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Abu Dhabi, UAEMonday 17 December 2018

New Zealand shows starting a business can be pain free

Abu Dhabi Model Economies: When Abu Dhabi looked for a model economy to inspire its growth of small and medium-sized business it chose New Zealand. Here is why.
Karaka cafe, a popular Maori themed restaurant, inside Te Wharewaka O Poneke. Camus Wyatt for The National
Karaka cafe, a popular Maori themed restaurant, inside Te Wharewaka O Poneke. Camus Wyatt for The National

Shae Moleta was born into a long line of sheep farmers. But his appetite for all things culinary, which led him to open a restaurant five years ago, is feeding into the growing number of small and medium-sized businesses based in New Zealand.

In Wellington, where his quaint restaurant Ambeli sits in a converted house that is more than a century old, Mr Moleta is competing in a fierce market where there are more eateries and cafes per capita than New York City. Yet his high-quality menu and effusive repartee, which won him a "cuisine restaurant personality of the year" award last year, has helped to push his restaurant ahead of hundreds of others and to the top-ranked spot on the review site TripAdvisor.

One of the ingredients that helped him to get started was a lack of bureaucratic obstacles after the owner of a different restaurant on the same premises agreed to let Mr Moleta apply for an operating licence and registration. "You know when sprinters are passing on a baton to the next runner?" says Mr Moleta. "The authority was willing to acknowledge that, literally, I was picking up where he left off."

Whereas entrepreneurs in the UAE and Germany require more than two weeks to start a new business, and those in the US, Canada and Hong Kong need five days, Kiwis need just one, according to a report released this year by the World Economic Forum and the Insead business school.

Being named the best in the world when it comes to fostering economic freedom and the ease of doing business is one of the main reasons Abu Dhabi picked New Zealand as a model economy in its Economic Vision 2030. "We were chosen for our small and medium-enterprise (SME) policies and support programmes," says Olga Speranskaya, the operations manager for investment at New Zealand Trade and Enterprise.

"We were invited to Abu Dhabi to visit for a week and present to a large group of policy and implementation officials on that," says Ms Speranskaya. "They were really, really interested in 'how do you develop a sector from scratch - and are you better starting off from a capability that already exists in a country'?"

Before the 2030 vision was released to the public, Ms Speranskaya spent six months corresponding via phone and email with officials at the Abu Dhabi Council for Economic Development.

At first the economies seemed "very, very different", she says, given their historical and economic fundmentals. But by the end of the process Ms Speranskaya says there was an understanding that they were not so dissimilar after all.

"Abu Dhabi is a country of oil and money. We're a country of milk and money. Diversification is key."

Yet, while Abu Dhabi concentrates on igniting interest among entrepreneurs who might want to create a small or medium-sized business, New Zealand is facing a set of challenges with its own population - namely, how can the country's smaller operations grow into larger-scale operations or even global corporations?

"Some of those [SMEs] have been around for a long time and they kind of tick along," says Garry Poole, the chief executive of Wellington City Council. "But where the growth area happens is in the small, which sometimes becomes medium."

There are more than 400,000 small businesses in New Zealand that employ fewer than 100 employees. Many of these are one-man operations or those with just a small number of staff. Only 41,000 companies have more than 100 workers, including just 1,000 corporations with more than 1,000 employees.

"Our problem is that we've got this really fertile nursery for startups, but very few of them grow into big trees," says Wayne Norrie, the chairman of the Beachheads Advisory Board, which mentors local businesses on how to expand into international markets, including the UAE. "That's fundamentally the problem New Zealand is trying to tackle: how do we take those 400,000 and push it up?"

The Beachheads programme is just one of a number of initiatives under the New Zealand Trade and Enterprise office, which offers entrepreneurs guides on starting or expanding a business, as well as the option for startups to join a more formal business incubator. Yet the office is revamping its strategy given how the recent economic turmoil has shifted how companies try to expand to other world markets.

"As the world has changed over the last two years, in terms of where the money is and the global financial crisis, we recognised we need to become a lot more encouraging and flexible in how we assist New Zealand companies," says Grant McPherson, the deputy chief executive for New Zealand Trade and Enterprise. "For us, we've been re-looking at our strategy and purpose and [asking] how do we unleash the potential of New Zealand businesses to international marketplaces."

One hurdle the industry faces before seed startups can grow into bigger firms is a cultural phenomenon that is known by some New Zealanders as the "BBB syndrome". The explanation goes that local business executives start a venture and expand it only to a point where it is successful enough to buy the three Bs: a boat, a bach (meaning beach house) and a beamer (a BMW car).

"You don't need a lot of money here to have a really good quality of life," says Mr Norrie. "Our aspirational goals are often quite small.

"One of the reasons these companies don't grow is they don't aspire to. Whereas we can point to places like the US where if you get a start like that why don't you kick on and become a US$10 million [Dh36.7m], $100 million or $1 billion company?"

Mark Saunokonoko is an entrepreneur who splits his time between New Zealand and the Emirates. Last year, he founded Piper Drinks, a non-alcoholic relaxation beverage that is manufactured in New Zealand and distributed in the UAE.

"As a New Zealander, and someone who does business between the two countries, New Zealand has a lot of positives and Abu Dhabi also has a lot to offer New Zealand," he says.

But while Mr Saunokonoko acknowledges how easy it is to set up a business in the other land Down Under, he is also all too familiar with the so-called BBB syndrome. "What the New Zealand market has that Abu Dhabi may never have is that New Zealand entrepreneurs see market success as an end-game in itself," he says.

"Once you have a BMW, a beach house and a boat you've pretty much made it and there's nothing much else to strive for."

In Abu Dhabi, by contrast, "one of the greatest things is not the quality of businesses but the ambition of them. That's not something Abu Dhabi would ever lack. There's certainly plenty of ambition here to grow," he says.

 

nparmar@thenational.ae