YOU’VE got it all: family, friends, a decent job and a house in Remuera or Epsom. You send your children to private schools; you have a taste for European cars and fine wine. Then you land an unlucky roll of the dice – a redundancy, perhaps, or some unexpected bills. You make a bad investment or two; the recession plunges your business into the red. As your debts grow, so does the temptation to break the rules – reroute an invoice or distort a financial statement, just enough to get a new line of credit. You decide to risk it just this once – and maybe once or twice more if you don’t get caught.

“Often with your white collar criminal, they don’t believe – at least initially – that what they’ve done is wrong,” the Serious Fraud Office’s fraud and corruption general manager Nick Paterson says. “They believe themselves to be fundamentally honest individuals who got themselves into a ‘spot’ which they didn’t really want to be in.”

As the economy tightens, so will the chances that people will find themselves in just such tight spots. But is it fair to say that fraud in general in New Zealand is on the rise? “Probably,” Paterson says, though it’s difficult to know whether the rise is actually due to an increased awareness of fraud and better efforts to detect it. “Financial pressures have given people motive for seeking more money, whether honestly or dishonestly.”

Deloitte recovery and forensics partner Barry Jordan agrees. He points to an upsurge in complex fraud in the $100,000 to million dollar range – “the SME of the fraud sector” – over the last year and suggests this can be traced back to the impact of the global financial crisis 12 to 18 months ago. As cash flows tightened, he says, people were probably stealing in order to maintain their accustomed standards of living – but are only now being caught.

Jordan says there’s a perception among some white-collar criminals – however false – that fraud is a victimless crime. “No-one physically gets hurt; no-one’s going to chase you down the street with flashing blue lights and guys with guns,” he says.

Investors who lost collective millions from collapsed finance companies where evidence of fraud has been found would disagree with the “victimless crime assumption” – as would National Fire & Security director Steven Mahoney, left with a $1 million debt after his employee and former neighbour Martyn Scott was jailed for stealing $1.4m from his family business. “I should be able to repay that amount [$1m] in 19 years, so I should be able to retire at 73,” Mahoney told the NZ Herald at Scott’s sentencing last January. “What he stole is my children’s inheritance and our retirement savings. It leaves a very bitter taste in my mouth.”

As well as cold hard debt, staff fraud may leave an organisation with unwelcome media attention, particularly if they operate in the financial or public sector. ASB Bank hit headlines last year after former employee Stephen Versalko was jailed for running what was effectively a $17.7m Ponzi scheme using clients’ money. An ASB spokeswoman declined to speak to IN-Business about the case, as did Versalko himself.

More willing to speak was Ministry of Social Development chief executive Peter Hughes. In June 2003, he faced a public sector boss’ worst nightmare: Lisa Clement, a ministry financial administrator, appeared to have stolen what turned out to be nearly $2m of taxpayer funds.

His first step was to set up a “war room” in his boardroom. For the next few weeks, officials led by Hughes and his deputies literally worked through the night to investigate the offending. During the first week, the media picked up the story. “They just had a small bit of it,” Hughes says, “but we made a decision to put everything that we knew out.”

“One of the things that happens, in government departments in particular, people get sick to death of us ducking and diving and spinning stuff and on this, because it goes to the heart of the integrity of the organisation, it’s really important to be upfront and open and accountable.”

As media coverage ballooned, the full picture gradually emerged. Creating four business entities and using multiple identities, Clement – a 36-year-old married mother of two from Wainuiomata – had filed false invoices, forged signatures and manipulated budgets, forecasts and reports to defraud the ministry of $1.9m over nearly three years. By the time she was caught, just over a million of that had been spent, including $275,000 on cars, $102,000 on travel, $60,000 on jewellery and $86,500 given to friends and family.

“It was in a different league altogether to what we would normally see,” Hughes says. “It was very sophisticated and all internally consistent and you know, gone to great lengths. This is why people are quite shocked, because usually these are very valuable employees. They’re good at their jobs; they know what they’re doing. They’re not the sort of people you suspect.”

There are several basic steps that organisations can take to reduce their exposure to fraud. “It sounds a wee bit like Alcoholics Anonymous,” the SFO’s Nick Paterson says – but the first step is to “acknowledge that there is a problem”.

Second, check what internal controls are in place to prevent fraud, define who has responsibility for looking for fraud, and check what is actually being done to detect it. “If you run through those three or four things and do them well, it probably puts you – and I’ll make the numbers up at this point – but in the top 20-odd per cent of organisations in New Zealand,” Paterson says. “Most people aren’t doing them well enough.”

Since taking on his role, MSD’s Peter Hughes has made tackling staff fraud one of his top priorities – apparently with some success. Ministry data shows that staff fraud cases as a percentage of total staff numbers have declined relatively steadily since 2001, from 0.28 per cent in the 2001–02 financial year to 0.15 per cent in 2009–10.

“We probably have comparatively quite low levels of internal fraud,” Hughes says. “If we were running this as a commercial enterprise in the private sector, there’s a level at which we’d just say ‘well, we’re going to live with that because the cost of reducing it further is uneconomic’.” But when it comes to taxpayer funds, he says, any level is unacceptable.

Hughes says while good, tight internal controls are essential, there are limits to what can be achieved with internal controls and audit processes alone. “If you just focus on internal controls, it’s impossible to have an internal controlled environment tight enough to prevent all internal fraud, especially if somebody is IT-enabled, IT-literate and colluding with other people.

“You absolutely need to do all that but I’m strongly of the view that one of the primary ways of controlling for this is the cultural stuff that you do in your organisation.”

For Hughes, head of an organisation with 10,000 staff and responsible for handling about $21 billion of taxpayers’ money each year, this means a zero tolerance approach to fraud – every case will lead to dismissal, prosecution and all possible steps will be taken to recover funds. “The zero tolerance policy was one of the turning points,” he says. “From when we started to do that and socialise it within our organisation, our numbers started coming down.”

THOSE spoken to by IN-Business agreed monitoring overseas trends and working closely with sister organisations offshore is an important part of fraud prevention, staff fraud or otherwise.

The SFO works with its counterparts in the UK, Australia, Singapore and Hong Kong to stay informed on trends and activities, and tools used to support investigations – whether that’s legal tools or electronic and IT tools, such as specialist forensic and data analysis software.

For Paterson, the only trend that might be worth a mention is new bribery and corruption legislation in the UK to make it easier to arrest and charge nationals who pay bribes to overseas officials. The SFO is largely unaware of similar bribes being paid by New Zealand nationals offshore but Paterson says he’d “be surprised if it wasn’t happening at all”.

