New Zealand's Strengths and Weaknesses
Strengths
Today, New Zealand has a strong platform on which to build.
We have an advanced technology and low cost-base that are attractive to foreign investors. By any international yardstick, we are near the forefront in adopting the new technologies that underpin e-commerce.
We have been in the top ten countries in the world for Internet access on a per capita basis since 1993. We have been the highest spenders in the world on IT equipment per capita for the past two to three years. We have quality and price-competitive infrastructure services - energy, transport, telecommunications and professional services - by world standards.
We have the highest level of penetration of EFTPOS and ATM technologies in the world. New Zealand consumers and small businesses are already comfortable with performing electronic transactions. We have some well-established e-government services, including on-line customs services to importers and exporters and on-line company registration.
Our multicultural, English speaking, population is well educated. Our regulatory environment is open and transparent. Our climate, lifestyle, and political stability are attractions. We have a high concentration of small and medium-sized enterprises (SMEs) that can offer advantages of flexibility that offset disadvantages of small scale and "market muscle".
Although we are distant from the rest of the world, we have a natural resourcefulness and a desire to exploit the advantages offered by the Internet. New Zealanders are already recognising the value of marketing intellectual capital over the Internet in the form of digital products ("content").
History and the small size of our country have given us an ability to respond quickly to calls for change. Our "can do" attitude allows us to co-ordinate our efforts at the national and business level in the search for solutions to problems. This was seen in our successful collective response as a nation to Y2K.
Opportunities
The Internet offers new avenues for New Zealanders to exploit the rapidly developing market for creative content. Already, successes in fashion, boat design, film, music, software, and wine have placed New Zealand and its people on the world stage in ways that were previously unimaginable. The Internet also provides opportunities for Maori to pursue unique business ventures. Maori and Pacific cultures give New Zealand creative products a distinctive and fresh marketing edge, which their businesses are beginning to exploit.
The Internet allows for real-time participation in global economic activity. This has opened up opportunities for New Zealand businesses to create new services and information products, particularly as time-zone differences give us advantages in meeting the demands of the 24-hour global economy. We are at work while others are asleep. We can build new export trade by being the overnight information-processing partners for other parts of the world.
The flexibility provided by our large base of SMEs can be capitalised on by greater use of electronic linkages. Our SMEs have the potential to work with others in New Zealand and elsewhere to gain critical mass in order to meet customer needs in global markets. Clusters of SMEs can now compete against larger well-established businesses.
Weaknesses
Offsetting these strengths, however, are some weaknesses that must be addressed to ensure that all New Zealanders, including rural communities, can participate effectively. These include:
- a shortage of management, leadership, and entrepreneurial e-commerce skills
- a relatively low level of understanding of the opportunities afforded by e-commerce and the information and communications technology (ICT) revolution
- varying ICT-literacy in the community as a whole
- an uneven distribution of infrastructure capability at reasonable cost, particularly in rural communities
- a lack of integration or connectivity to global business networks
- the short supply of technical graduates from tertiary institutions
- the emigration of skilled New Zealanders, in particular IT personnel with a high degree of technical skill who are attracted by the pay and opportunities overseas
- the need to develop an innovation culture, and
- a lack of good quality information to support policy formation and inform how we are portrayed in the wider world.
While New Zealand displays widespread adoption of the technologies that enable e-commerce, such as the Internet, there is doubt about the depth of penetration to support fully integrated electronic business systems. Evidence suggests that many New Zealand businesses have yet to recognise the advantages of electronically integrating all their business systems from the front end (an advertising Web site), through integrated management and planning systems, to their supply and distribution chains. This requires a fundamental rethinking of processes and internal systems.
The domestic market provides a small economic base for businesses. While technology uptake is high, the benefits are not necessarily reflected in business profits and growth. This points to weaknesses in business innovation. R&D investment may be low. While competition in many markets is intense, a strong go-it-alone attitude prevails, and many SMEs prefer debt- rather than equity-financing, to avoid sharing ownership control.
There is a tendency for businesses and financial institutions to be risk averse. Their focus on costs is often matched by ignoring critical intangible factors and a failure to appreciate the changing strategic environment and the opportunities it offers.
Threats
New Zealand has been relatively slow to appreciate the globalisation of the market for skilled labour. We have seen the departure of many talented New Zealanders in pursuit of their own interests overseas. The competition for skilled labour, particularly for people with ICT skills, is becoming fierce, as evidenced by the recent decision by the United States to remove certain immigration restrictions for people with ICT skills. Such developments pose significant policy challenges, accentuated in developed countries such as New Zealand by an ageing population.
E-commerce also poses new risks to incumbents in a range of industries, as nimble competitors harness the power of the Internet and e-commerce to drive prices down and undermine competitive positions.
Others, including those whom we have not formerly seen as competitors, are addressing these challenges and exploiting new opportunities faster than we are.
Summary
New Zealand has a strong foundation that will enable us to reap the full benefits of e-commerce. That we have done so well in the first stages of the e-commerce revolution is a testament to our ability to adapt to and adopt new technologies.
The full strategic implications of the information revolution, of which e-commerce is a part, are only now beginning to emerge. New Zealand needs to build on this promising base if we are to keep pace and to exploit the opportunities that are being opened up. At the same time, we must manage the significant risks of this revolution if others move ahead at greater speed. We need to turn our attention to building our capability by addressing our weaknesses.
The more people who participate in the networked environment, the more value the network delivers. The greatest benefit of electronic commerce will be realised through the widest participation. We need to ensure that all businesses and citizens are able to participate, including Maori and Pacific people, the less well-off, and those in remote areas.
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