NZ Economy Gets Digital Reset

Image credit: iStockphoto/Feodora Chiosea

When the New Zealand economy comes to mind, there are images of cows and sheep, wine, and adventure tourism.

Yet, an ongoing push for digitalization is transforming these very traditional industries. It is also helping small and medium-sized NZ businesses get their products out nationally and into the region.

Then there is the emerging games industry, which has proved remarkably resilient during COVID-19 as practitioners have been able to continue working remotely.

Data from the New Zealand Game Developers Industry survey show the interactive media sector earned USD 323.9 million in the year to April, an increase of USD 121 million on the year earlier. That is a rise of around 60%.

The ten largest studios earned 95% of this revenue. However, three-quarters of studios are small, employing five people or less. One growth issue is the lack of support for these smaller firms, but the industry and government are on notice that these firms need nurturing if the sector is to grow. 

Genie out of the bottle

It has often been said that the pandemic disruptions have accelerated so much of the momentum towards digitalization. This is undoubtedly true in NZ, where the Government has also taken a very active leadership role.

A Microsoft survey from October 2020 found that 62% of NZ organizations were accelerating their digitalization in response to the COVID-19 lockdowns. It spanned digital payments, the launch of new digital products, and embracing new e-commerce channels.

According to a late 2020 report from Westpac’s NZ Economics team, the “digital genie” is out of the bottle in NZ. The bank expects spending on cloud computing, social networking software, and collaboration platforms to be “buoyant” in 2021.

Even before COVID-19, however, NZ was already well advanced with its public digital infrastructure.

The rollout of the ultra-fast broadband network (UFB) in urban and regional areas continues under the Infrastructure Commission’s ten-year pipeline plan, which will continue to 2025, helped by the decentralization of some government functions.

Vodafone began rolling out its 5G network in New Zealand from December 2020, and that is continuing, although work slowed during the lockdowns of 2020.

Government initiatives are also moving things forward. Businesses are embracing the push towards e-invoicing, while another significant initiative has been the Digital Economy Partnership Agreement (DEPA) signed by the NZ and Singapore Governments in June 2020 and now in force between those two countries. Chile and perhaps Canada are to follow.

DEPA commitments are good for small and medium-sized NZ businesses, which can use it as a stepping stone to launch in international markets.

Practical improvements from DEPA include promoting online consumer protection, the facilitation of paperless trading, e-invoicing, e-payments, and the sharing of best practices on digital identity policies and regulations. DEPA will also help establish new rules and practices for digital trade.

Digitalizing wine

NZ is justly famous for its wine, and the industry has emerged as a significant niche player in global markets.

In 2019, NZ Winegrowers reported that 776,599 international wine tourists visited New Zealand and spent $3.26 billion, but that has stopped in its tracks as international tourism was canceled.

To reach out to these consumers, NZ wine producers now have access to the online marketplace, Wine Collective Digital, which operates as a sales channel for local producers in the premium segments. They each have access to an e-commerce version of their physical cellar doors through the portal.

The initiative kicks off in February and is expected to become a major new sales channel, initially targeting the Hong Kong and Australian markets and then the U.K. and the U.S.

Beyond the wine industry, the Government has also established funding for skills training through what it calls the Digital Boost program and has heralded 2021 as “the year of digital transformation” for thousands of NZ SMEs.

Launched in December 2020, the program is a partnership between the Ministry of Business, Innovation, and Employment and private sector organizations, the Mind Lab and Indigo.

Growing digital-scape

Already, the macro-economic picture for NZ is brighter in 2021.

Much of that, of course, is due to its success in controlling the virus’s spread. But the pace of digitalization is pushing the national economy further into the future, at a faster clip.

They call NZ the “Land of the Long White Cloud” because of its spectacular skyscapes. Soon that may have a digital implication as well.

Image credit: iStockphoto/Feodora Chiosea