While surveys currently carried out by the “big four” accounting firms are a good start, Paterson says the true levels of fraud in New Zealand remain unknown. “I’m a survey carried out in New Zealand specifically relating to fraud which has got a statistically relevant number of samples – or a statistically meaningful number of respondents.”

The SFO hopes to carry out a national fraud mapping exercise to put some solid numbers around the problem – which can then be used to drive targeted prevention in different industries.

Deloitte’s Barry Jordan says that, at a basic level, fraud in New Zealand will remain the same as it ever was. “Fraud is fraud,” he says. Computers, internet banking and modern complicated accounting systems may have made it easier for fraudsters to hide their tracks in a mire of data but the types of perpetrators, motives and basic business of investigation remain the same.

“It used to be like looking for a needle in a haystack,” he says, “but the needle was red and it was a relatively small pile. Now the haystack is as big as a large building and the needle is no longer red.” The good news? “We’ve now got much better tools for looking for needles.”

How common is fraud in New Zealand

Of the 85 New Zealand organisations in the last PricewaterhouseCoopers global economic crime survey, 42 per cent said they experienced some form of economic crime in the year to November 2009. Types of reported crime included asset misappropriation, financial statement fraud, bribery and corruption, IP infringement, money laundering and tax fraud.

The average cost of fraud to an organisation in that time was $491,596 – a figure skewed by one unlucky unnamed respondent who suffered over $7m worth of fraud that year.

More recently, a KPMG survey of fraud in Australia and New Zealand found that 53 per cent of respondents experienced at least one incident of fraud in the two years to February 2010.

Illustration by Rebecca Walthall

IT’S true the worlds of trade and politics foster an innate, burning desire to create acronyms.  The ‘group of eight’ major world economies, made up of France, Germany, Italy, Japan, the United Kingdom, United States, Canada and Russia are the ‘G8’.

In 2001, commentators would say ‘BRIC’ was better than using ‘emerging economies’ because after all the reform, after seeing the skylines of showcase cities like Sao Paulo, Moscow, Mumbai and Shanghai – bastions of light, energy and freshly-minted money  – it seemed a bit condescending to still refer to them as ‘emerging’.

The next 11 coming up, the supposed inheritors of the BRIC mantle, are the ‘N11’: Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam.

The acronym BRIC was designed to give an exciting glimpse of where fortunes would be won, lost and built over coming decades. It was originally coined by Goldman Sachs economist Jim O’Neill as a way of grouping high-growth countries together. Early this year the heads of state invited South Africa to join them, turning BRIC into BRICS.

Where New Zealand fits into this crowd of acronyms is around our current trade positioning, and around our need to move from an internal-consumption model of growth towards an export-led one.

One country makes a notable presence across both the G8 and the BRICS: Russia. It is also the country looking set to soon be our second BRIC free trade partner.

For the BRICS countries, who have largely  lifted themselves up in the last decades through export, there is now a need to move to a model where economic growth is fuelled by internal consumption – growing a middle class with purchasing power and disposable income.

The crossover would seem to be the very definition of trade, like an economist’s dream market: we need to sell and they need to buy, but instead we have an impasse on a grand scale.

The World Trade Organisation’s Doha Development Round, kicked off in 2001 to negotiate increased worldwide trade liberalisation, has been limping on, in circles, for a decade.

Senior lecturer in political science and international relations at Victoria University Marc Lanteigne says many of the BRICS countries have been trying, unsuccessfully, to act as intermediaries between the European Union, the US and the lesser developed countries to reach a consensus in the talks.

“You have China, to a lesser degree India, to a degree Brazil, trying to act as mediators back and forth, all of these countries are trying to put themselves as the go-betweens and in the end we haven’t seen much in the way of solid progress,” he says.

Because of the start of electoral cycles, particularly in the US, experts have called for December 2011 to be a deadline for the final make or break of the Doha gridlock. Not many hold out hope of any success.

In the absence of success in WTO trade liberalisation, what many countries will fall back on is the agreements they’ve already negotiated.

“New Zealand is aware of this,” Lanteigne says. “New Zealand is certainly aware of the value of creating as many bilateral and multi-lateral [agreements] as possible.”

New Zealand’s regional, bilateral and multi-lateral trade agreements in force include with Australia, Hong Kong, Malaysia, Thailand and Singapore. Agreements currently being negotiated include with Korea and the Gulf Co-operation Council (Bahrain, Oman, Kuwait, Saudi Arabia, the UAE and Qatar).

In terms of agreements with the high-growth, high-potential BRICS’ countries, the last four years has seen fast movement.

The New Zealand-China free trade agreement (FTA) was signed in 2008. Many credit the huge resultant increase in trade with getting us through the recession.

In May 2011, Indian Minister of Commerce and Industry Anand Sharma said he hoped the New Zealand-India FTA would be in place by the first quarter of 2012.

Negotiations for the Russia-New Zealand FTA were announced in 2010 and are due to be completed late this year.

Lanteigne puts our popularity as a free trade partner down to our experience and the fact that our number of sectors open to preferential trade is small enough that the negotiation process is much shorter compared to European states.

We also have a history of jumping at opportunities to declare things first. In 1997, New Zealand was the first Western country to conclude a bilateral agreement with China on its accession to the WTO and, in 2004, the first developed country to recognise China as a market economy.

“Those other countries wanting a stronger economic role in that region will very likely see New Zealand as a very good way of getting started; it’s almost like training wheels,” Lanteigne says.

Illustration by Rebecca Walthall

THE BRICS have a common story: inflation is a short-term risk across the board, and all of them have a certain amount of political risk, but the long-term fundamentals are there: increasing population, burgeoning consumer consumption, low debt relative to GDP, increasing household saving and increasing spend on infrastructure.

China and India are seen as the stronger two for manufacturing. Russia and Brazil have advantages in the supply of natural resources.

HSBC New Zealand Head of Wealth Glen Tonks says he sees the BRICS countries’ massive investment in infrastructure as particularly exciting for business, typified by construction to host world sporting events.

The BRICS together will spend in the region of US$8 trillion over the next 10 years on infrastructure, which is around about 80 per cent of the world’s infrastructure spend over that period, he says.

“That is a story we are seeing with developing nations hosting the world’s major sporting events – the Beijing Olympics, the Indian Commonwealths and the Russian winter games – it’s really interesting to see how the relative success of those events – what message that sends to the world.”

China is leading the BRICS with respect to moving rapidly from an export-invest model, to an internal-consumption model, with last year 70 per cent of China’s GDP growth coming from consumer consumption.

“Really these four nations that have 40 per cent of the world’s population are the future growth engines,” Tonks says.

“[It] is a shift from West to East, and we see that accelerating out of the financial crisis. Particularly because of the hangover of debt in the developed world, so really it is game on the BRIC nations, really led by China.”

