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Issue 92 - May 2012Publ icat ion of the Employers & Manufacturers Associat ion Inc

Business Plusn e w s , a d v i c e , l e a r n i n g a n d n e t w o r k i n g

In this issue: EMA’s advocacy

at work

photovoltaic power delivers

attractive roi

when will the rMB be fully traded?

• When someone goes AWOL from work• Generating wealth in the Wynyard Quarter• Marketing in Asia• Dealing with an under performing manager• OH&S takes centre stage

china myths exposed

Fighting the tide of printed money...

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Contents 1

Our Vision. Your Success

Business Plus is published by : The Employers and Manufacturers Association (Northern) Inc

159 Khyber Pass Rd, Grafton, Private Bag 92066, Victoria Street West, Auckland 1142Ph: 09 367 0909 or 0800 800 362 Email: [email protected] Website: www.ema.co.nz

Chief Executive: Kim CampbellAdvocacy Manager: Bruce GoldsworthyManager, Employment: David LoweManager EMA Learning: David FoleyManager EMA Membership & Marketing: Mauro Barsi

Whangarei Louise Morrison 09 459 1501 mob 027 6870604

WaikatoDenis Quigan 07 823 9311 mob 027 203 0694 Russell Drake 07 853 0018 mob 021 686 621 Max McGowan 09 570 1289 mob 027 241 4608

Bay of PlentyTerry Arnold 07 575 8401 mob 021 662 656 Patrick Brus 07 542 2295 mob 021 758 714

Rotorua / Taupo / South Waikato / WhakataneClive Thomson 07 348 0334 mob 0274 372 808

Business Plus

Editor Gilbert Peterson Ph: 09 367 0916 [email protected]

Writer Mary MacKinven [email protected]

Published by Mediaweb

Project Manager Anthony Stead 021 215 9632

Advertising Sales Colin Gestro (09) 444 9158 [email protected]

ISSN No. 1176-4953

04 Non-resident business GST to be addressed

06 OH&S centre stage

17 In Asia the chicken and egg both come first

18 Fighting the tide of money printing

19 New wave of financial reforms set to increase acceleration of RMB internationalisation

21 Proud Moments: - Giltrap chairman knighted

- Cores for a good cause

- World Class New Zealanders Douglas and Falkenstein

22 Engineering plant installs country’s largest solar panel system

02 China: Trade mission report - myths exposed With EMA CEO Kim Campbell

05 EMA: Advocacy at work

12 Generating wealth in Auckland’s Wynyard Quarter from Phil O’Reilly CEO BusinessNZ

15 Auckland business rates unfair. Tauranga rates increase tough

16 Freight productivity report questions port ownership

08 When someone goes AWOL from work. What to do when someone derides your business: Employment Chat.

10 When the manager under performs

S.A.F.E launched its new solar panel system recently. Pictured (l-r) Richard Johnstone (SAFE), Barry Robinson (SAFE), Dave Keppel (What Power Crisis), Henry Cassin (What Power Crisis), Edith Robinson (SAFE) and Dr Paul Hutchison (MP for Hunua). For the full story go to page 22

On the cover...

News

Advocacy

Advice21

05

0222

2324

05

Business Plus – Exclusive news, advice, learning and networking

Advocacy2

“I can help with China trade...

just give me a name and a

product ...I can find customers.”

So began the conversation with

Evan Chin at one of the many

investment seminars on the

trade mission to China led by

Auckland Mayor Len Brown.

Who is Evan and why would he want to help us? Indeed why

come to a seminar in Ningbo about New Zealand at all? In fact Evan Chin’s attendance and enthusiasm informs and validates the Len Brown drive into China in a number of ways.

In his well cut suit, with excellent English and exuberant youthfulness, Evan mirrors a new, urbane and aspirational Chinese middle class ...its not surprising because Evan is a graduate in business from Auckland University.

Now back home, Evan wants to develop and maintain his Kiwi connections.His positive experience in Auckland and his appreciation of the Kiwi way will, as time goes by, be of immeasurable benefit to our trade and relationship with the Peoples’ Republic of China.

The potential and benefit to be won from Chinese graduates from New Zealand to build our exports and earn foreign exchange was not lost on the representatives of all nine Auckland tertiary institutions who made the trip to China in April.

China itself produces over a million graduates a year but that isn’t enough, and there is a flight to quality. Provided we keep our standards up, and students have a positive experience here, we

offer an assured place to develop a product – education - a gift that keeps on giving!

There are some myths needing to be exposed however, lest we make some expensive errors about the way forward in China.

Yes, there are over a billion people but that isn’t the size of the market....its about 250 million who earn around $US7000 per year.

A second myth is around the one child policy which is producing interesting demographic trends. The population has peaked, and it is unlikely that overall prosperity will rise much in coming decades because of the drag from the ageing of the population,

and the enormous challenges of feeding,housing and keeping healthy the millions entering the money economy each year.

Third, the Chinese have no interest in buying up New Zealand. They want our technology and need and want a secure and safe supply of food. But it is completely contrary to their entire

history to presume they may have imperialist and territorial expansionist aspirations.

No-one can own land in China. It’s all leasehold,with internal migration carefully controlled and aligned with the planning and development of infrastructure and employment.

The absurd, almost Pythonesque developments around the Crafar farms purchase would not be an issue if New Zealand simply did what most Asian countries do,which is that no foreign ownership of land is permitted, but unlimited leasing of it is.In my view there is a compelling case for this, but that will have to wait for another article.

Another myth is that there are

unlimited growth opportunities in China best realized by joint ventures. The fact is, as the ANZ Bank advised, over 70% of all jv’s have ended in failure through misunderstandings, theft, unrealistic expectations about profitability and often, timelines.

Kiwi companies must harden up,and make sure they have very deep pockets.

China: Trade mission report - myths exposed

By Kim Campbell, Chief Executive, EMA


EMA CEO Kim Campbell met up with Auckland University graduate Evan Chin on Len Brown’s mayoral trade mission to China last month.


3 Advocacy


There is no capital available within China. They expect you to fund everything. When things go wrong you are on your own. The authorities talk about enforcing their laws but only do so when it suits them. If you are in any doubt, pay attention to what becomes of the unfortunate blind activist, Mr Chen who currently is on the run in Beijing simply for asking the Government to enforce their own laws in the provinces.

Curiously, because of the considerable opacity surrounding all financial arrangements in China, it is probably easier to source and invest in partnership with the Chinese government outside China than within, which brings me to the real purpose of the Mayor’s trade mission.

Simply put, Auckland needs a lot of infrastructure investment, and so far neither central government nor the rate payers of Auckland have the money to provide it. But the Chinese have built up enormous reserves which if all spent inside China, would be very inflationary. So they are looking for safe havens in places where they are welcome.

They have plenty of candidates hoping for favorable consideration.

Our mission in part was to reaffirm our sister city relationships with Guangzhou, Ningbo and Qingdao after the emergence of our super city.

Certainly being a large and senior mission group of 42 business leaders almost all at CEO level, was advantageous - the local Chinese authorities literally rolled out the red carpet.

It became very clear early on that our diplomats had done an outstanding job in paving the way for the visit. China wants to breathe life into the FTA and their interest can’t be solely because of the money given our relative sizes, so it has to be about legitimacy and hegemony.

Making friends in the South Pacific means access to shipping lanes, access to food, to fish, to education and most importantly access to agritech.

In return we get market access and access to capital investment.

To make this happen requires guanxi which is all about relationships and trust built through personal direct engagement. The idea that through personal contacts I build my clan - we might call it extended iwi - doesn’t suggest I lose contact with my common sense and give away the farm, but it does mean that over time I give preference to my iwi and seek ways to increase the amount of business we do together.

This mission was about guanxi, about our film people signing partnership agreements with the largest media school in China,the tourism team talking seriously about direct links from new cities in China to Auckland, and about our KEA (kiwi expats abroad) organization linking up our diaspora in China to the New Zealand community.

It was also about Mayor Len Brown and the city team presenting our credentials and pouring a solid

foundation onto which we can build a strong trading relationship and attracting investment into our businesses and infrastructure for establishing partnerships to build our roads,tunnels,and bridges.

One thing rate payers can be sure of: Len worked his heart out for the city and the country. He opened doors and raised Auckland’s profile in a way we can all be very proud of. His management team did a superb job of coordinating a complicated and long programme.It was a privilege to be there in support.

Oh, and in the meantime Evan Chin will be busy importing soft drinks and exporting building materials and finding ways to maintain contact with his temporarily adopted home.

For a commentary on when the RMB will become fully convertible go to page 19.

