand is a small country which allows for shared facilities and research. This is unlike in the US, where universities and research institutions tend to be very proprietary about what they develop, which stifles collaboration.”

Shukla threw down a challenge at the Summit. He urged the audience to consider what we could do as three world-class cities, and suggested the creation of a tripartite working group that would be dedicated to food safety, reliability, and innovation in high-value foods. “I imagine this would involve a combined research effort across the three cities, and must include the collaboration of universities, public health bodies, and regulatory agencies,” said Shukla.

“By creating a grand challenge for collaboration, the tripartite alliance could create high-value foods that are good for our economies, and good for our planet,” he said.

Shukla emphasised how important it is that the applications of research are understood and framed in the context of what is happening in the world.

“It is a fast moving world and no longer alright to focus on research for research sake,” he said. “The problems we face are so urgent that there must be a continuing connection between research and the adoption routines of the marketplace”.