New Zealand’s long-term BRICS strategy has been accelerating in recent years. More than anything, our free trade agreement negotiations with China, India and Russia represent a fundamental shift towards a more long-term, strategic view of our place in the world and our friends in high-growth places.

Deputy chief executive of New Zealand Institute of Economic Research (NZIER) John Ballingall says the developments show a movement away from focusing on tariff reduction alone towards building long term political and economic relationships, as well as freeing up the way for enhanced services and investment trade, or put simply:

“We curry them some favour and as a consequence we hopefully get to be alongside them when they really start to grow rapidly.”

Because of the focus on high-quality agreements, New Zealand now finds itself well-placed to act as a go-between country with others who want to trade with our free trade partners.

“We’ve got these great links to China and Russia and soon India and South-East Asia and lots of other countries,” he says.

“[International companies can] invest in us and use us as a base from which to export or invest into these countries so it’s about getting this first-mover advantage really.”

In terms of the agreement we have most recently started to negotiate, Russia occupies a strategically important geographic position as a bridge between Europe and Asia, he says.

“[Russia has] got the extremely fast-growing Asia Pacific region on one side and a much more muted growth profile of mainland Europe on the other side and therefore potentially Russia could play a really important role of acting as a link between the two.

“If we’re then tapped into that supply chain as well, then that allows us to try and benefit from the growth that might happen in that supply chain as well.”

FOR grouping and vernacular purposes the BRICS are lumped together under one acronym – but they are also closely watching the success of each other’s state-guided economics, which has profound impacts for foreign businesses working under complex political, bureaucratic, financial and regulatory environments.

Perceptions of the Chinese model of state-guided economics, also called the ‘Beijing consensus’, have gone from abstract concept to “they may have something here” among other BRIC countries, Lanteigne says.

“Russia has definitely adapted that [Chinese] model, the state is now hyper present in so many parts of the country’s economy, especially in the energy sector.

“You’ve got the same thing in Brazil, you’ve got the same thing in South Africa, India; they’ve been oscillating back and forth a bit towards greater free market, but there’s still a huge amount of state dominance in several sectors and still a lot of bureaucracy involved in setting up any kind of business in the country.”

Lessons learnt from doing business within China’s state-guided economic sphere could help us do business in Russia, Lanteigne says, but the Sanlu scandal with Fonterra in 2008 will continue to be a cautionary tale.

A common communist government history in both China and Russia, countries where private property laws have traditionally been weak, will also have some relevance, as we’ve seen with New Zealand company Pacific Hovercraft NZ’s continuing fight over intellectual property with Chinese company Lianyungang Supreme Hovercraft.

“I think New Zealand’s experiences with China will help [in Russia] quite a bit, but there’s still a lot of caution that’s needed. When you’re in a country where the state has such a strong advisory role in so many sectors, including raw materials and agriculture and so forth, keeping that in mind is very important.”

With increased trade liberalisation brokered by the World Trade Organisation looking increasingly like a pipe dream, a ‘hub and spoke’ model of free trade agreements with BRICS countries in particular looks set to be what takes New Zealand through.

And if there happens to be some progress in the Doha talks, New Zealand will be in a much stronger position, and much better informed, to play an active role in the negotiations.

“Because a lot of it is also about information,” Lanteigne says. “In order to successfully complete a deal you really have to understand the concerns of the state, what the other states wants out of various deals, their economic situation.

“Setting up bilateral [agreements] is in some cases not a perfect method, but it does create a lot of windows into what your potential trade partners are thinking.”

Photograph by Martin Luff

IT is the sort of boost any population-conscious provincial town or city can normally only dream of; an influx of thousands of people virtually overnight. No marketing campaign required, no complex district council plan or ratepayer-funded economic strategy. Just the tragic consequence of a major natural disaster in your nearest city.

In the hours and days after the February earthquake in Christchurch, thousands of people were suddenly looking for refuge. The earthquake in September last year did not send people fleeing in the same way. But for a variety of reasons, not least being the knowledge that people had died in the central city, many Christchurch residents grabbed essential possessions, climbed into their cars and drove to somewhere that felt safe. The South Island town of Timaru, a two-hour drive from Christchurch, saw its usual population of about 27,000 rise by an estimated 7000 to 8000 in the days after the earthquake.

There were suggestions that as many as 60,000 to 70,000 people left Christchurch in the days after the earthquake – about 17 per cent of the population – and the impact on Timaru and other smaller centres in Canterbury and elsewhere in the South Island was obvious. Janie Annear, the mayor of Timaru, told a radio interviewer shortly after the Christchurch earthquake that the town was “absolutely buzzing” with the influx of people from Christchurch. She also speculated that Timaru might have regained its status as a city had the government not cancelled the 2011 Census as a result of the earthquake.

Displaced Christchurch businesses also looked for new homes. In an interview with Radio New Zealand last month, Canterbury Employers’ Chamber of Commerce chief executive Peter Townsend said that about 200 businesses in the central city had left for other towns. The question for these centres now – especially those that have been struggling to maintain their populations – is whether the newcomers become permanent residents.

Planners and economists have already started researching the likely population movements to flow from the Christchurch disaster, looking to experiences overseas for clues. Researchers are concluding there will indeed be a change but that the permanent flow will be only a fraction of the numbers estimated to have left the city in the immediate aftermath of the earthquake. Many, it seems, have already returned and there is a campaign underway in Christchurch to encourage people to stay; a local lawyer launched The Pledge, a project inviting people to put their signatures to a commitment to stay and rebuild.

Nevertheless, economists at ANZ Bank predicted in a report published in March that Christchurch could lose 4 per cent of its population permanently in the first year after the earthquake as a result of emigration to other parts of New Zealand and overseas and a reduction in immigration. ANZ looked at longer-term population changes in cities and areas affected by natural disasters in several other countries including Kobe in Japan where 2.5 per cent of the population left permanently after the earthquake in 1995. “We think it is possible that Christchurch city could see a loss of around 15,000 residents in the first year, equivalent to almost 4 per cent of the population,” the ANZ report said. “This consists of around 9500 residents deciding to leave permanently, 4000 fewer migrants from overseas than otherwise would be the case, and 1500 fewer internal migrants.”

However, ANZ cautioned its estimates might fall short of what actually happens, noting that the extended period of shaking in Christchurch has “changed the situation completely, relative to offshore norms”.

The Canterbury District Health Board commissioned a report by consultancy Sapere Research Group on possible population trends post-earthquake. This concluded that about 8000 people might leave in the year after the disaster, the equivalent of 2 per cent of the pre-earthquake population.