“The absurd, almost Pythonesque developments around the Crafar

farms purchase would not be an issue if New Zealand simply did what most Asian countries

do,which is that no foreign ownership of land is permitted, but unlimited leasing of it is...”

“...China itself produces over a million graduates a year but that isn’t enough, and there is

a flight to quality. Provided we keep our standards up,

and students have a positive experience here, we offer an

assured place to develop a product – education - a gift

that keeps on giving!”

4


News

Since GST is a tax on

consumption, not on business it

should be neutral for both resident

and non-resident businesses,

Revenue Minister Peter Dunne

said last month.

He said our GST system can be a hurdle for non-resident compa-

nies looking to do business with New Zealand businesses, such as in the case of aviation training services provided to foreign airlines, especially if countries such as Australia offer more favourable GST treatment.

Another GST issue relates to costs a New Zealand resident manufacturer must pass onto a customer for the crea-tion or modification of tools required to produce specific products.

A New Zealand manufacturer must charge GST on these tooling costs even

if those tools are used to make products that are exclusively exported.

Mr Dunne said he intends to intro-duce a GST registration system for non-

resident businesses to claim back GST and a specific zero-rating rule for tooling costs.

Subject to some tax base protection rules, the registration system would al-low non-resident businesses to obtain refunds in a similar way to resident busi-nesses.

Mr Dunne said he will seek Cabinet agreement to implement the measures by 1 April 2014.

“By removing GST as an impediment, this will help level the playing field and allow our businesses to compete for con-tracts internationally,” he said.

Non-resident business GST issues to be addressed

terminal tax.Tame your

Talk to your accountant, call the tax masters on 0800 829 888 or visit www.tmnz.co.nzEMA/PB/TT

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EMA-PB-TT H-P.indd 1 17/3/11 12:17:32 PM

Revenue Minister Hon. Peter Dunne

“...Mr Dunne said he intends to introduce a GST registration system

for non-resident businesses to claim back GST and a specific zero-rating

rule for tooling costs... used to make products that are exclusively

exported.”

5


News

Canada’s Minister of International Trade and Minister for the Asia-Pacific Gateway, the Hon. Ed Fast, joined Canada’s High Commissioner to New Zealand, Caroline Chretien, and two officials to talk with EMA staff over outstanding issues relating to Canada’s aspirations to join the Trans Pacific Partnership Agreement (TPP).

Mr Fast’s visit from April 29 to May 3 was the first by a Canadian trade minister to New Zealand in 23 years. His goal was to promote Canada’s competitive advantages and

seek new ways to broaden and deepen trade relationships with the trans Tasman countries.

New for BusinessPlus! Here you

can read about the high-level

exchanges between EMA and

local and overseas decision-

makers in business and politics.

Over the course of any year EMA

invites many Cabinet Ministers,

MPs, prominent CEOs and

government officials to discuss

the hot topics of the day. We also

host many important visitors from

overseas including politicians

from other countries and trade

delegations. Some of those over

the past month are outlined.

EMA: Advocacy at work

The Hon. minister Ed Fast (right) is joined by Canadian High Commissioner Caroline Chretien and EMA CEO Kim Campbell.

Minister of Economic Development, Science and Innovation, Tertiary Education, and Skills and Employment, Steven Joyce spoke to the EMA Business Lunch for members on the new Ministry of Business, Innovation and Employment that he will become responsible for from July 1st. Mr Joyce explained the reasoning behind the change, the Government’s new Growth Agenda and its significance to business.Mr Joyce told the large audience the

Government wanted to change New Zealanders’ thinking from one of ‘you can’t do that...’ to an attitude where things start to develop once the right safeguards are put in place. New Zealand businesses need to find their niches and be innovative in doing so, he said.

Steven Joyce

Vector Energy CEO, Simon McKenzie, at the EMA Regional Infrastructure and Local Government Committee meeting asked: “What infrastructure do we really want, and how are we going to pay for it?”

EMA’s Trade and Foreign Policy Committee met with two senior officials from the Ministry of Foreign Affairs and Trade late April. Michelle Slade, Lead Negotiator for the Built In Agenda of New Zealand’s FTAs, and Steve McCombie, Acting Deputy Director and Head of the ministry’s Economic and FTA Unit, Asia Region.The meeting focused on what should happen once FTAs are signed to boost trade and resolve issues that arise.

Deputy Prime Minister of Vietnam, Nguyen Xuan Phuc, spoke to a business group at SkyCity Hotel over breakfast in Auckland on April 15th. He was in New Zealand with a delegation of Vietnamese ministers for bilateral and business meetings jointly hosted by the Export New Zealand division of EMA and the ASEAN NZ Combined Business Council.

Nguyen Xuan Phuc

David Shearer David Cunliffe

Labour Party Leader David Shearer and Labour spokesperson for Finance, David Cunliffe, visited EMA to discuss common goals over lunch. The meeting went very well, covering topics as diverse as raising the retirement age to 67, capital gains taxes and industrial relations.

6


News


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Try i t for f ree

Health and safety in New Zealand

workplaces is a key focus area for

me personally, Labour Minister

Kate Wilkinson told EMA’s 16th

Annual Occupational Health and

Safety Conference in Auckland

last month.

She said New Zealand suffers one workplace death each week and a

farmer is injured every 30 minutes. In fact there are five priority sectors with the worst rates of injury and fatality: construction, agriculture, forestry, fishing and manufacturing.

A week later the minister announced workplace safety was to get a funding boost of $37 million over the next four years in addition to a full review of New Zealand’s health and safety system by an independent taskforce.

The extra funding will be used to

increase the number of front-line health and safety inspectors, further fund the High Hazards Unit, support targeted health and safety initiatives, and develop ICT to improve data sharing and analysis.

“This investment will bolster the health and safety inspectorate and support initiatives to help improve the culture of workplace safety in New Zealand,” Ms Wilkinson said.

“The number of inspectors will rise to 180 over three years – a 20 per cent increase,” she said.

“We have seen from the success of the High Hazards Unit the importance of having the right people on the ground working closely with businesses.

“I have set a target of a 25% reduction in workplace deaths and serious injuries by 2020. A strong and effective regulator is the cornerstone of any health and safety system, and this funding will help ensure this target is met.”

At EMA’s OH&S conference the

Minister said workplace health and safety needs to be seen as an investment that leads to better productivity and performance.

High Hazards UnitThe creation of the High Hazards

Unit at an initial cost of $1.5 million is to monitor and support operators of high-hazard facilities in the mining and petroleum industries. It includes three mines inspectors, three petroleum and geothermal inspectors, and two

OH&S centre stage

Hon. Kate Wilkinson

Last month BusinessPlus requested Labour Minister Kate Wilkinson to respond to issues raised by Crest Clean over Part 6A of the Employment Relations Act 2000. (See page 5, BusinessPlus, April). This is the part of the law that ostensibly is to protect workers said to be vulnerable when a business changes ownership. But Crest Clean says it fails in

its aims for both the employer and employees involved. The Minister’s office has responded, saying Part 6A is in fact currently under review by the Department of Labour, which will report back to the Minister this month with its recom-mendations. Once the Minister has considered these she will announce what the government plans to do about them.

Part 6A of ERA under review

7


News

internationally experienced chief inspectors.

“Studies have shown that organisations that are leaders in health and safety practices within their industry also tend to have overall better business performance,” the minister said.

Health and safety review positive EMA welcomed the review with

Health and Safety Manager, Paul Jarvie, saying business supports the role of the modern regulator as practised in Australian, Japan and elsewhere.

“The role of the modern regulator is where workplace safety inspectors are empowered to advise and assist businesses meet their obligations, and help them create a safe workplace culture while retaining their powers to investigate and police,” he said.

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ACC remains a unique and world-leading initiative and this Government strongly supports the right of all New Zealanders to access what is an efficient and comprehensive accident compensation scheme, ACC Minister Judith Collins told the EMA OH&S conference on April 19th.Over the last three years ACC’s financial situation has turned around, and ACC’s focus on rehabilitation has increased, helping claimants get back to work earlier.Employers and the self-employed are now ‘experience-rated’ and no-claims bonuses are available, increasing the incentives for safer workplaces.From April 1, reduced levies will save business and employees more than half a billion dollars each year. For an average small business with seven

staff that’s worth $1120.ACC has been trialling a new employer-centric model with ACC staff working directly with some large employers to provide co-ordinated delivery of services and help to get injured staff back to work sooner. The aim is to benefit employers and employees alike.Minister Collins said, “We know injured people recover and rehabilitate more effectively when they are at work. So our main goal is to achieve fewer workplace injuries, and a faster return to normal daily living for people who have been injured.“Whatever improvements are made to the delivery of workplace compensation, ACC will remain an important and significant organisation.”

