Dynamic Business: Is NZ having a Trump moment? (NZ Herald)

Tim McCready

Issues of social mobility rather than inequality may be to blame for the current rise in anti-establishment politics

As anti-establishment politics continues its seemingly unassailable rise, the concept of ‘inequality’ is often invoked to explain it.

While there is no doubt inequality has driven many to the polling booths in support of Donald Trump, Brexit, Pauline Hanson and others, arguably what is at stake is more an issue of social mobility.

People will tolerate inequality. Many accept it as a natural by-product of an economy that encourages entrepreneurship and growth. Indeed, Americans have voted in as their president a man who embodies that inequality.

But that tolerance comes with hope; a hope that they, or their children or grandchildren, can reach the upper echelons of the economy if they continue to work hard, make prudent long-term decisions, and have a little bit of luck.

Circuit breaker
Increasingly, Western economies have represented a closed circuit of economic enrichment.

Alan Krueger coined the term ‘The Great Gatsby Curve’ to describe the way inequality affects social mobility.

As Krueger summarised in a Brookings Institution blog, “greater income inequality in one generation amplifies the consequences of having rich or poor parents for the economic status of the next generation”.

Once the working class gets the sense that their prospects of upward mobility are waning, they are willing to turn to a circuit breaker.

The left
For decades, the left have adopted the rhetoric and policy that implies the economy is a ‘zero-sum game’.

Specifically, the consistent premise of their arguments has been that something that benefits the rich must automatically, and equally, cost the poor. A gain to one is a loss to another, they argue.

This is simply not the case when it comes to economic growth. But that is beside the point in relation to the present climate. The bigger problem is that such a paradigm becomes easily transported to the flow of people. Priming voters to see the economy as a zero-sum game makes it very easy for the nationalist right to argue that immigration is likewise a zero-sum game. It becomes difficult for the left to then argue that immigration is the one area where a benefit to one (the migrant) is not a cost to the other (the destination economy).

Immigration
Perhaps that is why we are beginning to see some New Zealand’s political parties tentatively embracing anti-immigration policy.

The Greens recently released a new, population-based immigration policy, stating they would cap overall net migration at one per cent of the population — including returning New Zealanders. “We know that immigration is becoming more of a concern for people and in my experience the vast majority of people aren’t concerned about immigrants, they’re concerned about the impact on house prices, and infrastructure,” says James Shaw, Green Party co-leader.

“Others around the world think as New Zealand First does,” said New Zealand First leader Winston Peters this year, at the party’s 23rd anniversary. “They were tired of being fobbed off about issues like immigration.”

Much has been made of a potential ‘Trump moment’ occurring in New Zealand in the future. Already, we may be falling into the same trap of the establishment in the US: being paralysed, fascinated even, by the phenomenon; musing over, sometimes analysing with impressive depth, its causes; but in doing so, failing to consider its remedies.

Inequality
But viewing inequality through a predominantly economic lens — incomes — fails to account for all the other things that make for an upwardly mobile life.

Anxieties do not only stem from income levels, but from not being able to get your child into a good state school, poor health, intolerance, a lack of social support, or few opportunities to progress.

Income is not everything. Indeed, it is everything aside from income that matters most for social mobility. From upward mobility, higher incomes follow.

Flawed measures
This is partly the reason why existing measures of inequality are flawed.

The Gini coefficient is the most used measure of inequality and looks through the lens of wealth at the income distribution of a nation’s residents. The number ranges from zero to one, where zero represents perfect equality — where everyone has the same income, and one represents perfect inequality. A higher Gini coefficient means greater inequality.

New Zealand’s Gini coefficient of 0.33 ranks New Zealand at 22nd — below the Netherlands but ahead of Norway.

However, aside from the fact that the measure cannot tell the difference between a society where everyone is equally poor and a society where everyone is richer, but incomes are more unequal, it is also deeply flawed as it fails to reflect the fact that inequality is about far more than simply income.

If the measure cannot reflect differences in health and social support and education outcome and opportunity and job quality, it means that you miss the root malaise that is behind Brexit, and to a certain extent Trump.