ANZ said given past migration patterns, Christchurch residents would move to Wellington and Auckland. “However, relocating from one quake-prone area to another does not feel right, so we suspect you can rule out Wellington as a major beneficiary. On a net basis, the largest gains are likely to be in Dunedin, followed by Invercargill. Areas on the Christchurch periphery – Timaru, Ashburton, Blenheim, Greymouth and part of the wider Canterbury area – have also seen a large big city drift in the past. We will likely see this drift reverse sharply.”

Even if the de-population of Christchurch is on a much lower scale, long term, than the figures suggested in the immediate aftermath, the ANZ and health board research shows there will still be a significant number of people looking to relocate.

Two months after the earthquake when IN-Business spoke to community leaders and business advocates in Timaru and other centres, they were indeed aware that they might gain from Christchurch’s loss. Some have been working on strategies for years to maintain their populations, particularly young people, and to attract businesses.

Interviewed a few weeks later by IN-Business, Timaru mayor Annear says many businesses have relocated to the Timaru district and others have contacted the district council’s economic development arm for support.

“It is impossible to know if they will stay permanently. However we believe it is vital for the economic well being of Canterbury that we support those businesses to get up and running quickly and not lose them to the North Island.”

Annear’s comment about the economic well being of Canterbury as a whole is echoed by other provincial civic leaders. They are cautious about appearing to want to cash in on Christchurch’s misfortune. They do not think it would be in their interests, or the region’s, to suck businesses out of Christchurch.

Wendy Smith, chief executive of South Canterbury Chamber of Commerce, says:  “The key is to keep Canterbury strong. What we are doing is, rather than wooing businesses away [from Christchurch], is to say ‘if you are going to move, consider South Canterbury rather than the North Island or offshore’.” It is vital to Timaru, she argues, that Christchurch remains a strong economic centre for the region.

Smith believes, however, that the earthquake has underlined the risks inherent in policies that encourage too much centralisation of resources. Her message is that the risk of disruption is increased if key services and resources are too heavily concentrated in a few areas.

New Zealand, known to be at risk from earthquakes, needs to look at the Christchurch experience to consider the consequences if vital infrastructure such as ports are disabled. “As a district and a country we are hoping this is a key message.”

Smith says she has fought against centralisation of resources, particularly in education, which is now seen as a key factor pulling young people away from provincial towns.

The earthquake appears to have provided Timaru’s Aoraki Polytechnic with an unexpected opportunity to show how smaller educational organisations can work together to provide competitive alternatives to large education providers in main centres.

Organisations like Aoraki see themselves as vital contributors to the economic health of the towns and regions they serve, not just because they help attract and retain young people, but because they tend to be closely linked to the agricultural sector and other core local industries.

Photograph by Ron Lindsay

AFTER the earthquake, Aoraki and Christchurch polytechnics moved some of their courses to the Southern Institute of Technology (SIT) campus in the western Christchurch suburb of Hei Hei, which was relatively untouched by the earthquake.

Alex Cabrera, deputy chief executive at Aoraki Polytechnic, believes this is a living, working example of a new model for how regional-based educational institutions could develop. Normally it might take years to achieve agreement to share resources in this way, Cabrera says, but the earthquake proved constructive in bringing institutions together to maintain services.

Cabrera sees many advantages in the co-operative effort, not least the influx of new students from a variety of disciplines to the site.

“I strongly believe this will give these students a much better student experience. And, from a governance point of view, you get a better utilisation of assets.”

He believes this could be a model for an education “hub” where a variety of courses from different institutions are available from one location. Taking the idea further, he foresees students being able, with assistance from modern technology and co-operation agreements between institutions, to access courses from institutes and universities overseas. The aim would be to allow young people to take advantage of a wide variety of courses without leaving their home towns. Cabrera, who has worked in education management in several countries, argues a young person in Twizel should have the same opportunities as a young person in Auckland – which would remove at least one driver of centralisation in the main centres.

In another earthquake-response initiative for Aoraki, Cabrera has also been working on the development of short courses for unemployed people to train them to work in construction and other industries that will require labour for the rebuilding of Christchurch.

David Ayers. Photograph supplied.

THE Waimakariri region to the north of Christchurch has had mixed experiences in the earthquakes. The town of Kaiapoi was badly damaged in the September earthquake but became something of a refuge after the February event. Waimakariri District Mayor David Ayers jokes he had heard that McDonald’s in Kaiapoi was the closest branch of the burger chain for residents of eastern Christchurch after all local branches were put out of action by the earthquake. The town of Rangiora meanwhile started to experience traffic jams.

Ayers says the region’s population had been growing before the earthquake and he expects that growth to accelerate. “We are certainly able to accommodate any increase in business.”

Rangiora may not spring to mind as a centre for high fashion but Ayers notes that designer Annah Stretton has opened a shop in the town.

Paul Davey, chief executive of Selwyn District Council thinks his region, to the south west of Christchurch, which was experiencing a rapid growth in population before the earthquake, may become even more popular given that it was relatively unaffected by the earthquakes. There has been some discussion, he says, about the possibility that the gravel and stone ground structure of Selwyn may be preferable for building than the sandy geography of parts of Christchurch.

The Izone industrial park in the town of Rolleston has attracted business interest since the February earthquake. But Davey sees Selwyn as being in a partnership with Christchurch. “We all have a role to play in the rebuild.”

Further down the coast between Christchurch and Timaru is the town of Ashburton, about an hour’s drive from its city neighbour.

Rob Brawley, chief executive of local economic development agency Grow Mid Canterbury says that woodworkers, photographers and jewellery manufacturers are among the businesses that have moved to Ashburton since the Christchurch earthquake. “Also, employers have been inundated with skilled staff looking for work.”

Located in an area at the centre of the dairy boom, Ashburton employers had been experiencing some skill shortages and the influx of workers is welcome, Brawley says. Tourism and conference-related businesses have also done well as visitors and organisations have been forced out of Christchurch for accommodation and venues.

But Brawley says while Ashburton is pleased to welcome workers, businesses and visitors, “at the end of the day we are part of the Canterbury dynamic”.

“We don’t for ethical reasons want to be playing on [Christchurch’s] misfortune. We want a major city on our doorstep.”

Photograph by Kathleen Collins

STUART Prior is well-read and well-informed, quick to counsel and even quicker to quip. “A fool and his money are easily parted” is his advice to New Zealand companies considering doing business in Russia. It’s frank advice from a man who’s served his equivalent of “two life terms” – a total of 30 years in the New Zealand diplomatic service, including four as Russian Ambassador.

At 61, he speaks English, French and Russian and now runs his own company, Prior Group, specialising in promoting business between New Zealand and Russia.

