Global Insights – January 2022
Our Kea Regional Directors give on-the-ground insights into what is happening in their region and the opportunities this presents for New Zealand export businesses.
Our largest trading partner, China, continues to be an attractive market for New Zealand exporters this year and we are already seeing some key trends begin to emerge. New Zealand businesses should keep a close eye on these as they look at their China market strategy for 2022.
The pandemic has dramatically changed the way consumers interact with brands and make purchases. Unsurprisingly, e-commerce continues to boom: as of June 2021, the number of online shopping users in China reached 812 million, accounting for 80.3% of total internet users. 2022 will be another year of innovation for China’s e-commerce market and there are some key features to focus on this year.
a). Livestream sales continue to grow but brands are seeking greater autonomy. Livestreaming continues to gain popularity as a way to connect with consumers, but more brands are shifting away from using expensive KOLs (Key Opinion Leaders) to running promotions in-house. This means Kiwi brands don’t necessarily need to pay an arm and a leg to KOLs any longer. Instead they can better tell their unique stories by investing more in their own marketing/livestreaming capabilities.
b). WeChat, especially WeChat mini-programs continue to be essential in brands’ marketing strategies.
While very few Chinese consumers engage with brands via websites, around 450 million Chinese consumers were active on WeChat mini-programs every day last year, an increase of 50 million compared to 2020. Rather than developing their own apps and wasting energy building fancy Chinese websites, New Zealand companies are likely much better off utilising the WeChat eco-system.
c). Short video platforms are taking a large share of the e-commerce market.
The pandemic has led to a surge in the number of active users of short video platforms. New Zealand brands should be aware, in 2022 short video platforms such as Douyin and Kuaishou are likely to capture a larger share of the e-commerce market as they now actively support users to sell and market products through their apps.
2. The rise of Gen Z as well as millennial middle-class families.
Gen Z is considered to be China’s rising consumption powerhouse. Unlike consumers of previous generations that placed emphasis on brand name or product practicality, these post-95 consumers often pay a premium for highly emotive products. For Kiwi companies better serving this group could be as simple as having a really cute brand mascot.
Millennial middle-class families are often willing to spend much more on products that they view as healthy, safe, high-quality or high-tech. The point for many Kiwi firms focused on this age group is not to try compete on price, but on both provenance story and product quality.
3. Silver economy
Products targeted to silver-haired people (the elderly) are going from strength to strength, especially health and well-being related products. In 2020 alone China’s silver economy was worth over $1 trillion NZD. The elderly are becoming an important group for online shopping. The pandemic saw this traditionally hard-to-reach demographic suddenly come online and two years later they have only grown in confidence.
However, this rising demand in the silver economy is not just driven by the elderly themselves. ‘Post-80s’ and ‘post-90s’ children frequently buy daily necessities, health products and holiday gifts for their parents. This “digital filial piety”, showing care for parents through e-commerce, is a way many children seek to make up for the regret they feel about not being at home to take care of them. For those New Zealand companies that can show how their products are good for the elderly, this is a key strength to market.
Zoe Wang, China Marketing specialist, Kea member.
UK & Europe
The spread of Omicron means Covid-19 numbers in the UK and Europe remain high and frustrations around travel continue. However despite that, the UK and particularly London does seem to be just getting on with things. Adjusted to a new normal? Or accepting of uncertainty being a part of our day to day lives? Whichever it is there is plenty to keep us busy in the coming year. Some of the key dates on the calendar which will be highly relevant to New Zealand businesses are;
- The signing and implementation of the UK FTA
- Completing negotiations of our European FTA
- Birmingham hosting Commonwealth Games – headed up by our very own Kea community member Katie Sadleir who has recently landed in London to take up the reigns as the CEO of Commonwealth Games Federation.
We have the joy of in person events on the near horizon (Covid-19 willing), including Waitangi Day celebrations, a return of the NZ Society Waitangi Day Charity Ball and announcing the UK New Zealander of the Year award. Plus we are looking forward to our annual International Women’s Day event in March in conjunction with New Zealand Business Women’s Network (more details to come).