Prosperity
The Legatum Institute released its 10th annual global Prosperity Index last month — a huge study that measures the prosperity of 149 countries based not only on their wealth but also on a series of other factors including education, personal freedoms, how safe people feel and how strong community networks are.

This year, New Zealand topped the world for prosperity, and ranked first in the Index’s measure of economic quality, first for social capital, second for business environment, second for governance and third for personal freedom.

Harriet Maltby, head of policy research at the London-based Institute’s Prosperity Index team says that it is important to look at all inequalities combined, through one measure (prosperity), otherwise you miss the very reinforcing nature of deprivation.

“The problem is that traditionally, national success and related issues such as poverty and inequality, have been looked at from a purely economic perspective. While we recognise that wealth matters, so too does wellbeing.

“Income measures miss so much about what makes for a good life. That’s why the Prosperity Index looks at wealth and wellbeing combined.

“It is opportunity — real life chances — that drives prosperity, not money,” says Maltby. “This all feeds in ultimately to a country’s long-term success, which matters to business.”

Maltby, who is visiting New Zealand over January, explains that we need to shift our perceptions of what inequality looks like. “Making people richer in itself is not the answer”, she says. “We need a measure like prosperity that can look at wealth alongside all the other things that matter in life, and make policy decisions based on that. The New Zealand Government is already thinking like this, and other countries should do the same.”

“Britain is achieving what it achieves with a significant proportion of its population totally left behind in a whole load of dimensions. Imagine the potential and prospects for a nation if it could use and develop the talents of all?”

Globalisation
While it is useful to analyse the impact of globalisation on America’s rust belt, too much time spent examining the causes of those anxieties allows the establishment to feign intellectual interest in the winds of change, while making little or no progress in harnessing them for the good.

At last month’s Apec leaders’ summit in Lima, the leaders of the Pacific Rim pushed back against the creeping global protectionism, promising to continue to strengthen economic ties.

“If the United States doesn’t want to participate in free trade, [president-elect] Trump needs to know that other countries will,” said John Key at Apec.

“We hope he is part of the programme.

“But if not, we are going to continue doing things.”

Meanwhile, Australian Prime Minister Malcolm Turnbull warned that protectionism is the way to poverty. “We have seen this film before, the world did this in the 1930s after the Great Depression and made it much worse,” he said. “It’s not only missing out on a positive but risking a very big negative in terms of destabilising the global trading and strategic system.”

What is often overlooked is that businesses, particularly those that benefit most from a globalised world, can play an important role in helping to find the solutions, and will benefit from operating in a country that offers up the talents of all its people.

Dynamic Business: No ordinary disruption (NZ Herald)

Tim McCready

A handful of forces are shaping the future of what global business will look like

Four global forces are breaking all the trends and shaping the future of what global business will look like: greater global interconnections, industrialisation and urbanisation in emerging economies, an ageing world and disruptive technologies.

These disruptive forces will clearly have an impact on the business environment and will have an impact on investing for the future.

Consulting firm McKinsey & Company outlines the four global forces in its presentation: ‘No Ordinary Disruption’.

Greater global interconnections
The world is becoming increasingly connected through trade and cross-border flows of capital, people and information. Since 1990, cross-border flows have increased five-fold. Data flows are surging and connecting more countries — in 2005, 4.7 terabits per second were transferred globally, growing 45 times larger by 2014 to 211.3 terabits per second.

Australia and New Zealand are noted as two particularly well-connected economies in all five types of cross-border flow (goods, services, finance, people and data).

Relative to the size of the economies, Australia and New Zealand have more exchanges than most pairs of countries — people and data are rated particularly high, with 27 and 25 per cent share of total flows between the countries, respectively.

However, Australia and New Zealand rank lower in global connectedness — Australia is ranked 27th (down 10 places from last year) and New Zealand is ranked 48th (down five). This is in contrast to Singapore, the Netherlands and the United States who take out the top spots.

McKinsey & Company notes that the current slowdown masks digital transformation, but creates opportunities for smaller firms to participate. While Australia and New Zealand are strong together, it is important to acknowledge there is much more that can be done.