Prior’s life has been influenced by Russia from the outset. His family moved from London to New Zealand after his father, discharged from the British army in 1945, received a letter summoning him for duty in response to Stalin’s World War Three scare in the early 1950s. What started as a boyhood interest sparked by the exoticness of the Russian alphabet grew into a degree in Russian language and literature and has been Prior’s livelihood through his diverse career.

From 1976 until 1991 he took part in New Zealand diplomatic missions to Canberra, London and Moscow. When the Cold War ended, his occupation as a Soviet expert was no longer needed and he was moved “from one cold war to another” and put in charge of New Zealand’s Antarctic policy throughout the 1990s. From 1999 until 2002 he worked as deputy manager of New Zealand’s international aid programme, before returning to Moscow as the New Zealand Ambassador from 2003 to 2006. He married his Russian wife in 2004 and they have recently welcomed their first child. His father came to New Zealand to give him opportunities, he says. “And I think I’ve had a pretty good series of opportunities.”

Prior is irked by the fact names like Lenin and Stalin dominate most people’s lists of Russian thinkers and politicians. During his studies at Otago University he discovered Russian writers such as Tolstoy, Pushkin and Gogol, who influence his business practices to this day. “I use them when I am, if you like, screening Russian business people . . . because Russian society has been late to develop, these 19th century writings are a very good guide.”

Gogol’s Dead Souls is described by Prior as his “business bible” because of its descriptions of some of the earliest examples of leveraged debt and mortgages. In 19th century Russia, peasants, termed “souls”, were counted as part of a landowner’s wealth. The book’s main character, Chichikov, bought the names of dead peasants and used his list of souls to secure mortgages from banks by appearing to be a substantial land owner. Throughout this tale, Prior says, Gogol describes a business mentality that is highly contemporary; Chichikov represents an archetypal snake oil salesman that could easily be encountered today. “Essentially it’s a very practical business deal . . . It was super modern. It would not be looked at sideways by many of our modern businessmen or financiers.”

Prior’s diplomatic presence in Russia allowed him to witness many historical events, including the New Zealand boycott of the 1980 Moscow Olympics and political demonstrations in the early 1990s. While his first trips to Russia left him with the impression of a “dour and grey” country, he was also a bystander for “Very seldom, wherever you are, are you in a place where you see history being made. Being on the sidewalk, watching a demonstration of half a million people walking towards the Kremlin in absolute silence, was just stunning.”

When he returned for his final stint as a New Zealand representative to Russia in 2003, he found himself gobsmacked at the changes: cafes and shops lined the streets, and the Russian orthodox church had reappeared.

Yet this radical transformation is what he says can fool New Zealand business people – while Russia is often imagined as a place of “vodka, oligarchs and mafia”, people arrive to find slick and modern cities. He says the difference can lead people to throw their defences out the window, which is foolish in any business scenario. Taking the time to understand Russia and how its culture and people work is what Prior advises to parties interested in the New Zealand–Russia Free Trade Agreement currently being negotiated.

“If we take the same look that we’ve taken at China, where it’s a long-term project, then we say ‘right, as in China, we have to start building relationships, getting to know each other’. And you have to be careful, because at the end of the day we’re 4.4 million people and there is an opportunity for some rich guy in Russia to come andbuy us in ways we might not like.”

Prior points out that the FTA with China has revealed difficulties that businesses cannot respond to alone. Because New Zealand is dominated by small family companies, he warns that foreign capital is not always a friendly giant – but still brings opportunities. Businesses and politicians should prepare, and have plans in place for situations such as the recent Crafar farms controversy.

“How are we going to react if under the FTA some rich Russian madly comes to New Zealand and says ‘I want to buy lots of dairy farms’? You need to be thinking through what it’s going to mean in practice.”

He says an FTA between New Zealand and Russia is only the starting point of a relationship between the two countries. Russian interest is particularly directed at using New Zealand to help them approach the modern, global trading world. “So that’s what you’re trying to do in this, you’re trying to elevate New Zealand from a little, isolated, irrelevant country to somebody who’s worth talking to,” he says. “And then you translate that into money.”

Photograph by flickr user backpackphotography

RUSSIA is a country where money talks louder than words. What could this mean for the New Zealand-Russia Free Trade Agreement currently being negotiated?

In 2010, Russia ranked near bottom in the “Corruption Perceptions Index” compiled annually by Transparency International, coming 154th out of 178. At the honest end of the scale, New Zealand ranked second, pipped only by Denmark for the top spot.

Corruption is a part of everyday life for Russians, says Andrey Rozanov, general director of Fonterra Russia. Rozanov was born in St Petersburg but is now based in Moscow, heading up the Kiwi dairy giant’s Russian trade operations. “Corruption is a fundamental part of Russia and will not change in the short or medium term. To change it needs to be from the very top, to the very down below.”

In terms of the FTA, Rozanov is sceptical about the likelihood of it being signed at all. “There is no economic benefit for Russia whatsoever,” he says. “Russia does not export anything – except oil and gas – it doesn’t need international markets.”

He doubts the political will exists in Russia to complete an FTA with New Zealand. With a national population of 143 million and capital city population of over 14 million, it’s hard to dispute the insignificance to Russians of our small and far-removed market.

New Zealand, of course, has more to gain from an agreement. Exports to Russia last year were worth less than $200 million. I can see an agreement being a case of history repeating – within two years of signing the Chinese Free Trade Agreement, our exports to China increased by $70m.

But if the FTA does go ahead, according to Rozanov, Fonterra doesn’t have plans to leverage it. He says they are focused on growing premium Asian markets expected to generate a greater return to New Zealand farmers.

Russia houses the third highest number of billionaires in the world, alongside a growing middle class prepared to pay top dollar for quality. According to PricewaterhouseCoopers’ Doing Business in Russia report published in April 2011, strong growth in Russians’ consumption is expected to increase in coming years.

PwC partner Michael Hurle explains that following mass privatisation after the collapse of the Soviet Union, the large majority of Russians now own their own homes. “Seventy-five per cent of them [are] without mortgages and as a result they have high disposable incomes, which is driving demand across sectors such as retail, fast moving consumer goods and automotive,” he says.

Photograph by Kathleen Collins

NEW Zealand’s ambassador to Russia, Ian Hill, is upbeat about the FTA’s prospects, insisting not only that negotiations are well underway, but that both governments are equally keen. “It’s under way now. Both governments have said that they would like to get the negotiations done as expeditiously as possible.”

New Zealand may have to wait longer than expected for signatures on paper, however. “We are hoping that it can be done over the course of the next year or so, but sometimes issues come up and it can take a little bit longer,” Hill says. “But at the moment it’s going as well as can be expected.”

While optimistic about the FTA, Hill is also realistic about the potential drawbacks to increased trade with Russia. “Corruption is a problem here. I think Russian authorities would admit that.

