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4.1  The pool of potential exporters

The vast majority of firms that are not currently engaged have no immediate plans or interest in earning overseas income (table 4). Among firms that have never earned overseas income, only nine percent express any interest in doing so, with the other 91 percent responding that they are “not currently interested or business not suitable for overseas income” (table 4, final row).[20] Levels of interest differ by industry, and are highest in industries that already have a high proportion of firms earning overseas income.[21] However, interest in overseas income is not restricted to the traditional export industries such as manufacturing. For example, interest is relatively high in professional services and education, with 6.3 and 8.3 percent of non-engaged firms respectively reporting that they are actively looking at opportunities to generate overseas income in future.

Table 4: Interest in future overseas income by broad industry, firms reporting no current or past overseas income
Interested in
Not interested
or not suitable
Primary (A,B) 0.011 0.049 0.940 2,214
  [0.003] [0.017] [0.018]
Manufacturing (C) 0.054 0.097 0.849 2,565
  [0.010] [0.014] [0.017]
Utilities & construction (D,E) 0.036 0.061 0.903 3,123
  [0.019] [0.025] [0.030]
Wholesale & retail trade (F,G) 0.009 0.061 0.931 /td> 5,094
  [0.006] [0.018] [0.018]
Accommodation & food services (H) 0.033 0.075 0.893 3,339
  [0.020] [0.031] [0.036]
Transport & communications (I,J) 0.013 0.039 0.944 1,383
  [0.004] [0.010] [0.011]
Professional Services (K,L,M,N) 0.063 0.064 0.873 4,197
 /td> [0.013] [0.012] [0.017]
Education (P)   0.083 0.093 0.829 618
  [0.028] [0.028] [0.038]
Social & recreation services (Q,R,S) 0.024 0.014 0.962 3,387
  [0.009] [0.004] [0.010]
Total 0.032 0.059 0.908 25,914
  [0.005] [0.007] [0.008]
Standard errors in brackets. Significance tests for probability of having some interest in overseas income show that social services firms are significantly less likely to be interested in overseas income than all industries except primary and transport (at the 10% level or lower). Manufacturing, professional services and education firms all have a higher probability of being interested than those in the transport and communications, wholesale and retail trade, and primary industries, but do not differ significantly from each other.

Definitions: Actively exploring: initiatives underway and overseas income anticipated within the next 12 months or/ actively exploring the options. Interested in exploring: no action currently but interested in exploring options. Not interested or not suitable: not currently interested or business not suitable for overseas income.

Firms that stated that they were not currently interested or not suitable for overseas income were asked to indicate the reason for their disinterest (table 5). The main responses were either a belief that earning overseas income is infeasible because the nature of the business relies on proximity to customers (55%) or a feeling that the New Zealand market is sufficient (38%). The distribution of these reasons reflect the main activities of these industries - proximity to customers is reported as a reason for remaining domestically focused in social services, utilities and construction, while manufacturing firms are more inclined to cite that they are satisfied with their current market. This suggests that, in the absence of significant shifts in technology, culture or both, attempts to reduce the barriers to initial export entry are unlikely to influence the behaviour of the majority of non-exporters.

Table 5: Reported reason for lack of interest/ability in overseas income generation, firms reporting no current or past overseas income
NZ specific
business role
NZ market
Primary (A,B) 0.062 [0.020] 0.381 [0.039] 0.157 [0.031] 0.193 [0.036] 0.479 [0.043] 2,082
Manufacturing (C) 0.182 [0.022] 0.535 [0.029] 0.102 [0.018] 0.109 [0.018] 0.505 [0.029] 2,178
Utilities & construction (D,E) 0.069 [0.026] 0.779 [0.044] 0.097 [0.033] 0.055 [0.024] 0.367 [0.052] 2,820
Wholesale & retail trade (F,G) 0.044 [0.015] 0.495 [0.041] 0.160 [0.029] 0.137 [0.022] 0.421 [0.041] 4,737
Accommodation & food services (H) 0.047 [0.028] 0.573 [0.064] 0.096 [0.039] 0.098 [0.038] 0.277 [0.059]& 2,979
Transportation & communications (I,J) 0.042 [0.018] 0.507 [0.052] 0.196 [0.040] 0.093 [0.026] 0.381 [0.052] 1,311
Professional services (K,L,M,N) 0.074 [0.015]& 0.403 [0.030] 0.267 [0.028] 0.123 [0.017] 0.410 [0.031] 3,663
Education (P) 0.065 [0.029] 0.547 [0.057] 0.182 [0.044] 0.129 [0.037] 0.347 [0.056] 510
Social and recreational services (Q,R,S) 0.037 [0.011] 0.715 [0.026] 0.186 [0.022] 0.078 [0.016] 0.246 [0.025] 3,258
Total 0.066 [0.007] 0.550 [0.015] 0.162 [0.011] 0.111 [0.009] 0.379 [0.015] 23,541

Standard errors in brackets. Proportions based on weighted counts, random rounded base three in accordance with Statistics New Zealand confidentiality. Firms may give multiple responses. requirements. Definitions: costs/barriers prohibitive: costs, risks or barriers are prohibitive. proximity required: the nature of this business relies on physical proximity to its customers. NZ specific demand: goods or services satisfy demand specific only to New Zealand. limited business role: role in business structure is limited to the New Zealand market. NZ market sufficient: New Zealand market is sufficient.