This year the UK will also come to a halt as the Queen celebrates her Platinum Jubilee marking 70 years on the throne – officially this is February 6th. We are all looking forward to marking the occasion in June. Included in the festivities is Kea WCNZ’er Monica Galetti, who will be judging the Jubilee Pudding competition alongside Dame Mary Berry and Buckingham Palace Head Chef, Mark Lanagan. We are also looking forward to welcoming the international business community from New Zealand when travel is less cumbersome, as well as friends and family.
Sara Fogarty, Kea UK/Europe Regional Director
It was a wild end of the year here in the USA. There was a sense of optimism for many industries heading into December. Christmas sales were strong, the hospitality sector was buoyant, and most people were looking forward to finally spending time with family. The travel industry saw unprecedented levels of people moving around the country, reporting close to pre-pandemic levels. Times Square was going to see the return of the 60K strong crowd to welcome in the new year. Then a curveball. Omicron was first detected in the USA on December 1st, 2021 and since then the US has seen rapidly increasing Covid numbers including a record single-day number of more than 1 million new infections.
The recent wave has affected every part of daily life here, from school bus drivers to mass transit staff and the airline industry, particularly hard hit. Retailers and restaurants are experiencing disruptions due to lack of staff, and schools, who were set to return to in-person learning, are arguing with state officials about how to do that safely.
However, there is light ahead. This new strain seems to be proving less dangerous to those who are vaccinated, and data from other countries have authorities hopeful that we will see this spike and decline sooner than later. I guess this will be our lives worldwide for a few years to come, as we are learn to live with Covid-19.
Regardless 2021 saw many Kiwi businesses entering the market. Much talked about Kiwi brand, Allbirds, known for its eco-friendly wool sneakers, started trading on the Nasdaq exchange in November and new startups and established companies also expanded and increased their presence in this market, with Kea providing connections to our community.
Last year, Denver featured in the news as a destination hub for N.Z. tech startups with a very supportive global business development program and its geographical location attracting over 25 companies to the city alone. Xero relocated to Denver in 2014 and has paved the way for other companies to follow; more information about their Global Business Development initiative here.
Trends we saw in 2021 will continue to be a key focus for businesses this year. Governments and companies will be under pressure in 2022 to tackle climate change, despite persistent pandemic and economic challenges. Product and supply chain sustainability, green manufacturing, and design practices are significant drivers in product development. Consumers are looking for credible and authentic products and services, and that trend will continue to grow this year.
Gary Fortune, Kea North America Regional Director
A New Year ushered in the halfway milestone for Expo 2020, with the show entering its fourth month. The team also celebrated a huge milestone, marking 700,000 visitors so far. Listen to WCNZer Leigh Flounders speak with New Zealand at Expo’s Nicola Garvey about his perspective on what Expo 2020 is really like, and his top takeouts from his time at the event.
The big focus for the Government this year will continue to be the ongoing response to the pandemic, particularly with the Omicron variant causing so much disruption offshore. Along with that other significant programmes include;
- Continuing negotiations on several Free Trade Agreements (FTAs). As well as the cabinet review, signing, and implementation of the NZ-UK FTA, further rounds of negotiations on the EU-NZ Free Trade Agreement and the ASEAN-Australia-New Zealand FTA (AANZFTA) upgrade, New Zealand is one of more than 80 World Trade Organisation (WTO) members launching negotiations on e-commerce. The WTO e-commerce negotiations are even more vital with the exponential uptake of digital trade during the COVID pandemic. The negotiations will cover paperless trading; customs duties on electronic transmissions; authentication and security; openness and market access, including the flow of information and data; trust and digital trade and infrastructure gaps (the digital divide)
- Health system reforms and the launch of the Maori Health Authority. The Ministry of Health will be focused on policy, strategy and regulation while a new body, Health New Zealand, will take over the planning and commissioning of services and the functions of the existing 20 District Health Boards to remove duplication and provide true national planning. The new Māori Health Authority will work alongside Health NZ to improve services and achieve equitable health outcomes for Māori, and both new bodies are expected to be established by July. This reform signals a major digital transformation for healthcare in New Zealand, and an opportunity for the country to benefit from the expertise and experience of other nations leading the way in digital healthcare systems.
- The hosting of several major sporting events including the ICC Women’s Cricket World Cup in March, the Women’s Rugby World Cup in October and November. Hopefully these events will give a much needed boost to local businesses.
Saya Wahrlich, Global Director, Government & Industry
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