“I’d say Russia is similar to other developing nations. Yes, it needs to continue to tackle corruption, but the same is true in countries like Brazil and China,” he says.

This comparison may be a little tough on Brazil and China, ranking 69th and 76th respectively in the Corruption Perceptions Index, well above Russia.

Ambassador Hill hopes the FTA will help improve the situation. “It seems to me that as Russian companies become globalised and international, if they are going to secure outside investment, which is what they really need – they desperately need foreign investment – people are only going to put their money in if they’re satisfied it’s going to be put into a safe depository, so to speak.”

Former Wellingtonian Simon Liddell believes you have to take Russia as it comes. A geologist and engineer with international consulting company AECOM, Liddell has moved away from wanting to change this aspect of his adopted home. “I learnt to simply let Russia be Russia. It will deal with this in its own time.”

When we later mentioned the number of corruption-related stories we had heard to Andrey Ivanov, a lecturer at Moscow State University, he was not surprised, saying there’s little political incentive to change the status quo. “It is here to stay, for years and years, for good. “Police are particularly prone to bribery. The corruption is 100 per cent there. It’s the road police, the police, the court system.”

That said, a Moscow-based Kiwi business consultant insists change is happening, especially in larger businesses. Matthew Cook of KPMG estimates 75 per cent of Russian corporates are now audited by the “big four” firms. “The other 25 per cent don’t want to be and probably wouldn’t be invited to be,” he says.

All parties I spoke to agree having a local business partner is essential – not necessarily to avoid corruption, but rather to help understand and deal with Russia’s unique bureaucratic complexities. It is a matter of knowing when to argue, when to go to court and when to pay up.

New Zealand products are valued for their high quality. Quality is closely related to integrity and honesty. Let’s hope our new friends improve theirs and avoid damaging ours.

Photograph by flickr user beggs

WHEN the Soviet Union broke up almost 20 years ago, hundreds of thousands of clothing and carpet workers were laid off in Russia and the factories closed.

Cheap clothing became the second largest import after food. Russia still farmed a large flock of sheep bred for the quality of their wool but in the economic crisis of 2009, and a food shortage, the Russians were forced to eat them.

Now, as Russia has bounced back from that crisis with a growing middle class, there is a demand for warm quality clothing. Enter New Zealand.

In June last year, Textiles New Zealand CEO Elizabeth Tennet led a delegation of seven clothing and textile companies to Moscow. They met with potential buyers through introductions arranged by former New Zealand Ambassador to Russia, Stuart Prior.

As a result, each of those seven companies obtained business in Russia. One of the Russian companies they met visited New Zealand companies in May to buy warm quality clothing it can sell in the larger cities of Russia.

Elizabeth Tennet says it is important that New Zealand textile companies work closely with the wool industry to make the most of these opportunities.

“Russia is a greenfields market and, because of the opportunities, companies that get in now are guaranteed a great future,” she says.

“Russia is very keen to buy New Zealand wool products which they view as being of top quality. They also have no objection to using fur and are very interested in possum merino which is a whole new product for them, light and wonderful to wear.”

New Zealand will need to tailor designs to Russian fashion but other export arrangements in this industry appear surprisingly straightforward. In what is generally regarded as a difficult country to trade in, Tennet says Russian textile partners are used to paying up front and will take care of regulations and paperwork themselves.

By chance, the delegation was in Moscow with Trade Minister Tim Groser when he announced New Zealand’s wish to enter into Free Trade Agreement (FTA) negotiations with Russia. Both countries confirmed in November their intention to commence negotiations this year, along with Kazakhstan and Belarus which are forming a customs union with Russia.

In announcing the FTA with Russia President Dmitry Medvedev, Prime Minister John Key highlighted that Russia is one of the world’s emerging powerhouses alongside Brazil, India and China. It is the world’s 12th largest economy and the fifth largest food importer. Key foresaw opportunities for New Zealand particularly in its food and beverage, agritech, specialised manufacturing and clothing industries.

The Textiles NZ delegation told Groser firsthand that They and their Russian partners would benefit from a reduction in tariffs, duties and levies. These can add up to 150 per cent on the price of New Zealand textile products sold in Russia. Formal submissions for the New Zealand FTA negotiating team closed in December last year.

The submissions highlighted that Russian tariffs are considered to be very high. Submitters requested they be phased back to zero and also identified regulations as needing attention, along with communications between Russian authorities. Customs procedures were identified as complicated and time-consuming.

The FTA negotiations have now progressed to their second round, held in Astana, Kazakhstan, on April 14-16. Catherine Graham, deputy director with the Ministry of Foreign Affairs and Trade, says negotiations are still on track to conclude the agreement in 2011. “The atmosphere between the parties continues to be positive and focused.”

Up until the FTA announcement, Russia was not a priority market for the New Zealand government’s economic development agency, New Zealand Trade and Enterprise (NZTE). It responded reactively to requests for assistance by exporters and most of these were referred to the New Zealand Embassy in Moscow.

But now Kari White – NZTE’s international market manager for Europe, Middle East and Africa – says the agency will take a more proactive approach, working closely with the embassy.

“We are having conversations with some of our contacts there. We need to understand what the Russian market is looking for – do a lot more research and scoping strategies. We need to have a more professional approach to the market.

“We’re such a small country. We see Russia as a bright opportunity but look at its size – do we have the manufacturing capability to meet demand? We need to be careful about creating expectations we can’t meet. We need to be very strategic. It may come down to supplying smaller niche products rather than making big hits.”

Russia has a population of 142 million. It has 11 cities with a population over one million. Moscow is Europe’s largest city and said to be home to the largest number of billionaires in the world.

Russia’s GDP growth is expected to remain above 4 per cent each year until at least 2015. In 2009, it contracted 7.8 per cent.

OECD indicators show that while the impact of the economic crisis in 2009 was larger in Russia than in Europe, China and India, Russia’s recovery has been stronger.

Foreign investment in Russia reached US$115 billion in 2010, up 40 per cent on 2009. The two largest areas for investment were financial services and manufacturing. In 2010, Russian exports totalled US$400b and imports totalled US$248b – a positive trade balance of US$152b.

Russia has embarked on a programme of diversification and modernisation. It is still the world’s second largest exporter of oil but wants to innovate its industry base. It aims to modernise its energy, IT, space and medical industries particularly.

Russia will be hosting the 2014 Winter Olympics and the FIFA World Cup in 2018. It also wants to develop Moscow as a world financial centre, aligning Russian financial law with international rules.

Russia does have some rankings it could do without. It ranks 120th in the world in ease of doing business and 154th on the Corruptions Perceptions Index 2010. As New Zealand is regularly placed at the top of these two lists, these cultural differences create challenges for trade between the two countries.