Industrialisation and urbanisation emerging
The rise of China, India and other emerging economies over the past 10 years has seen the global economic “centre of gravity” shift at an unprecedented pace. Emerging markets are going through simultaneous industrial and urban revolutions. The acceleration of output per person is occurring at roughly 10 times the pace of that following Britain’s Industrial Revolution and 300 times the scale — creating an economic force 3000 times as large.

McKinsey projects that by 2025, 46 of the global top 200 cities will be Chinese (in terms of 2025 GDP) and emerging regions of the world will be home to almost half of all Fortune Global 500 companies.

This massive scale and momentum means big shifts in economic power, but it is the mid-tier cities that are driving growth — not the megacities. Nearly three billion people will join the consuming class by 2025, bringing new consumers and competitors for businesses to consider.

An ageing world
The population of advanced economies is ageing rapidly. There are currently three countries where one-fifth of the population has passed the age of 65 — Germany, Italy and Japan. By 2020, 13 countries will fit this profile. By 2040, about one in four people in advanced economies and China will be 65 years old, or older.

Productivity, which is needed to meet the demands of an ageing population — and therefore becoming increasingly critical — is going the wrong way. This has implications for skill gaps and successions, and without an increase, a smaller workforce will constrain consumption and slow the overall rate of economic growth by up to 40 per cent over the next 50 years.

Disruptive technologies
Mobile internet and advanced robotics have seen massive increases in development pace. It took 115 years to advance from the first phone call to the launch of the first website — and then 16 years until the first iPhone was launched in 2007.

We have all seen the statistics demonstrating how quickly the adoption of new technologies is accelerating. The amount of time taken to reach 50 million users has decreased from 38 years for the radio, 13 years for television, three years for the internet, nine months for Twitter, to an incredible 19 days for the 2016 mobile game phenomenon of Pokemon Go.

Despite these advances, McKinsey reports that digitisation is still in its early days, with advanced economies capturing only a fraction of their true digital potential.

Smaller firms and large sectors (such as agriculture, construction, hospitality, government and healthcare) remain laggards in technology adoption, and are still a long way away from achieving potential benefits.

Both New Zealand and Australia are currently lagging behind the OECD average in terms of STEM qualifications.

Of all graduates, 18 per cent in Australia graduate from across science, technology, engineering and mathematics. New Zealand is slightly higher at 21 per cent (up five per cent from last year), yet talent across these subjects will be critical in shaping the future of our economies.

From East to West – Crossing the Siberian Heartland (Sunday Star Times)

Tim McCready

The day I arrived in Vladivostok, I was taken to an open day held by the Russian military. As they searched the bags of visitors at the entrance, my friend Igor warned me to not raise unnecessary suspicion by speaking to the soldiers.

I watched hundreds of Russians run the gauntlet through mud and a series of extreme obstacles – presumably designed to showcase the fun that can be had in the military (but resulting in multiple broken bones), and was then let loose with all kinds of guns, artillery, grenade launchers, tanks, and surface-to-air missiles. It was a rapid immersion into Russia, and I suddenly felt a world away from life in Auckland.

Kiwis are known to have a sense of adventure, but I’d been looking for something that would take me far from the typical tourist destinations, and truly challenge my comfort zone. So when Igor suggested a five week road trip over the summer across the largest country in the world – from Vladivostok to St Petersburg – I was game.

In the Russian Far East, near the borders of North Korea and China, Vladivostok is only one hour from Tokyo or two hours from Seoul, with a time zone just two hours behind New Zealand.

The city was closed to the outside world between World War II and 1992, and it remains the home of the Russian Navy’s Pacific Fleet. It is often compared to San Francisco because of the ornate buildings that line its steep streets, and the striking hills that offer sweeping views over the city, the harbour, and the Pacific Ocean. Putin recently invested US$20 billion to upgrade the city, which included construction of the world’s longest cable-stayed bridge, an opera house, and an aquarium.

I was invited by Igor’s parents to their rural dacha. They live in the small two-level brick house an hour out of Vladivostok over the summer, surrounded by shrubs laden with berries, fruit trees, and a vegetable garden stretching out in all directions.

The ongoing Russian sanctions have caused meat and fish prices to increase, and some foods are just not available.