Although only a small proportion of firms that are not currently generating overseas income express an interest in doing so in future, absolute numbers of interested firms are significant relative to the existing population. Taking the population of 27,204 firms with no overseas income (table 1) and applying the levels of interest in future overseas income shown in table 4, implies that between 600 and 1,140 firms are actively looking at the potential for generating overseas income and a further 1,230-2,000 would be interested in exploring the options. In addition, between 440 and 1,050 firms could be considered “discouraged exporters” - firms that state that they are not currently interested/suitable, with the sole reason being that “costs and barriers are prohibitive” - and might, in principle, be responsive to policy interventions aimed at reducing these barriers. Together, these estimates suggest a population of around 3,200 “interested but non-engaged” firms - almost half the size of the population with current overseas income.

This raises the question of whether stated intentions to seek overseas income are borne out in reality. Table 6 summarises the transition rate into earning overseas income (restricted here to either exporting or significant tourism revenue)[22] in the following three years for firms that reported no overseas income in the 2007 and 2011 surveys, according to their reported level of interest. Among those firms that can be followed for the three years following each survey (around 48 percent of the 2007 (weighted) sample and 58 percent of the 2011 (weighted) sample), the observed probability of reporting export or tourism income in the next four years ranges from seven (2007) and 19 (2011) percent among those firms which initially stated they were not interested in, or not suitable for, overseas income in 2007 to 43 (2007) and 47 (2011) percent among those that were actively pursuing foreign income and were expecting to realise that goal within 12 months. High attrition rates from the survey and wide standard errors for the entry proportions mean that these numbers should be seen as weak estimates of the true probability of entry. Attrition rates are lower when calculated on an unweighted (39 to 46 percent) or employment weighted (26 to 32 percent) basis, reflecting the lower probability of exit for larger firms as well as higher sampling proportions among those firms. To the extent that firm size and performance are correlated with export entry (see Fabling & Sanderson 2013), it is likely that the weighted estimates of market entry are, if anything, on the high side relative to what we would expect in the full population. In the next section we examine whether the probability of future entry is systematically related to firm characteristics at the time of the 2007 and 2011 surveys, focusing on the barriers and motivations those firms report.

Table 6: Share of firms reporting no current or past overseas income in 2007 and 2011 surveys that report exports or significant earnings from tourism in following three years, by reported interest. < < <
Firms reporting no overseas income in 2007
of firms
Of which,
lost to attrition
Of remainder,
Proportion of
Of which, lost
to attrition
Of remainder,
Initiatives underway 0.011 0.790 0.571 0.025 0.390 0.520
Actively exploring 0.014 0.397 0.303 0.014 0.361 0.272
Interested in exploring 0.064 0.579 0.203 0.055 0.451 0.128
Not interested/suitable 0.910 0.516 0.069 0.9060.3120.079
N(weighted) 26,271 0.521
N(unweighted) 3,345 0.459 166,700 0.322
Firms reporting no overseas income in 2011
of firms
Of which,
lost to attrition
Of remainder,
Proportion of
Of which, lost to attrition Of remainder,
Initiatives underway 0.012 0.563 0.533 0.014 0.476 0.464
Actively exploring 0.020 0.574 0.440 0.018 0.214 0.373
Interested in exploring 0.059 0.513 0.212 0.0550.250 0.190
Not interested/suitable 0.908 0.407 0.195 0.913 0.262 0.158
N(weighted) 25,914 0.419
N(unweighted) 3,285 0.386 153,000 0.264

Firm counts random rounded base three in accordance with Statistics New Zealand confidentiality requirements. Columns1-3 refer to the weighted proportion of firms reporting reporting a given level of interest in earning overseas income in future, the proportion of those firms lost to attrition in the following three years, and the proportion of those firms which were not lost to attrition that report exports and/or significant tourism income in the BOS surveys of the following three years. Columns 4-6 present the same statistics, weighted by initial employment rather than sampling weights. Unweighted total firm counts and proportion lost to attrition are reported in the bottom row of each panel.


  • [20] The level of interest in re-entering overseas markets appear to be much higher among firms that have earned overseas income in the past than those that have never generated overseas income, with 45 percent of firms with previous overseas income reporting at least some interest in generating overseas income again in future. However, the past-exporter figure sits within a wide margin of error, due to the relatively small number of past exporters and high rates of non-response.
  • [21] Correlation coefficient of 0.60 for any interest and 0.33 for active interest.
  • [22] Significant tourism revenue defined as more than 25 percent of total sales.
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