Photograph supplied

PIP Austin, general manager sales and marketing of Sileni Estates Limited, says New Zealanders considering trade should insist on payment upfront or at least a letter of credit.

“They should do really good due diligence. If they don’t have contacts in Russia, NZTE is really helpful or they should ask around in their own industry.”

Sileni Estates first entered Russia in 2002. The Hawke’s Bay vineyard was represented first by a marketing agency and then by a top-end distributor, Whitehall, which initially sold the wine in their Moscow and St Petersburg wine stores.

New Zealand wine was an unknown with consumers. “If Whitehall says something is good, the consumers follow their advice,” Austin says.

The wine sold well in the first few years in a pattern that echoed Asian markets. “Most of the wine was sold to wealthy people who considered wine as very Western and very luxurious. Price was no object.”

But with the economic shock of 2009, the market went flat for Sileni. To kick-start it again, they encouraged their distributor to begin targeting the middle class with Sileni’s more competitively-priced Tahuna brand, sold through hypermarkets and supermarkets. The market is now starting to pick up.

For the last four years, Sileni has also done its own direct marketing in Russia. Austin spends up to two weeks every September in the country and visits a new region each time.

“When things tighten up, more companies travel a lot less. We’ve travelled a lot more and that has paid off in sustainable growth year-on-year.

“Last year I went to St Petersburg and Novosibirsk. As a New Zealander, I came from the furthest country in the world from them. They couldn’t believe I would spend time in their country. You get a lot of kudos from doing these things. When I’m there, I’m not only selling Sileni, I’m selling New Zealand.”

The Russians buy wine right across Sileni’s portfolio. There is demand for large format bottles – 1.5, 3.0 litre and upwards – which are presented hand-labelled in wooden boxes.

Sileni produces 600,000 cases of wine a year and exports over 90 per cent of its production to 50 countries. Russia represents just under 2 per cent of total sales but the dollar-per-litre return would be one of Sileni’s highest. It is this potential for high returns from a growing middle class that kicked off the FTA process, because New Zealand’s trade with Russia is still relatively low. New Zealand’s exports to Russia grew from NZ$51 million in 2000 to NZ$187.1m in 2009. Both the government and exporters intend that this upwards trend will continue.

New Zealand Trade and Enterprise is the government’s economic development agency. Its job is to lift the country’s economic performance by helping more New Zealand businesses to grow and compete in international markets. For more information about NZTE’s programmes and services see www.nzte.govt.nz.

Photograph supplied

RUSSIAN visitors to New Zealand have trebled over the last decade to 4000 annually. This year, with Russia qualifying for the Rugby World Cup for the first time, the numbers are expected to go even higher.

Leon Grice, director of New Zealand 2011, the Ministry of Economic Development’s world cup promotional arm, says the cup represents a great opportunity for businesses to build relationships with Russians and capitalise on the closer economic relationship being negotiated by the two countries.

Rob Young, who founded Exclusively New Zealand – a luxury, tailored travel service for visitors to New Zealand – knows full well the link between travel and business. He says his customers regularly look for business interests in New Zealand and also consider buying property here. “We make introductions for them.”

New Zealand is still relatively unknown to Russians as a travel destination, Young says. “They usually holiday in Europe, the Caribbean, the Indian Ocean, Africa or Asia. But they are looking for new destinations and New Zealand is on their radar.”

His company offers a travel experience. “People don’t generally travel to New Zealand only to stay at one of the luxury lodges. They come for everything else. We tailor unique experiences – we create a journey and a story.”

Two-thirds of the company’s visitors come from the US, the rest from Europe and Australia. He has had about six Russian groups in the past two years. One family stayed five months. He says Russians, like all his clients, like to travel in style but they are always looking for value.

In the middle of this year, he is bringing out a group of eight Russian travel journalists to give them an experience of New Zealand. He has appointed a well- connected partner in Moscow, Vasily Pasetchnik, to promote the destination and visits there at least once a year.

Tourism New Zealand has also recognised the potential of the Russian market. While visitor numbers are small compared with, say, the 65,000 annual visitors from Germany, their high yield and growth potential has spurred Tourism New Zealand to establish key relationships with airlines and tour operators in Russia over the last year. As a result, Tourism New Zealand is now offering regular training events for travel sellers in Moscow.

Russia will play at least four World Cup games in New Zealand. Our embassy in Moscow has been able to leverage the event to increase New Zealand’s profile through special TV programmes and interviews with former All Black Sean Fitzpatrick, who attended an embassy function late last year. Now the embassy is working to encourage Russian business people to travel with their team to New Zealand and explore business opportunities.

The Russians’ first game on September 15 will be against the USA in New Plymouth. Then they play Italy at Nelson on September 20, Ireland at Rotorua on September 25 and Australia at Nelson on October 1.

The Nelson Tasman Chamber of Commerce is organising three special business activities to coincide with two Russian games in Nelson. On the day before the match with Italy, it will host a Russian-themed business event. The chamber will also hold a forest industry tour and a tour to showcase Nelson’s wine, craft, sheep milk and olive industries. This tour will also be aimed at Italian visitors.

The Russian team’s host region will be Marlborough. On September 30, the region will host Indulge Marlborough – a showcase of fashion, wine, food and music. On September 28, the region will organise a tour to vineyards to demonstrate New Zealand’s viticulture technology.

As a tribute to the Russian team, the Omaka Aviation Heritage Centre’s Knights of the Sky exhibition will feature a replica of an early Morane monoplane flown by Russian Ace Alexander Kozakov. The centre’s Hurricane replica aircraft will also be repainted to commemorate the 1941 Murmansk mission led by a New Zealander, Wing Commander Henry Ramsbottom-Isherwood. He was one of only four non-Russians to be awarded the Order of Lenin.

There is also a New Zealand angle to the Russian team. New Zealander Henry Paul, the New Zealand rugby league and English rugby union representative player, is the team’s backs coach.

New Zealand Trade and Enterprise is the government’s economic development agency. Its job is to lift the country’s economic performance by helping more New Zealand businesses to grow and compete in international markets. For more information about NZTE’s programmes and services see www.nzte.govt.nz.

Photograph by flickr user panoramas

TAKING the aeroexpress from Domodedovo airport to Paveletskaya Railway Station on a cold mid-April afternoon doesn’t necessarily fulfil travellers’ expectations in regards to fast travel. In fact there is an element of stepping back in time which seems both incredible and astonishing in today’s modern world of high speed everything. Housing and commercial developments you pass on the way to the city of Moscow don’t match the picture of a superpower of old, or indeed a re-emerging one. Seemingly abandoned, dilapidated, agricultural machinery clutters the embankments; mounds of rubbish lie exposed in the snow and on the platforms people push their way through the wind to board shabby, old buses.

