Using an Agent or Distributor
Importer-distributors are a more common channel for products requiring technical knowledge, service, repairs, or spare parts. The size of the New Zealand market typically allows one distributor per unique product/manufacturer. Many distributors handle more than one manufacturer’s products. A stocking importer or distributor is important where continuity of supply is a selling point, such as for certain industrial or consumer goods. Large New Zealand retailers also work through purchasing agents or consolidators in the United States and other countries. Numerous subsidiaries of foreign manufacturers import directly from parent companies and distribute products to round out or supplement their domestic production.
Import and distribution by a New Zealand branch or subsidiary is common when the volume is substantial, and the foreign parent wishes to retain control of distribution.
Establishing an Office
Setting up a business in New Zealand is quite straightforward, provided U.S. companies complete their due diligence and ensure they follow local procedures for tax, banking, and employment conditions.
Business in New Zealand generally use one of these three structures: Sole Trader, Partnership, or Limited Liability.
New Zealand’s Inland Revenue Department offers through its website advice on setting up a business.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
Franchising is a popular business model in New Zealand. Self-employment is valued by New Zealanders. Globally, New Zealand has the highest number of franchise systems per capita. Within New Zealand there is a good mix of international and domestic franchise opportunities offered. Hospitality franchises dominate the franchise industry sector.
There is no specific legislation relating to franchising in New Zealand, as the sale of businesses and business practices is covered by normal commercial law. Of particular importance to incoming systems are the Fair Trading Act, Health & Safety in Employment Act, Consumer Guarantees Act and the Employment Act.
Digital marketing is common practice in New Zealand reflecting this country’s high level of internet usage. New Zealand’s Unsolicited Electronic Messages Act 2007:
- prohibits unsolicited commercial electronic messages (this includes email, fax, instant messaging, and text messages of a commercial nature;
- requires commercial electronic messages to include accurate information about who authorized the message to be sent;
- requires a functional unsubscribe facility to be included so that the recipient can instruct the sender not to send the recipient further messages; and
- prohibits using address-harvesting software to create address lists for sending unsolicited commercial electronic messages.
There are no compulsory requirements for foreign companies to form a joint venture with a New Zealand entity when starting up operations. Some U.S. firms choose for their own strategic reasons to join forces with established New Zealand firms to manufacture and market their products. A strategic alliance between U.S. and New Zealand organizations offers partners to access technologies or patented processes owned by the other partner and/or access to their distribution network. U.S. companies planning to partner via a strategic alliance are advised to undertake due diligence on prospective partners as well as seeking expert legal advice for Negotiating an Agreement.
New Zealanders are very familiar with express delivery services (known as courier services locally). DHL, FedEx, and UPS are well-known U.S. express delivery services operating between the U.S. and New Zealand. Express delivery times from the United States to New Zealand ranges from 7-10 days.
Domestically, New Zealand has many home-grown companies providing similar services to the U.S. brands. Overnight express delivery services from Auckland to Wellington is available.
Although New Zealand businesses enjoy a reputation for integrity, it is important for U.S. companies to complete perform appropriate due diligence on their business due diligence on new and existing business partners. Due diligence should confirm a business partner is who they claim to be, has the financial ability to deliver, and has the necessary capacity and capability to deliver over the life of the contract. All due diligence should be contracted.
Due diligence reports are offered by the U.S. Commercial Service to U.S. companies via its International Company Profile options.