ACC being rebalanced

8


When someone goes AWOL from work Q. My employee never came back after Easter holidays and I can’t get hold of them on the phone numbers I have, to find out what’s going on. What can I do? He was paid holidays in advance too, to have four days off after the weekend – Bob

Dear BobLong-term absences in all their forms

including yours of possible ‘abandon-ment’ are the bane of many an employ-er. You are not alone in being treated this way.

Some employment agreements cover the issue of abandonment but it is important to be able to show how you reached a particular conclusion, as there may be a genuine reason why an employee has failed to return to work or contact you.

First of all you need to make rea-sonable efforts to try and contact the employee. Call him first and if there is no response, post or email a letter asking him to get in touch by a certain date.

If you get no response you should follow up in writing saying if he doesn’t get in touch by a certain date you as-sume he has abandoned his job. If you still hear nothing, you should confirm your assumption that he has abandoned or terminated his employment without notice.

You then have to pay him any out-

standing wages/salary up to date. If you don’t owe any wages and in-

stead he owes you, you can attempt to retrieve this by asking for the money in your letter.

Keep written records of your actual and attempted communications with him, in case a personal grievance flares up though this must be lodged within 90 days.

If the person shows up after your letter(s) and just before official ‘aban-donment’, you need to listen to him in good faith and if necessary, put in place a disciplinary process for ‘unauthorised absence’.

Q. It’s now 11 months since Jane went on parental leave and I haven’t heard from her since, even though she had been here a few years. I really need to know if

she is coming back. Do I just ring her at home? – Panicked aka Anthony

Dear PanickedYou have been patient to wait this

long for a commitment from her….Check the information you provided

her when she left, which should include the date she is required to return to work, and the notice requirements, and also consider any other communica-tions you have had with her on the issue.

Presumably she applied up to three months prior to taking maternity leave and mentioned what date she wanted to start the leave and when she pro-posed coming back to work. You should have discussed and recorded whether her position could be kept open (and you are bound to keep it open in most cases, even if you employ a fill-in on a fixed term).

Whatever you have on record, she is required to notify you in writing at least 21 days before the end of her 52-week leave period if she is returning to work.

If that 21 days passes without your hearing from her, yes by all means ring her if you are comfortable with this informal approach, and catching her off-guard.

Otherwise send a letter or email ask-ing her to get in touch by a certain date (allow a few days for the mail to arrive)

“...you need to make reasonable efforts to try and contact the

employee..”

EMPLOYMENT CHAT

Specialist Employment Lawyers

Auc

klan

d

JO DOUGLASManaging SolicitorMobile: 027 683 7919

JO DOUGLASManaging SolicitorMobile: 027 683 7919

BRANDON BROWNSolicitorMobile: 021 515 116

BRANDON BROWNSolicitorMobile: 021 515 116

Our high success rate reflects our expertise. Our lawyers specialise in employment law and only act for employers.As part of a member-owned organisation, EMA Legal offers services that are excellent value.

Strategic advice Practical solutions Skilled representation

ERIN BURKESolicitorMobile: 027 459 3375

ERIN BURKESolicitorMobile: 027 459 3375W

aika

to

0800 362 534 1800 300 362 for your nearest contact

MATTHEW DEARINGSolicitorMobile: 027 284 4042

MATTHEW DEARINGMATTHEW DEARINGSolicitorSolicitorMobile: 027 284 4042Mobile: 027 284 4042


9

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What to do when someone derides your business

to discuss her intentions to return to work.

Any change has to be in agreement with you and she cannot extend the 52 weeks as ‘parental leave’ unless you are happy about that – and you do not have to agree.

Q. I really want to get rid of this em-ployee who goes around telling everyone the company is stink and that certain others are not doing their jobs properly (which is true….). What possible grounds would I have? – Tilly

Dear TillyWhat you describe is common in

workplaces. We all understand people being disgruntled but there is a point at which negativity brings everyone down and affects morale. There’s also the mat-ter of someone telling lies about others, which could have other consequences.

But let’s stick to the issues as an em-ployment matter. First, you can’t sum-marily dismiss someone for their bad behaviour unless it constitutes serious misconduct.

Subject to the nature of the behaviour, you might go through the disciplinary process required by law, of giving the employee a notice of a meeting, holding a meeting with them, and following up.

You may manage the issue less for-mally by raising your concerns and

talking to them about their negativity – giving examples (evidence) of what you have heard and/or the measureable or real effect it is having. Then ask her if she understands or agrees this is what is hap-pening. It sounds as though she might be

right to feel unfairly treated, for example.Ask her why she says these things and

what she sees as solutions to make the company, or individuals in it, things she can admire or be proud of; and her part in the events she complains of (is she be-ing harassed, for example?).

You need to ensure the employee is clear on your expectations and the cor-rect process to follow if she has issues about the workplace or the people she works with.

By the EMA Advocacy team in con-sultation with EMA Advice, and based on real calls to EMA’s AdviceLine.

The information in this article is a guide only and not to be used as business advice without further consultation.

Start with our AdviceLine team at phone 0800 800 362 (within New Zealand), 1800 300 362 (from Australia) or 09-367 0909, 8am-8pm weekdays. Alter-natively, email [email protected], and read or download information such as the A-Z of Employing – a manager’s guide on more than 100 specific top-ics, at www.ema.co.nz

“...there is a point at which negativity brings everyone down

and affects morale. There’s also the matter of someone telling lies about

others, .”

WHAT EMPLOYERS ARE ASKING ADVICELINE THIS MONTH


Advice10 By Erin Burke, Senior Solicitor, EMA Legal

When the manager underperforms

Dealing with an under-performing

employee can be as prickly as a

hedgehog at the best of times,

but what do you do when that

employee is your CEO?

That was the case in a matter I recently defended in the Employment Relations

Authority (‘ERA’) Garvin v Progressive Equipment Limited [2012] NZERA Auckland 101.

The problems all started when Progressive Equipment Limited (‘PEL’) decided to take their company ‘to the next level’ which required them to appoint a CEO and put together a five-year business plan. Based on what appeared to be sound credentials and experience, Mr Garvin was appointed as CEO and commenced work in September 2010.

One of the first tasks the CEO was required to do was to draft the all-important business plan. However, four months on and after taking nearly three weeks annual leave that had neither accrued nor been applied for, there was still no sign of the business plan. A number of other tasks and duties that formed an essential part of the CEO’s role remained unattended to as well.

The directors of the company became increasingly concerned about these issues and they culminated in a letter being handed to the CEO outlining 16 different performance issues and asking him to attend a meeting to explain.

On the Friday morning scheduled for the meeting the CEO claimed he had been given insufficient time to formulate his responses, and took a ‘no comment’ approach to most of the matters raised. The meeting was therefore rescheduled for the following Monday with the CEO asked to spend the remainder of Friday focusing solely on his responses to the issues raised. It had become apparent during the morning meeting that the CEO had never had his laptop backed up

during his five months of employment (company policy was for this to be done weekly) and it was sent to the IT department for back up. The CEO was also asked to leave his cell phone in the Managing Director’s office as his seemingly obsessive use of it would likely distract him from focusing on the task at hand.

On the Sunday evening before the rescheduled meeting, the CEO emailed his resignation to the directors claiming their treatment of him had been hurtful and humiliating. The directors immediately emailed back, urging him to engage with them and attend the meeting the following day – to no avail. The CEO then raised a personal grievance for constructive dismissal.

A constructive dismissal is where an employee resigns but claims the resignation was either forced or resulted from a course of action by the employer that left the employee no other option but to resign.

The two main elements in a constructive dismissal of the kind that would apply in this case require an employee to show the employer has embarked on a course of conduct that was so serious it has basically repudiated the employee’s actual and/or implied contractual terms, and that the employee’s eventual resignation would be

a foreseeable consequence of the employer’s conduct.

At the ERA hearing, Mr Garvin’s lawyers argued, amongst other things, that by temporarily removing the CEO’s phone and laptop, they had effectively removed the ‘tools of his trade’ and had also humiliated him

breaching both the actual and implied terms of his employment agreement, respectively. This, they argued, would foreseeably result in his resignation.

However, the ERA held that in this case the directors had a right to expect answers to the issues they raised, and their attempts to get Mr Garvin to engage with them, attend the meeting, and withdraw his resignation showed their desire to get answers was genuine, and not an attempt to force his resignation.

That the resignation was not foreseeable by them was further evidenced by the fact that they had confirmed flights and accommodation for the CEO to attend an overseas conference on the same day that the letter raising the performance issues was written.