The most noticeable was cheese – traditionally sourced European varieties have been replaced with Russian equivalents that could be generously described as bland. But despite that, summertime in Russia has no shortage of delicious food.
Highlights of the dacha banquet were okroshka (cold sour cream-based soup) and Russian barbecue – chunks of marinated pork cooked on metal skewers over hot coals. Both are extremely popular in summer.

We left the relative comfort of Vladivostok and set off for our destination some 14,000 kilometres away. Igor, Darren (another Kiwi), and I took turns behind the wheel.

While one of us slept in the back, one drove, and the other kept an eye out for hazards – we needed all the help we could get. On the road we saw it all. Pristine highways suddenly became consumed with potholes. Roads decayed into rubble – or disappeared into mud. More often than not we would be met with hundreds of kilometres of roadworks.

We attempted a shortcut only once. We’d gone too far along a perilous 70km path (unknown by our GPS) to turn back. Just as our fuel was running precariously low, we arrived at a river and a questionable floating bridge with an outrageously high toll to get across. We gladly paid it.

I underestimated the amount of driving we would do until the day we needed to cover 1600 kilometres in a single day. We had no choice – that was the distance between the neighbouring cities Blagoveshchensk and Chita.

Between them was nothing but (very infrequent) gas stations. No cafes, no shops, no villages. It took 18 hours, and with an outside temperature above 35 degrees, we found ourselves driving through Siberian forest fires for most of the journey.

Of the total 14,000km we covered, we passed through seven time zones, 27 cities and towns, and seemingly hundreds of villages. Equivalent to driving from Auckland to Wellington over 21 times. Or from Auckland to New York City.

Before the trip I assumed Russia was roughly homogeneous, but I soon discovered that once you look past the Soviet-era buildings, Russian cities and villages have their own unique history, sights, culture, and people.

We closely followed the trans-Siberian railway route that skirts the borders of China, Mongolia, and Kazakhstan. But along the way, we explored:

Ulan-Ude
Close to Mongolia, the city feels distinctly Asian. It is home to an enormous bronze head of Vladimir Lenin, which at 42 tonnes is the largest in the world, and casts intimidating shadows across the city square.

Ulan-Ude’s population is made up of a relatively large number of Buryats – an indigenous group descended from Siberian and Mongolian people. In stark contrast to the imposing Lenin head, we were given a warm welcome and assistance everywhere we went from the locals.

Driving out of the city, we were pulled over for speeding.

I was nervous as the policeman approached the car, but the officer was more interested in chatting to Igor about our journey and asking about our Toyota Prius – he had been looking to buy one. Russia was full of surprises.

Lake Baikal
The largest, oldest, deepest freshwater lake in the world, containing 20 per cent of the world’s fresh water. It’s also an extremely popular summer destination – Russia’s Coromandel. The plan had been to take a short car ferry trip to an island in the lake, but we were confronted with a 25-hour long queue. It wasn’t going to happen.

Instead, we found accommodation in a lakefront yurt. With three very comfortable beds and a central fireplace, I fell asleep to the sound of waves lapping the shore, and had one of my best sleeps in Russia. Our change in plans gave us time to spare, and after days on the road, the water was irresistible.

Tinskoy
Deep within the Siberian forest, I felt honoured to be invited to stay with Igor’s aunt and uncle in a remote village – they hadn’t had any foreign visitors before.

Although they knew only one word in English (pencil, bizarrely), they welcomed us with open arms, piling far more food and homemade vodka onto their small kitchen table than it was ever made to hold, and offered us their beds. I immediately felt like family.

Before leaving their home, we were herded together to sit down for a minute in silence – a Russian custom before a long journey that helps to collect your thoughts and ensure you remember anything you may have forgotten before you set off.
It is a habit that has stuck with me, and worked in my favour several times.

Tobolsk
Aside from St Petersburg, (arguably the most beautiful city in the world), Tobolsk really stood out. The historic capital of Siberia has an impeccably maintained stone Kremlin, perfectly manicured grassed squares, and streets and footpaths completely free of potholes and rubble. This was noteworthy because it was such a rare sight. It felt as though we had stumbled upon Disneyland.

