20pc of companies earn offshore income survey

Twenty per cent of New Zealand businesses generated some form of overseas income in the last financial year.

For 44 per cent of businesses surveyed, their offshore income came from sales of finished goods, and over a third, 38 per cent, gained income from services, Statistics New Zealand said today.

The department's business operations survey, run annually since 2005, asked questions for the first time about different types of international engagement.

The manufacturing industry had the highest proportion of businesses generating overseas income (38 per cent), followed by wholesale trade (35 per cent).

Only eight per cent of firms made overseas income from sales of raw, unprocessed materials.

Reasons given for not generating overseas income were most commonly due to exchange rate volatility or level, followed closely by distance from market.

Language and cultural differences were a barrier to 12 per cent of firms, and 11 per cent indicated their inability to rapidly increase supply was a barrier.

Profit margins ranged, with 47 per cent of businesses that earned money overseas saying they made their highest profit margins at home, possibly due to the exchange rate or competition.

Overseas markets provided higher margins for 21 per cent of businesses with overseas income.

Agriculture, forestry and fishing differed from most sectors, with 53 per cent of those businesses generating greater profit margins offshore.

When it came to buying goods or services from overseas, 44 per cent of firms bought raw materials, followed by finished goods (42 per cent).

The most common reason was that there was no local supplier (54 per cent), followed by a cheaper source of supply (37 per cent).

The survey also asked questions about innovation, expansion, research and finance.

Many indicators had remained stable over the past three years, but one that had taken a slight drop was innovation.

Forty-seven per cent of businesses engaged in some type of innovation activity over the last two years, from 52 per cent in 2005 when innovation results were last collected.

The industry with the highest overall innovation rate was the communication services group (70 per cent) and 55 per cent of businesses in the sector had developed or introduced new goods or services.

Other ways firms could be innovative were operational processes, organisational or management processes, or marketing.

But the cost of developing new methods, or lack of management resources such as time, were rated the biggest constraints to innovation.

A detailed report on innovation in New Zealand will be released in July.

In the last financial year, 29 per cent of businesses requested additional debt finance, while 11 per cent requested equity finance.

About 21 per cent of businesses invested in expansion and 7 per cent undertook research and development.

Further data on company engagements internationally will be released later this year.

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20pc of companies earn offshore income survey