So, what are the take home lessons from this case? Employers do have the right to raise performance issues with employees, no matter what their ranking. An employee is never likely to be thrilled to be informed they have performance issues, but causing unhappiness does not necessarily equate to conduct that leaves the employee no other option but to resign.

However, the way in which under-performance is managed does have a number of fish hooks and employers are urged to seek legal advice when dealing with this issue.

Erin Burke is a senior solicitor for the Employers and Manufacturers Association (Northern), based in Hamilton. She has also lectured in employment law at the Department of Law, University of Waikato. She can be contacted at: [email protected]

“...four months on and after taking nearly three weeks annual leave,

there was still no sign of the business plan..”

Erin Burke


11 Advocacy

EMA is deeply involved with the

skills development work of Capable

Auckland set up by Careers New

Zealand as a careers development

forum.The forum currently has

175 members ranging from

careers advisors to private training

organisations (PTEs). I represent

EMA on the Forum. What follows is

a report on some of the forum’s key

issues.

Careers Blueprint Under the Capable Auckland banner

Careers New Zealand is working on a project to write a Careers Blueprint for Auckland. The Blueprint will bring together in one document Auckland’s career development needs and ways to work towards becoming a career capable city. This project is sponsored by Fuji Xerox.

Auckland PlanThe Auckland Council’s landmark

Auckland plan adopted last month included an emphasis on careers development and we are very pleased about that, especially on its aim to make more effective transitions

for students from school to work. One target is to have all school leavers achieve Level 2 NCEA by 2020, and their own career plan. More details are available on the Auckland Council’s website.

Careers website Careers NZ is currently

developing a new website to provide a one stop shop to profile jobs in demand in Auckland – a single place to link to real job advertisements, links to jobs’ databases and links to tertiary training occupations. It’s modelled on the successful Canterbury Careers website using information from the Department of Labour and Trademe jobs to drive the “in demand” positions. The new website will be launched by October.

My Career PortfolioMy Career Portfolio is a project to

pilot and develop an electronic career management portfolio to support youth transitions from secondary education into work and trade and tertiary training using the online MyPortfolio personal learning environment. EMA will pilot the programme with one Auckland school this year with a view to offering it to other

schools in 2013 which will be able to get feedback about the issues and challenges their students face during post school transitions.

Because MyPortfolio is a cloud service, on-going support will be on offer to young people after they leave school through online services, texting

and a call centre.One of the value adds of this project is

the potential to train a group of younger workers in career monitoring of students after they have left school.

Career benchmarks for tertiary educationCareers New Zealand is currently

developing a set of benchmarks for careers education in tertiary education organisations. We have been road testing the working draft in a variety of tertiary institutions, including TeWaananga, PTEs, polytechnics and universities.

I am a member of the External Reference Group which acts as an Advisory Body. The working draft is at www.careers.govt.nz/feedback-tertiary-benchmarks For further information please contact [email protected]

KNOWLEDGE IS POWERBusiness breakfast

Getting energy efficiency into your businessSAVE MONEY BY SAVING POWER

Date: Thursday,21June2012Time:7:30am-10:30amVenue:EllerslieEventsCentre,80-100AscotAvenue,AucklandPrice*:$45+GST(EMAmembers)$65+GST(non-members)*includesbreakfast

No matter what business you are in, you can easily save up to 10% of your energy costs by

implementing simple, low-cost or no-cost measures. You could save as much as 30% by introducing an

energy management programme. Come learn simple strategies that could be saving you thousands.

The EMA, in association with Meridian Energy, is committed to helping NZ business’s be more productive - so we have put

together this 3 hour, low cost seminar on how you can save money by saving power, whatever power company you are with:

Latest market update, understanding Power Prices options (spot, fixed), ASEXMike Roan, Wholesale Markets Manager, Meridian Energy

Managing air conditioning and heating costs - What options are available and what are the payoffs?Charlie Hand, Wholesale Markets Manager, Meridian Energy

Register at www.ema.co.nz

Mike Burgess

Developing a more effective careers advice system

By Mike Burgess, EMA Advocacy Services. Skills Update

12


Generating wealth in Auckland’s Wynyard Quarter

Phil O’Reilly

Penny Nelson

On Auckland’s waterfront a door is

opening to science-earned wealth.

The Wynyard Quarter is beginning its transformation as a doorway to New

Zealand’s innovation ecosystem with the first company, NextSpace, recently setting up shop there. More tech companies and start-ups are expected to follow, along perhaps with research centres and business incubators.

Experience from other countries shows ‘innovation ecosystems’ like this can rapidly grow new products and services and earn new export revenues.

Within such an ecosystem, the personnel of companies in knowledge-based sectors, located in close proximity can swap and develop ideas and generally sharpen their act through daily exposure to each other.

The outcome is often innovative products and services getting to market faster.

This process is at work in places like Silicon Valley, Tel Aviv, Bangalore, Toronto and Massachusetts; in all of them it is responsible for IT, high-tech and biotech export successes.

The idea is similar to business clustering but focused on science-based business; the concept of these innovation ecosystems is to generate competitiveness since almost the only way to beat the competition today is not through efficiency or price cutting, but by innovating.

The trend plays to New Zealand’s

strengths. Our ability to come up with creative solutions means innovation should be our main game.

Using our innovation ecosystem help us leverage that strength.

We are a small economy and so rather than having our innovation ecosystem limited to a particular physical area like Silicon Valley, for example, ours

will cover the whole country, with doors or portals leading into it in several main centres, but more like “New Zealand valley” rather than Silicon Valley.

In time we should see a system joined up and New Zealand-wide, with portals in cities like Christchurch for example, where another hub for high-tech business is

currently being developed. Why should Wynyard Quarter

be one of the doors?New Zealand’s chief scientific

advisor Sir Peter Gluckman says it’s impossible to imagine how New Zealand can succeed in a world where knowledge-driven innovation drives economic

growth unless Auckland plays a significant role.

Auckland holds a strategic position: being a key part of an innovation ecosystem could help transform the city from a net user to a producer of technology. A high-performing innovative Auckland would literally become a supercity powering New Zealand forward.

What will the Wynyard portal be like? Obviously it will be a collection of

buildings in the Wynyard Quarter but the idea is bigger than just buildings. Experience from other countries says it’s not a matter of putting some buildings near a research centre and waiting for innovation to start. Silicon Valley didn’t happen because of buildings but because of thinking and communication in open networks among like-minded people. Innovation centres tend to flourish organically from a culture of diversity and interplay of ideas.

So Wynyard Quarter isn’t just about infrastructure. Getting it right for people is important. It needs to be a place that is

Penny Nelson is executive director of the Sustainable

Business Council formed in 2012 from the merger of the BusinessNZ Sustainable Business Forum and the NZ Business Council for Sustainable Development.

The SBC undertakes advocacy

and projects concerned with leading and mainstreaming sustainability in business.

Penny Nelson’s prior work involved sustainability and environmental work for private and public sector organisations, including work on building business capacity

for sustainability at Landcare Research Ltd and sustainable development reporting at the Ministry for the Environment.

An Otago and Lincoln graduate, Ms Nelson has a Masters’ in Science (Honours) in Resource Management.

New Director for Sustainable Business Council announced

“...‘innovation ecosystems’ can rapidly grow new products and services and earn new export

revenues.”

13


By Business NZ’s CEO Phil O’Reilly

welcoming for small and new businesses so they feel comfortable as they set about their innovation journey.

Even a business that’s never spent a dollar on R&D – but wants to – must feel they can walk in the door.

It shouldn’t have a central command. There’s no need for a centralised system for communications, or control centre. Sharing ideas needs to take place freely. The area needs spaces to make it conducive for people to meet and hang out and talk, along with display and exhibition spaces.

The Wynyard hub doesn’t have to have all kinds of innovation players located there either, and it doesn’t have to do everything itself; it just needs to act as a connector and facilitator, linking people and companies with each other and with things like venture capital networks.

And it doesn’t have to be all about high-tech. It can be about any kind of knowledge-based or science-based innovation. For example, it’s likely it would

add to the current good work around new food and fibre products.

I believe the planned new Advanced Technology Institute should be located in Wynyard Quarter, since the main task of

this new institute is to work with business. Being in the Quarter would allow the ATI to relate to the large numbers of businesses in greater Auckland.

The idea behind both the innovation

ecosystem and the Advanced Technology Institute is to revitalise New Zealand’s relationship with R&D. In past years a lot of investment has been made in the ‘research’ side of research & development, but the ’development’ side has attracted a lesser focus. But development with a research component often brings quicker commercial rewards.