Yekaterinburg
Next to a riverbank on the Ural plains stands a giant computer keyboard monument. Rumour has it if you jump out a wish on the oversized keys, it will come true.

The city had a bizarre collection of monuments and statues, including immortalisations of Michael Jackson, The Beatles and, for no obvious reason, one of a giant credit card.

By the end of our journey I came to realise that monuments are especially important in Russia. My favourite was a huge lab rat in Novosibirsk. The giant rodent stands knitting a DNA double helix, and is dedicated to all animals that have had their lives sacrificed to advance science.

Perhaps most fascinating of all was the Fallen Monument Park in Moscow, which houses those statues that were hauled there after the collapse of the Soviet Union. The park was full of decrepit marble heads, and Lenins in various states of disrepair.

Kazan
As Asia gives way to Europe, the “third capital of Russia” has a noticeable blend of Muslim and Christian architecture.
The Kazan Kremlin, once a Tatar fortress and now a UNESCO heritage site, contains a cathedral and vibrantly colourful mosque side-by-side.

Kazan is well set up for tourists with a variety of restaurants. Russian staples like blini (pancakes), borscht (beetroot soup), and pelmeni (dumplings), are a common feature on menus across the country. Even so, locals would often order pizza, or Russian-style sushi (which usually contained cream cheese or mayonnaise, served warm with a topping of melted mozzarella).

Perm
Some places were memorable for all the wrong reasons.

Not everything in Russia was impressive, and even when I ignored the graffiti and piles of rubbish, it was difficult to see past the decrepit Soviet architecture of this industrial city. The less said the better.

Volgograd
This was the furthest south we travelled in Western Russia, and without a doubt it provided the most spectacular sight of the trip.

The Motherland Calls statue stands atop a hill with 200 steps to the base – each step representing a day of World War II’s Battle of Stalingrad.

At twice the height of the Statue of Liberty (excluding the pedestal) the Motherland Calls is the world’s tallest statue of a woman, and is considered a remarkable feat of engineering due to her characteristic posture – a sword raised high in her right hand, her left arm extended in a summoning gesture, and her mouth screaming triumphantly. It truly dominates the skyline, and yet it’s another Russian landmark most people have never heard of.

We visited the statue during the day, but were drawn back in the evening to watch as her profile was lit up under the setting sun.

It is probably the most magnificent sight I have ever seen. It was also one of Igor’s highlights.

Russians don’t tend to travel far from their own city – Igor told us that without having a couple of Kiwis to travel with, he wasn’t sure he would have ever found the opportunity to visit the historic city he was taught so much about in school.

Moscow and St Petersburg
Without a doubt, Russia’s largest cities are the jewels in its crown, with an unmistakable presence of grandeur laced with authority.

The familiar tourist sights are more beautiful and majestic than I imagined, but by the time we reached them I realised the privilege of spending weeks visiting sights and attractions devoid of tourists. Suddenly having to queue among hundreds to view Lenin’s body and the Hermitage didn’t feel right.

If you are short on time, the Golden Ring (a ring of historic cities including Yaroslavl and Vladimir) is just outside Moscow, and offers an easily accessible taste of the Russian heartland, and a welcome escape from tourists.

On reflection, travelling without a Russian would have made the journey infinitely more challenging. Even with Igor, it seemed as though everything – no matter how trivial – could rapidly become a headache. More often than not, when we needed fuel the gas station had either run out, wasn’t accepting credit cards, was out of order, or was closed.

We tried to stay in apartments rather than hotels. They were generally more spacious, cleaner, cheaper, and gave us access to laundry and a kitchen. Booking accommodation on the fly worked well, until we discovered the apartment had been double booked, destroyed by the previous occupants, or was missing beds. We frequently found ourselves scrambling to find alternate accommodation, and stung with late night check-in fees.

Driving an average of 10 hours a day meant we needed a lot of fuel – sometimes up to four top-ups along a single drive. But thanks to the weak rouble, after we sold our car the total cost per person for five weeks on the road was $2200– including accommodation, food, entertainment, $225 worth of fuel, and one police fine ($12).