The Advanced Technology Institute to be set up in coming months will be focused on developing money-making technology based on best of breed research from New Zealand and the world and the Wynyard innovation precinct will become a focus for Auckland firms seeking precisely the same outcome.

The development of the Wynyard innovation hub will rightly demand a close

watch and intense interest.

Phil O’Reilly is Chief Executive BusinessNZ www.businessnz.org.nz

“...Innovation centres tend to flourish organically from a culture of diversity and interplay of ideas...it doesn’t have to do everything itself; it just needs to act as a connector and facilitator, linking people and companies with each other...”

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15 Advocacy

Though Auckland is a world class

city for livability, the business

environment is being short

changed, EMA told the hearing

on Auckland Council’s long term

plan on April 27th.

EMA said the Council planned to charge Auckland businesses $150

million more than if there was no business differential.

“Business ratepayers are being called on to shoulder an unfair share of the city’s rates and future debt repayments,” said EMA’s Peter Atkinson.

“The business rate planned means businesses will pay 2.63 times more than other ratepayers, or $150 million a year more than if there were no differential imposed.

“This is not a recipe for making Auckland business friendly. It would be far better to increase the Uniform Annual General Charge (UAGC) from $350 to $650. The average UAGC across Auckland’s previous eight councils used to be 18% of rates but now its being reduced to 12%.

“We have said for years the UAGC should be the maximum allowed by law which is 30%, but as an interim measure we would be pleased to see it increased to $650 per property, which would be 23%.Other matters raised were:• Objection to waste water differential • Planning for business land inadequate• Performance measures recommended

Mr Atkinson said business strongly objects to Council setting a waste water differential

against business. Its totally arbitrary and unjustified, he said.

“Charging everyone the same rate, by the amount they send down the drain is the only fair method,” he said.

“The Council’s proposals for providing business land fall far short of the ideal. The target of building 75% of all new

housing and business within the existing ‘metropolitan urban limit’ (MUL) is neither achievable nor desirable.

“The proposed provision of land available for business will only be enough for five years of development, nowhere near enough for a 10-year plan.

“To help improve Council governance we suggest the Council establish performance measures such as surveys of public opinion to show the levels of satisfaction with Local Board and Council decision making.”

Peter Atkinson

Auckland Council’s Business Advisory Panel stated a single preference for bridging the region’s huge transport funding deficit. The options have been out for public consultation. Early in April the Panel met at EMA and resolved to support in principle ‘network charging’ across Auckland’s entire motorway system, allowing for variable pricing at peak and non-peak times.Chair of the Business Advisory Panel, Cameron Brewer, says the network charging option seems to be gaining

momentum from the business sector as arguably the fairest, the most likely one to generate significant revenue to close the $11.7b transport funding gap, influence driver behaviour, and improve Auckland’s economic performance.A network charge would cost most Aucklanders a few dollars a week, but doing nothing costs the country at least $1.3b every year in wasted time, productivity and fuel.EMA CEO Kim Campbell is a member of the Council’s Business Advisory Panel.

Toll all Auckland’s motorways: Business panel’s advice to council

Auckland business shouldering unfair rates burden

Tauranga Council’s planned rates increase of 4.6% will be tough for

business, EMA told the Tauranga City Council’s 10 year plan hearings on May 8th.

But we applaud Tauranga’s efforts to keep its rates increases to the level of inflation plus 2% even though its still too high, EMA’s Peter Atkinson said.

“The Council is commendably pro-posing a review of the property it owns and selling assets not providing a public

benefit commensurate with their value. “So the time has come to privatize or

partly privatize the airport.“Another change the Tauranga Coun-

cil should make is to move to volumetric charging for wastewater this coming year.

“The limit for Tauranga’s debt should be reduced to 200% of its annual operat-ing revenue from the current, excessive 250% and it needs to make this reduc-tion faster than by the planned 2016 year.”

• Consider sale of Tauranga Airport.• Move to volumetric charging for

wastewater.• Proposed rate increase of 4.6% is tough.• Reduce debt limit to 200% of annual

operating revenue.• Bouquets for maintaining the capital

value rating system, keeping the UAGC at the maximum and not introducing a business differential.

• Priority One is a model for other councils.

Tauranga rates increase tough. Water charging needs to be fairer


Advocacy16

EMA believes 100% local

authority ownership of freight

related infrastructural assets

such as ports and airports

is detrimental to sound

commercial investment decision

making, and the Productivity

Commission in its final report

on international freight services

agreed.

The Commission looked at the effectiveness and efficiency of the

existing infrastructure and regulatory regimes for international freight transport services. The government has committed itself to provide a thorough response in a few months.

Commission chair Murray Sherwin said the New Zealand economy is very sensitive to international freight costs, and our standard of living is affected by these costs since they are built into the prices we pay for everyday imported goods, and impact on the prices our exporters receive for the goods they sell.

“In total we pay $5 billion a year in freight costs. In 2010 that was 2.7% of our GDP,” he said.

The benefits of high-productivity at any workplace include higher real wages, better working conditions, higher levels of job satisfaction, and more competitive and profitable businesses. Most New Zealand port companies, their employees and unions have some work to do to fully achieve these benefits, the Commission said.

“A productive workplace is characterised by good workplace relations founded on mutual trust, a shared vision for the organisation, and a willingness to adopt new technologies and to invest in worker skills and development.

The report said (due to a lack of

these): “Work practices at some ports are leaving ‘money on the table’ that, if captured, could be shared among port workers, port owners and port users.

Port governanceIn its report the Commission

recommended ports could improve if changes were made to the governance framework for council-controlled port companies by: • clarifying the purpose of those

companies by bringing them into line with the statutory objective for state-owned enterprises;

• precluding councillors and council staff from being directors of port and airport companies; and

• establishing a monitoring function to create independent comparative performance information for the port owners. “Achieving this will take time in

some ports and will require leadership and a willing attitude from both workers and management.”

For unions, improvements could

be achieved by reforms to the Incorporated Societies Act (which applies to all unions) to ensure modern governance structures and practices.

“Well governed unions with high-quality leaders can play an important role in overcoming the barriers to achieving high-productivity workplaces, while also advancing the wages and conditions of their members,” the report says.

However, implementing changes such as this would be a major challenge for union leaders and port managers and they can be met with resistance from more ‘traditional’ union members who may see it as a weakening of the union’s ability to represent its members.

The Commission noted the Port of Tauranga approach works well for its owners and customers saying the reasons were the company’s mixed ownership structure - 45% listed on the NZX, and its majority owner (the Bay of Plenty Regional Council) treats it as a financial asset to be managed according to commercial principles, and the port’s contestable business model for containerised freight handling.

Since decisions about ownership are the prerogative of the current owners, the Commission’s proposals to encourage a more commercial focus in council-controlled port companies include a requirement on the company “to be a successful business as profitable and efficient as comparable businesses that are privately owned.”

In response to the question: would increased sharing of operational data between transport firms help achieve efficiency,

EMA agreed and noted work is underway to achieve this through the Tomorrow’s Cargo Logistics Group and the Customs Department- led “Trade Single Window.”

A summary and the full 329-page report are at: www.productivity.govt.nz

Freight productivity report questions port ownership issues

“Work practices at some ports are leaving ‘money on the table’ that, if

captured, could be shared among port workers, port owners and port

users..”


17

The decision is made. Asia is

“on.” And your company gears

up to work on your ultimate entry

strategy. Market opportunities

are quantified, competitor activity

researched, staff are briefed with

additional responsibilities, and ROI

calculations finalised to support

the business case.

But which comes first? Finding a distributor, JV partner, agent, etc. or

finding sales?For those companies needing partial or

full in-market manufacture the decision is a little more complex: Finding a distribu-tor, JV partner, agent, etc. or finding sales, or finding local manufacturing capability? Which comes first?

For most scenarios the answer is clear – all require concurrent work.

Indeed the overlap can be advantageous. A client of ours secured a great distri-

bution opportunity through one of the in-market manufacturers we shortlisted for them. Ironically, the manufacturer who introduced them was not their ultimate choice.

However, the rush to sales is most often the first consideration. No matter how strong your research findings, how positive your initial in-market response and how clear your documented strategy, everyone feels more comfortable when they get some sales under their belt. And it is com-monly assumed that sales will be the most difficult part.

However, early sales can be a distraction. In our experience most often early sales cause a poorly executed market entry or worse, its failure.

Western companies must also un-derstand the need to find appropriate in-market manufacturing expertise is criti-cal. Importantly once this is achieved the company will obtain a detailed under-standing of the differences between their

own manufacture versus in-market, where there are potential bottlenecks, where costs build up, and where they can add real value to their in-market manufactur-ing. They can then manage their margins much more finely – as they often give away too much margin in manufacture and come up short in distribution and sales margins.