We reached the end of our journey unscathed – miraculously the only damage our 2011 Prius suffered was a dislodged mudguard.

Igor threw down one final challenge before leaving Russia – to take the lead and show him around Moscow. Thankfully we’d picked up enough Russian and Cyrillic to easily navigate the city, and one of the world’s busiest and most extensive metro systems with virtually no English signage. We passed the test.

Veni, vidi, vici.

Asia New Zealand: Myanmar Matters

Leadership Network member Tim McCready discusses being part of an Asia New Zealand Foundation delegation that travelled to Myanmar in September to learn about the rapidly changing Southeast Asian country and explore business opportunities.

The ‘Myanmar Matters’ trip was part of the Foundation’s ASEAN Young Business Leaders Initiative (YBLI), which builds networks between entrepreneurs and business leaders in Southeast Asia and New Zealand.

“Things are moving quickly in Myanmar,” says His Excellence Steve Marshall, New Zealand’s ambassador to Myanmar. “For some, not quickly enough, and for others too quickly.”

Marshall didn’t follow the traditional MFAT route to an ambassador position, but instead spent eight years heading the International Labour Organisation’s Myanmar office. As a result, he was able to offer the delegation of business leaders and entrepreneurs from Myanmar and New Zealand profound insights into the country.

Myanmar is part of ASEAN and the country has huge potential within the global economy. But more importantly, says Marshall, Myanmar matters because it is a country made up of over fifty million people, each deserving the opportunity to live their life without constant fear, and with the income, affordable education, and healthcare required to improve their situation.

“Myanmar has experienced decades of repression, with citizens living in a nation that essentially ran on fear.

“There are ethnic groups in the country voicing what they need and what they want, which will be important to build a unified and peaceful Myanmar.”

The country is going through a major transition. From over sixty years of military rule, to some form of democratic governance; years of fighting to – hopefully – some peace; and severe poverty to a time of inclusive growth.

“The military still plays a major role in the country in terms of control of the economy, and they will continue to have a big impact on the environmental and social fabric of the country – but the country has shifted from an arrogant government, to one that listens and is responsive to new ideas,” Marshall says.

Marshall reiterated that business can – and should – assist the government in making changes. While business must achieve a return on investment, to be truly successful they should also contribute to the environment in which they operate. “We shouldn’t hide until the government puts standards in place – we should be proactive,” he says.

Debbie Aung Din Taylor was born in Myanmar but her family left when the military took over. She grew up in Thailand, Nepal, Italy and the West Indies, before studying and working in the United States.

Taylor returned to Myanmar in 1994 and co-founded Proximity Design – a non-profit social enterprise that produces and sells clever agritech devices, and offers financial and farm advisory services.

The Myanmar Matters delegates visited Proximity Design’s factory in Yangon’s industrial zone and saw how it is providing a path out of poverty for rural families. Taylor agrees with Marshall that it is important for business to lead the charge as the country changes.

“Farming needs to be lucrative to attract young people, and it needs to have less drudgery,” Taylor explains.

“If you give things away for free, then you have no appreciation of whether something is valued or even used. It’s also difficult to distribute things fairly. You have to be able to scale, and run like a business.”

Taylor vehemently disagrees with the statement frequently made that Myanmar is ‘the new Vietnam’.

“It is not a new Vietnam,” she says. “Vietnam has a socialist foundation of healthcare and education that Myanmar doesn’t have.

“Myanmar is starting from feudalism – it’s pretty severe. We’re in a deep hole and don’t even have the basics to get the economy going yet.”

Thuta Aung, managing director of business consulting firm Hamsahub – a YBLI delegate and one of Myanmar’s strongest advocates for social entrepreneurship – argues that despite the challenges, there are exciting opportunities emerging in Myanmar.

“Myanmar is a country in transition. But it needs to be fixed further,” says Aung. “Myanmar’s transition brings with it significant opportunities.”

Myanmar’s place in the world – sandwiched between India and China, Bangladesh and Thailand provides connections that can be taken advantage of.

“Myanmar can be a useful partner to access neighbouring markets”, says Aung – “Myanmar can be an ideal launch pad for entering China.”