As the process evolves, some distributors may have a preferred in-market manufac-turer. Having gone through the manufac-turing pricing exercise independently, the company gains a detailed understanding of the dynamics of manufacturing in-market which puts them in a strong position to negotiate with their distributor’s manu-facturer and look at the true cost/benefit analysis of their different options.

But take care with this. Outsourcing is not abdication. Companies must own every decision as their market entry strat-egy unfolds.

However, a real challenge is to compre-hend the sheer volume of doing business in Asia. One large order can mop up excess domestic capacity but still leave the company short on that crucial first order , and that can be the death knell for many new entrants in Asia. The relationship is lost, hard won trust evaporates and both sides retreat blaming the other.

Quite simply, the risk of chasing early sales supplied from a western base to then backfill with

local manufacture and distribution must be carefully managed.

Companies must know all their num-bers first and have a clear understanding of what sales threshold activates their in-market manufacturing, and the timescale involved.

Key concurrent activities include:• Research sales channels, review how

competitors are structured, look for synergies with similar non competing products which may uncover a potential distributor, JV partner, agent, etc.

• Research local manufacturing capacity and analyse local supply chain, produc-tion capacity, etc.

• Ensure you can underwrite double your sales forecast in half your timeframe

• Test your ROI repeatedly throughout the process and adjust your strategy ac-cordinglyAbove all, make time your friend. Asia is

a powerhouse that needs to be treated with great respect. Companies must truly own every aspect of their market entry strategy from the outset so they can indeed deliver on the mega sales that await them.

Greg Reynolds is a Director of Your-BUSINESSinASIA.com, an Asian Market Entry and Business Development Con-sultancy based in Bangkok covering the wider ASEAN region.

In Asia the chicken and egg both come first

By Greg Reynolds


It seems not a month goes by

these days when another major

western country decides to turn

on the printing presses in an

effort to weaken their currency

in order to maintain some form

of competitiveness for their

exporters.

New Zealand has not followed this approach and that is having the effect

of making the NZ Dollar a somewhat scarce commodity in a world awash with cash.

This relative scarcity has the effect of pushing up the value of the NZ Dollar over time and it can seriously undermine the NZD value from export receipts.

In the past six months the European Central Bank has pumped 1 Trillion Euro’s into the Banking system and the Bank of Japan has countered this with 40 trillion Yen (approx. USD500 Billion).

In NZD terms this is in excess of $2.2 Trillion extra foreign currency in

circulation relative to the NZD.

If we go back to 2009 when the financial crisis reached its nadir, the amounts are even larger with the US printing USD2.7 trillion, the UK having three attempts at money printing totaling GBP325 Billion, and the Chinese adding somewhere between USD 1.0-2.0 Trillion equivalent Yuan.

As a result of all this extra money in the global economy, items deemed scarce have been bid up in price. In hard assets the likes of gold, silver and oil are in this category.

In the world of currencies it has been the non printers like New Zealand, Australia and Canada that have been dubbed the risk currencies as they rise in value when people think the economic outlook is brighter, and fall in periods of uncertainty.

But it is these risk shake-outs that create hedging opportunities for exporters.

The challenge is that the shake-outs often take the form of precipitous

declines in short time frames with the effect that exporters hesitate to hedge even when the rates seem favourable since market commentary quickly extrapolates the decline into even bigger falls.

The irony is these extrapolations often come from the same commentators

who just recently had been seeing only ‘blue sky’ for the currency.

In order to be able to hedge effectively exporters need to have a clear plan in advance of the declines so that they can take advantage of the opportunities that the currency markets present all too infrequently.

Exporters are the sales force of the country, ensuring that we maximize the return of their sales is in New Zealand best interest if we are to grow and to prosper.

Mike Houlahan is Director at Tuatara Management Ltd, Corporate Foreign Exchange and Risk Management. www.tuatara.co.nz Email: [email protected]: +64 9 300 9500

18

By Kenneth Leong, Mission managerMalaysia/Brunei trade mission big success

The 14 strong Export New Zealand/ ASEAN NZ Business Council trade

mission to Malaysia and Brunei resulted in large numbers of new business leads, and a substantially enhanced reputation for New Zealand.

The group led by Sir Ken Stevens met many very influential business leaders amongst them Tan Sri Ghazzali, a former Malaysian Ambassador to US who briefed the mission upon its arrival.

New Zealand Trade Minister the Hon Tim Groser met the mission in KL too, encouraging delegates to take advantage of the many opportunities in-market, especially given New Zealand’s FTAs with Malaysia and ASEAN nations. Other business commentaries were presented by:

• Mahendran, HSBC’s Head of International Trade,

• Rajendran, the Oceania Director for Malaysia’s Investment and Development Agency

• Tim Lamb, Fletcher Building’s country manager

• Sally Smart, Cognition Education’s regional manager, and

• David Ross, Fonterra’s Managing Director in Malaysia.

Discussions in KL centred on eco-tourism, theme parks, adventure tourism and wellness tourism while food and beverage sector delegates visited the NZ Food Fair at AEON One Utama. In Penang Dato’ Lee from Invest Penang, the city’s investment attraction agency, food and

beverage delegates met local distributors while tourism delegates met a theme park developer with global operations. Thanks to Invest Penang the business matching was highly targeted.

New Zealand’s ambassador HE David Pine and mission leader Sir Ken Stevens met the state’s Chief Minister, YAB Lim Guan Eng and Deputy Chief Minister YB Ramasamy. The Chief Minister highlighted the long standing relationship between Malaysia and New Zealand.

In Sarawak the mission met senior staff of Sarawak Tourism Board, Ministry of Industrial Development and Sarawak Timber Association briefed the mission.

Delegate reports and photos will be cov-ered in the next issue of BusinessPlus.

Mike Houlahan

Fighting the tide of money printing

By Mike Houlahan

19


Continued reforms by The

People’s Bank of China (PBOC)

are set to further accelerate

the use of Renminbi (RMB)

in international trade and

investment and reinforce the

move towards full convertibility of

the currency.

Reforms such as the widening of the RMB daily trading band, recent

capital account deregulation and the expansion of the Qualified Institutional Investor Scheme are all signs of a change in focus away from the currency’s appreciation to flexibility.

With a move away from the crawling dollar peg, HSBC expects China’s foreign exchange regime to offer more two-way volatility and the true flexibility characterised by a traditional free market currency. As such, HSBC has revised down its year-end 2012 forecast of USD-RMB to less than 2% appreciation over the calendar year, down from a previously forecast pace of 3% over a year ago.

In addition, HSBC predicts that by 2016 China will overtake the USA to become the biggest trading nation in the world, accounting for 12% of global trade*. As a result, RMB is predicted to become a top three global currency by 2025.

“We continue to encourage exporters and importers to ‘test the water’ by, at a minimum, receiving or providing quotes in RMB as well as USD,” says Cath Henry, Head of Payments and Cash Management at HSBC New Zealand.

“It’s important New Zealand exporters and importers are competitive in understanding and using RMB when trading in the global marketplace.

“This continues to be an exciting time in China, with constant developments changing the economic and financial landscape. It is a significant challenge to

remain aware of the latest movements but each new announcement opens up new opportunities for New Zealand businesses,” continues Henry.

Recent financial reforms and its effect on the currency

RMB band wideningIn early April the PBOC widened the

USD-CNY daily trading band. As at 16 April 2012, the band is extended from +/- 0.5% to +/- 1%.

This represents a milestone in currency deregulation, as it means the currency is moving away from an appreciating crawling peg regime to being more market driven.

Although the PBOC may not utilise the new fully expanded range, this increased exposure to market forces is expected to be followed by a gradual increase in intra-day volatility.

Capital account liberalisationChina continues to liberalise its current

account, most recently evidenced by Beijing policy makers further easing restrictions on capital inflow. China’s structural current account surplus has also fallen as domestic demand grows relative to exports and RMB appreciation erodes the surplus. This is highlighted by China’s current account surplus to GDP ratio which fell to only around 3% of GDP indicating the RMB exchange rate is much closer to its equilibrium level than it has been in previous years.

Qualified Institutional Investor scheme expansion

In another move designed to promote inbound foreign investment, China announced in April it would raise the quotas for both USD and RMB qualified foreign institutional investor schemes (QFII), which is a main channel for

foreign investment into Chinese Securities.

The USD and RMB QFII will be expanded to USD80bn from USD30bn and to RMB70bn from RMB20bn respectively; this is expected to boost foreign investment in domestic markets.

Mainland Designated Enterprise requirements abolished

Until now cross-border trade settlement in China has been limited by the Mainland Designated Enterprise (MDE) list system which has required Chinese companies to be pre-approved in order to conduct RMB goods export. Now this system is to be abolished and replaced by a blacklist system.

Set-up initially in July 2009 with only 365 mainland companies having approval, it was then expanded to more than 67,000 companies in 20 provinces in 2010. Now this trade and services settlement programme will be widened to all payments relating to cross-border trade or service settlements made by companies that are not named on the black list.

As our second largest export market, we already have strong relationships with China’s traders, and New Zealanders can increasingly capitalise on the benefits of trading directly with this upcoming global currency.

*HSBC’s Global Connections report issued 22 February 2012

The above material has been provided for general information only and does not constitute personalised investment advice. Although every effort has been made to ensure its accuracy, it should not be relied upon or used as a basis for entering into any products or making any investment decisions. Readers should seek independent legal/financial advice prior to acting in relation to any of the matters discussed in this publication. Neither HSBC nor any person involved in this publication accepts any liability for any loss or damage whatsoever that may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this publication. HSBC in New Zealand is The Hongkong and Shanghai Banking Corporation Limited, incorporated in the Hong Kong SAR with limited liability, acting through its New Zealand branch.

Cath Henry

New wave of financial reforms set to accelerate internationalisation of RMB

By HSBC staff

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6152

SCH6152 - Business_Health_Ins_FP_EMA.indd 1 21/11/11 9:05 AM


21 EMA MEMBER PROUD MOMENTS NOTICEBOARD

The Giltrap family, founders of the Giltrap Group Holdings Ltd car sales and service business, shared a special day last month. Group chairman, Colin Giltrap, was officially honoured as a Knight Companion of The New Zealand Order of Merit (KNZM) for services to motorsport and philanthropy, at an investiture ceremony at Government House Auckland.

Sir Colin’s son and Group joint managing director Michael says the day was made even more special by being the first investiture ceremony for the Governor-General of New Zealand, Lt. Gen. The Rt. Hon.

Sir Jerry Mateparae which means Sir Colin was the first person he honoured on behalf of Her Majesty, Queen Elizabeth II.

At the small celebration that night, Sir Colin acknowledged Giltrap’s great staff and great customers, without whom this honour would not have been achieved, he said.

Sir Colin Giltrap at his investiture at Government House in Auckland, with his grandson Marco, whose father Richard is Sir Colin’s oldest son and joint managing director of Giltrap Group.

Giltrap chairman knighted

The cardboard cores designed to hold up the temporary Christchurch cathedral replacing the one damaged by earthquakes are being manufactured by Sonoco NZ Ltd based in Henderson, Auckland, says national operations manager Gareth Wilson.

The company manufactures and exports cardboard cores, cardboard tubes, and composite cans. The tubes and cores are used for structural support in buildings as well as winding film, paper and textiles.

The new $5 million cathedral will

be built on the original site in Latimer Square now that the landmark cathedral is no more.

The designer, Japanese architect Shigeru Ban, reportedly says a similar cathedral he designed for the earthquake-hit city of Kobe in 1995, is still being used today.

Seven entrepreneurs and innovators were honoured in the ninth World Class New Zealand Awards to recognize people who have contributed significantly to New Zealand’s growth and development as well as its international reputation in any field.

Recipients of the awards demonstrate New Zealand’s ‘global connectedness’ which are run by the KEA NZ expat network.

Douglas Pharmaceuticals founder and managing director Sir Graeme Douglas was awarded in the life sciences category.

Tony Falkenstein, chief executive of Red Eagle and Just Water won the new thinking category.

Two other awards, for Iconic New Zealander and the supreme World Class New Zealand Award will be presented on May 31.

A New Zealand designed system of managed first aid kits has become a hit on both sides of the Tasman. Over 7000 of the kits are now serviced in Australian workplaces, which together with the 4000 here, make the system a highly successful

Kiwi occupational health and safety innovation.

According to Gavin Smith, New Zealand manager of ALSCO First Aid and the designer of the system, Australians elect to contract their first aid kit management to an all in

one rental service because the DIY approach doesn’t meet the stringent OSH or Australian state requirements.

Many businesses now prefer to have it all done for them, and know that they are meeting relevant OSH requirements.

Cores for a good cause

World Class New Zealanders Douglas and Falkenstein

NZ designed first aid kits a hit in Australia

22


New Zealand’s largest steel forging

and heat treatment facility, South

Auckland Forgings Engineering

Ltd (trading as S.A.F.E) has built

the country’s largest solar power

installation – 360 photovoltaic

panels to save money on electricity

bills and be clean and green.

S.A.F.E project manager Richard Johnstone says the installation includes six inverters to convert direct current off the panels to alternating current forfactory use.

The installation generating up to 62.4 kW at any time is expected to deliver about 90,000 kWh a year, about 70% of the company’s electricity needs. The rest will come off the power grid.

Surplus electricity generated by the panels, for example on weekends, will be bought by Meridian Energy under a two-year deal – the best buy-back deal in New

Zealand, Johnstone says.At the launch of the new installation last

month, staff and about 70 guests including suppliers looked on as local Hunua MP Dr Paul Hutchison flicked the switch to activate the new source of power.

Guests were treated to a demonstration of the panels: the solar-powered forge heated a steel bar red hot in one minute by induction heating.Turning it into a bolt took only a

few seconds. The whole demonstration took 10 minutes.

Mr Johnstone’s next task is to install pipes and taps to a water trough for sheep which will be kept around the panels on the grassy, north-facing land at the company’s 3ha site in Drury, Auckland. The sheep save mowing and spraying, says Johnstone.

With increasing power bills in these uncertain economic times the company began looking at ways to limit price fluctuations of the power. To evaluate the return on investment they factored in the dramatic decrease in the cost of solar installations, the luxury of having money in the bank (the full $250,000 installation cost) and available land space, plus the ability to claim GST and depreciation, weighed against the compounding annual cost increases for lines’ electricity. One outcome was a projection of 9% pa return

on investment, rather than spending on electricity, based on this year’s prices.

In addition S.A.F.E’s wanted to provide another reason for customers to choose

IN OUR REGULAR SNAPSHOTS OF EMA MEMBER COMPANIES WE DESCRIBE THE BUSINESS OF SOUTH AUCKLAND FORGINGS ENGINEERING Ltd (SAFE) BASED IN DRURY, AUCKLAND

Engineering plant installs country’s largest solar panel system

The photovoltaic solar power plant on site in Drury.

“One outcome was a projection of 9% pa return on investment, rather than spending on electricity, based

on this year’s prices.”

23


By Mary MacKinven

them over their (mainly in China) competitors.

As general manager Barry Robinson says, the plant heats steel til it’s bright yellow and bashes it into shape – an activity not generally associated with the ‘clean and green’ use of solar power.

Mr Johnstone adds, “With heavy engineering seen as dirty we wanted to present a cleaner image. We are often the primary supplier of components and many

businesses are looking at their supply chains for [proof of] sustainability.

“Whether you believe in global warming or not doesn’t change the fact that businesses worldwide are implementing policies and principles of sustainability with renewable resources.

“S.A.F.E in Drury has risen to the challenge by installing the largest photovoltaic solar electricity generating array in New Zealand.

“Sustainability is important – being clean and renewable - but it has to be financially viable too.”

S.A.F.E is a multi-faceted specialist engineering company with 43 years’ experience. It operates a heavy forging plant, a large heat treatment facility, machine shop, metallurgical laboratory and educational facility all on the one site to provide a “one-stop shop” integrated manufacturing facility.

Meridian Energy Ltd is a premium partner of EMA and offers as part of this partnership, qualifying EMA members an additional 2% prompt payment discount on their Meridian electricity bills. Sustainability is part of Meridian’s DNA and underpins their operations by determining how it does business. Meridian is New Zealand’s largest electricity generator, developing electricity from renewable resources, like wind, water and the sun. They own and operate seven hydro stations and four wind farms in New Zealand and generate electricity from wind in Australia and solar in the United States of AmericaThey also retail electricity and develop innovative products and services, to help their customers to be more energy efficient.As part of their commitment to creating a better energy future for all New Zealanders, Meridian has been

investigating a number of products, including photovoltaic solar systems.Meridian’s Business Solutions Manager Peter Doidge says Meridian is interested in these opportunities because it sees itself as a leading retailer in the renewable resource and sustainability space. Mr Doidge works full time with customers helping them to install their own small scale renewable energy schemes He says that photovoltaic solar systems are the most popular by more than 100:1.“These customers are aligned with our stand on sustainability.” Mr Doidge further adds that while these schemes are relatively costly to run currently, the costs have come down considerably and the systems are showing real potential. “Localised generation has good benefits for our customers and the national grid, and we want to actively support these sorts of innovative schemes.”