As the country is rapidly pushed into the 21st century, the people of Myanmar talk about ‘leapfrogging’. The Burmese didn’t grow up with computers, and had never used the internet. Just a few years ago mobile phone sim cards cost around NZ$2,500 each.

Upon arrival at Yangon airport, I picked up a sim card with 1GB of data for NZ$6. Now the country has one of the fastest growing mobile markets – more than 45 percent of the population uses mobile phones, bringing with it significant opportunity.

Although ranked the 167th country in the world for ease of doing business by the World Bank this year – ten places higher than last year – Myanmar still has a way to go in terms of enforcing contracts, facilitating trade across borders, protecting investors, construction standards. The list goes on.

Mood of the Boardroom: Will this be Winston’s finest hour? (NZ Herald)

Perhaps the real winner of the opposition in the current climate is NZ First Leader Winston Peters, writes Tim McCready

There are striking similarities in the motivations behind the United Kingdom’s vote to leave the European Union, the incredible rise of Donald Trump (and Bernie Sanders) against all odds, and what have consistently been Winston Peters’ policies.

At the heart of the Brexit campaign — passionately supported by Nigel Farage’s UKIP — the closest comparable UK political party to New Zealand First, was strong rhetoric around the “deterioration” of the United Kingdom and the unrecognisable, rapid change resulting from globalisation (and the mass migration that has come with it). Notably it was the lack of control felt by ordinary people over the direction of their country that most resonated.

The UK’s financial markets rose sharply in the final stages of the referendum campaign, reflecting the confidence that “Remain” would prevail. But when the quiet majority rose against the prevailing voice, Donald Trump himself used the victory as his own platform, tweeting: “Just arrived in Scotland. Place is going wild over the vote. They took their country back, just like we will take America back. No games.”

Trump ignored (or missed) the fact that the majority of Scotland backed a continued membership of the European Union.

Farage consistently and successfully directed his anger towards the “establishment”, including politicians in Brussels and Westminster who had long ignored resentment toward closer political integration and immigration, particularly in traditionally working class areas.

Sound familiar? Earlier this year, marking 23 years of New Zealand First, Peters used both Trump and Brexit to boost his own platform.

“The rise of Donald Trump in the United States against all predictions and the chord Bernie Sanders struck with many Americans can be attributed to ordinary citizens stepping up to the mark and saying — we’ve had enough.

“Others around the world think as New Zealand First does,” he said. “The people of Britain decided they had put up with enough of being ignored or talked down to from Brussels. They were tired of being fobbed off about issues like immigration.”

In stark contrast last week, Prime Minister John Key addressed the UN General Assembly, speaking out against creeping protectionism — “borders are closing to people and products, to investment, to ideas. Many states are turning inwards.

“The politics of fear and extremism are gaining ground. We cannot turn inwards.”

Though we cannot yet speak for the United States, the early signs are at least that the Brexit vote may well turn out to be a force for global free trade rather than protectionist interests.

There is a great opportunity for New Zealand and the UK to ally closely on this, but no outcome is guaranteed for either nation — particularly with Winston Peters on the march.

In this year’s survey, 40 per cent of CEO respondents thought New Zealand First would hold the balance of power following the next election; 14 per cent think he won’t and 46 per cent aren’t sure.

None of the respondents seem particularly thrilled with the prospect:

  • “Winston seems to be the obvious winner of the disenfranchised voter. I never thought I would say it but I am glad we have MMP — it may prove to be a good moderator in this new political environment.” — A manufacturing chief executive.
  • “Watch out: Winston’s coming!” — A chief executive of a government agency.
  • “I would like to see Winston Peters prosecuted for treason.” — A FMCG boss.

Peters aims to mobilise those one million “forgotten New Zealanders”, and those that have become disillusioned with politicians.

He has positioned New Zealand First to be anti-political, anti-immigration, and anti-capitalism.

He has had his own successes this term at the expense of the Government: the failure of Key’s flag referendum, and a landslide victory in last year’s Northland by-election.

Farage has said that the British people conclusively fired a stone at their Goliath earlier this year. Perhaps, in 2017, Winston Peters will strike his.

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”.