Out & About

1

Eco Smart Business programme launch and awards ceremony, Auckland

1

| 1 Don & Rae Cornes, Kenneth & Jocelyn MacKenzie, Linda Fox, Craig Bennett [Jani-King (NZ)] | 2 Ross Kesby [Kelmarna Gardens] & Penny Hulse [Deputy Mayor of Auckland] | 3 Marissa Oakley Browne & Sue Martin [Auckland Council] | 4 Tim Kitson [Nova Energy] | 5 Glenys & Bruce Flowerday [Flowerday Enterprises Ltd]| 6 Erin Moore [EECA] | 7 Oliver Evans [International Certi� cations] | 8 Barry Samu & John Thompson[Rubbish Direct] | 9 Peter Doland [Abilities Group] | 10 John Glen [Auckland War Memorial Museum] & Chris Fulford [Auckland Tourism Events & Economic Development] | 11 Thomas Dignan [Library Supply Company] | 12 Dave Evans [International Certi� cations] | 13 Anthony Thomson & Martin Wylie [Eco Insulation] | 14 Kirsten Mur� tt and Robyn de Bruin Judge [de Bruin Judge Furniture] | 15 Barbara Kiely [Library Supply Co] & Mary Mackinven [EMA]

2

643

8 9 10

7

13

Don & Rae Cornes, Kenneth & Jocelyn MacKenzie, Linda Fox, Craig Bennett [Jani-King (NZ)] Don & Rae Cornes, Kenneth & Jocelyn MacKenzie, Linda Fox, Craig Bennett [Jani-King (NZ)] | 2 Ross Kesby [Kelmarna Gardens] & Penny Hulse [Deputy Mayor of Ross Kesby [Kelmarna Gardens] & Penny Hulse [Deputy Mayor of

1412

5

11

15

Business lunch with Steven Joyce, in his role as Minister of Economic Development, Auckland

| 1 Rowena Foster [KiwiRail] & Liza Viz [Beyond Services] | 2 David Tomas [Coastguard Northern], Robyn Webb [Pohlen Kean] & Vernon Herbert [Wedderburn] | 3 Steven Joyce [MP] | 4 Rachel Skudder & A� Leuila [Best Paci� c Institute of Education] | 5 Charles Ingley [Sky TV], Carren Walker-Raos [Beyond Services] & Chris Morrison [PWC]

1 2 3

4 5

EMA Alert

www.ema.co.nz | [email protected]

MAY

JUN

E

Conference ContactsKaren Joe | 09 367 0959 | [email protected]

Training ContactsLotta Bryant | 07 839 2710 | [email protected]

Kevin Chambers | 09 367 0958 | [email protected]

Craig Garner | 09 367 0907 | [email protected]

Deborah Law-Carruthers | 09 367 0947 | [email protected]

Post Budget Business Issues DiscussionJoin us and hear the Minister’s personal analysis of the 2012 Budget – his � rst Auckland public discussion after he delivers the Budget to the nation on May 24. Come and ask the hard questions on behalf of business.

Don’t miss this stimulating post budget discussion

10am – 12pm | Auckland Contact Karen Joe

30

HR Policies and Procedures– Best Practice Guide

Having sound policies and procedures in your company or business will greatly reduce potential misunderstandings. This workshop is the Human Resource guide to best practice in this area of responsibility.

9am – 4pm | HamiltonContact Deborah Law-Carruthers

11

Performance Management– The Fundamentals

21-22

National Certi cate in

Business (First Line Management)Level 3This programme covers the fundamentals of � rst line management and emphasises the one-on-one communication skills required for workplace leadership.

9am – 4pmEMA, AucklandContact Kevin Chambers

28-29Block 1 of 4

JULY

Induction Programme Design

It is important to make new employees feel they are a vital part of your organisation. They also need to feel safe and have a plan to start them on a development programme.

9am – 1pmEMA, AucklandContact Deborah Law-Carruthers

5Interviewing Skills

To make quality decisions on sta� selection and recruitment you need to know how to interview e� ectively, gather accurate information and use that information to ensure a consistent process across your organisation.

9am – 4pmEMA, AucklandContact Deborah Law-Carruthers

5 National Certi cate in Adult Educationand Training, Level 5

In this course you will learn how to facilitate and evaluate interactive learning sessions for individuals and groups and how to design, evaluate and moderate assessment materials following moderation administration practices.

9am – 4pmEMA, AucklandContact Kevin Chambers

11-13

Did you know, EMA Tailored Training can deliver all these workshops fully customised to re� ect

your workplace... at your workplace?

Contact Rhonda [email protected]

Mobile 021 664 321

– Best Practice Guide

company or business will

practice in this area of responsibility.

feel they are a vital part of

them on a development

Deborah Law-Carruthers

In this course you will learn how to facilitate and evaluate interactive learning sessions for individuals and groups and how to design, evaluate and moderate assessment materials following moderation administration practices.

9am – 4pmEMA, AucklandContact

how to interview e� ectively,

Deborah Law-Carruthers

Disaster and Business Recovery Conference – Planning for the UnexpectedJoin us for a full day learning how to prepare your business for the unexpected including: HR & payroll – what are your options? Insurance – knowing what it covers, and getting what you want; data and IT – business resilience starts now; business interruption planning & practice – you don’t know until you try; recovery and rebuild – what the months that follow will hold; plus case studies of how companies survive.

Contact Karen Joe

18

Health And Safety Representative Training Stage 1 (Workplace)In many instances health and safety in the workplace is a matter of attitude – it is often a challenging and unfamiliar role. This course forms the basis for a personal development plan based the on current skills sets & the needs of the company.

9am – 4pm | EMA, AucklandContact Craig Garner

21-22Join us and hear the Minister’s personal analysis of the 2012

Inaugural Asset Management ConferenceThis new EMA Conference explores sustainable technologies for your business, compliance issues, plant and equipment, insurance, power, � eet management, new trends in building usage plus much more. It is aimed to give your business the latest in asset management as well as ensuring you are up to standard and complying with all current legislation for your physical assets.

Contact Karen Joe

28

you are up to standard and complying with all

Out & About

1

Eco Smart Business programme launch and awards ceremony, Auckland

1

| 1 Don & Rae Cornes, Kenneth & Jocelyn MacKenzie, Linda Fox, Craig Bennett [Jani-King (NZ)] | 2 Ross Kesby [Kelmarna Gardens] & Penny Hulse [Deputy Mayor of Auckland] | 3 Marissa Oakley Browne & Sue Martin [Auckland Council] | 4 Tim Kitson [Nova Energy] | 5 Glenys & Bruce Flowerday [Flowerday Enterprises Ltd]| 6 Erin Moore [EECA] | 7 Oliver Evans [International Certi� cations] | 8 Barry Samu & John Thompson[Rubbish Direct] | 9 Peter Doland [Abilities Group] | 10 John Glen [Auckland War Memorial Museum] & Chris Fulford [Auckland Tourism Events & Economic Development] | 11 Thomas Dignan [Library Supply Company] | 12 Dave Evans [International Certi� cations] | 13 Anthony Thomson & Martin Wylie [Eco Insulation] | 14 Kirsten Mur� tt and Robyn de Bruin Judge [de Bruin Judge Furniture] | 15 Barbara Kiely [Library Supply Co] & Mary Mackinven [EMA]

2

643

8 9 10

7

13

Don & Rae Cornes, Kenneth & Jocelyn MacKenzie, Linda Fox, Craig Bennett [Jani-King (NZ)] Don & Rae Cornes, Kenneth & Jocelyn MacKenzie, Linda Fox, Craig Bennett [Jani-King (NZ)] | 2 Ross Kesby [Kelmarna Gardens] & Penny Hulse [Deputy Mayor of Ross Kesby [Kelmarna Gardens] & Penny Hulse [Deputy Mayor of

1412

5

11

15

Business lunch with Steven Joyce, in his role as Minister of Economic Development, Auckland

| 1 Rowena Foster [KiwiRail] & Liza Viz [Beyond Services] | 2 David Tomas [Coastguard Northern], Robyn Webb [Pohlen Kean] & Vernon Herbert [Wedderburn] | 3 Steven Joyce [MP] | 4 Rachel Skudder & A� Leuila [Best Paci� c Institute of Education] | 5 Charles Ingley [Sky TV], Carren Walker-Raos [Beyond Services] & Chris Morrison [PWC]

1 2 3

4 5

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