There is another side to Moscow however. On the wide car-choked avenues, latest model Audis and Mercedes outnumber Ladas and Volgas 10 to one. Behind the old supermarkets with fine foodstuffs and fancy restaurants increasingly packed with a growing middle class. There are initiatives outside of Moscow to speed up agricultural development and modernise the infrastructure as well as invest in the long-overdue upgrading of the healthcare system.

After experiencing a decade of unprecedented growth, the crisis of 2009 brought the country to a stand- still. Consumer confidence fell and unemployment skyrocketed. Since then though, Russia’s GDP has stabilised and is expected to stay above 4 per cent per annum for the foreseeable future. Of Russia’s 142 million inhabitants, around 60 per cent already have a growing disposable income of around US$350 per month, thanks in part to a flat income tax rate of 13 per cent.

The appetite for Western brands, lifestyle and know-how across all areas of business remains high, and this creates great opportunities for New Zealand have already been successful and we predict further potential in the areas of agritech and livestock, a sector in which New Zealand has excellent capabilities.

The respected Institute of Grocery Distribution (IGD) predicts Russia’s grocery retail market is due to double over the next five years from €200 billion in 2010 to €400b by 2015, making it the fourth largest retail market in the world. By that time the Russian grocery market will be larger than the United Kingdom and Germany’s combined.

The proposed Free Trade Agreement will simplify New Zealand doing business with Russia. With a focused strategy and solution-driven products, companies can expect great returns. Nevertheless, it is a huge and complex market requiring thorough research and long-term commitment. Generally, it’s not a market where you can expect a quick return nor can it be conquered without a reliable Russian partner or a multinational with an established presence in Russia. The Russian government is trying to cut the amount of red tape involved in trade, but there is still a high level of bureaucracy, ambiguity, corruption and, of course huge regional differences.

Just like the short train ride to Moscow makes you aware of contrasts, challenges and differences, this applies also to doing business in Russia. However, by keeping this in mind, the outlook for New Zealand goods and services is positive and business can be rewarding if approached strategically.

“In sport, no one says ‘no’ to you and everyone wants to know you. In sales, everyone says no and no-one wants to know you,” says former New Zealand cricketer turned businessman Dion Nash.

Nash cut his post-cricket business teeth in sales at vodka company 42Below, where the bosses wanted to be sure he had the stamina for the tough end of business life, and recalls that the experience was “pretty humbling at times”.

But attributes and skills that Nash developed in elite-level sport stood him in good stead.

A strong work ethic, the ability to be self-motivated and to make decisions under pressure are some of the qualities that he feels have been particularly useful in business.

“You are constantly making decisions and backing yourself to fulfil those decisions.

“In the period of time when I was playing, my sport transitioned from being an amateur game to a professional one. I learned about marketing and treating yourself as a product.

“No-one likes to see sports people treating themselves entirely as products but at the same time, having to look after yourself and present yourself in the best light, know your worth and be able to negotiate are all things that apply when you are in business.”

Nash went on to become marketing director at 42Below, working alongside famously entrepreneurial and creative founder Geoff Ross.

Hard work, determination, confidence, resilience and stamina are qualities that most managers would want to cultivate in themselves and their staff. All are found in abundance in sport and successful competitors often look to business for second careers. Businesses meanwhile are eagerly importing the habits and philosophies of top-level sports people.

ANOTHER former New Zealand cricket player, Richard Petrie, is now coaching business people, having worked in business for several years after he stopped playing top-level cricket.

Petrie draws on experience he began to build for himself from early in his sporting career. He was inspired by an interview he heard on the radio with a cricketer already playing at an international level who said that it was vital to have the right attitude to achieve success. If you wanted to play international cricket you needed to learn to think like an international cricketer.

“He said that 80 per cent of it was mental. It became my obsession; how to think to perform better,” Petrie says. “When I got to the New Zealand team I discovered that all the guys had a good idea of how to think and how to train themselves to think.

“I came out of cricket with a really good understanding of performance psychology from having applied it to a very difficult customer – myself.”

One of Petrie’s first jobs in business was selling photocopiers by cold calling offices. “The fear you have to face in sport is the same as you face in a cold calling situation. I trained myself to think like someone selling $200,000 a month. I sold $200,000 for three months out of four.

“You’ve got to become that person in your head and train yourself to think like that person.”

He started training other sales people and found that his techniques worked for others. “If you have your head screwed on you can sell more. Positive thinking is where it starts.”

Petrie uses a variety of techniques, including visualisation which involves the use of mental imagery to focus on particular movements or goals. Visualisation is widely used in the training of top-level sports people to help them focus on the physical moves they need to make to achieve results and to focus on winning.

The techniques may seem like common sense but, says Petrie, it’s not “commonly available sense”.

“I think one of the biggest things that a sports person takes into business world would be the ability to overcome the fear of failure.”

WORLD champion mountain- and stair-runner Melissa Moon, who regularly speaks to businesses and other organisations about her experiences and techniques, says of herself: “I have always been someone who has taken myself out of my comfort zone.”

She has developed routines such as using visualisation and other techniques to help her compete in events, such as running to the top of the Empire State Building, that would be unthinkable for most. “If I have to get 110 per cent out of myself I go through a visualisation process. I will self-talk and use key words to get the best out of myself.” Her race preparation includes projecting an air of confidence in front of other competitors.

The same processes can be applied to challenges in businesses such as selling or going to board meetings. “You would start visualising how you would stand in that room with confidence.” Anyone can benefit from the systems with practice, she says.

Moon is a Buddhist and her techniques for mental discipline include meditation, which assists with thought control.

WHEN Murray Mexted was playing as an All Black he was managing the family automotive business in Wellington. Mexted, now known as a rugby commentator and the founder of a chain of international rugby academies, recalls that he likened the motor business to a rugby team with mechanics, sales people and others, each with specific roles in achieving business goals.

“Teamwork is vital. If we join together with a common goal we will get a better result. There are 15 people in a rugby team and the whole thing has to operate like a well-oiled machine.”

Top-level sports people also develop mental toughness: “the ability to perform at the maximum every time”. Mexted’s academies use a variety of techniques to develop this resilience in players. Visualisation is a very powerful mental tool if it suits you, he says.

DAVID Kirk captained the only All Black team to win a Rugby World Cup before moving on to a career in business. He believes that people who are successful in sport have a set of attributes that gives them a head start in business. These include leadership and problem-solving skills.

And although some people have natural abilities that help them to perform at a high level, such as the ability to remain calm under pressure, Kirk agrees that many of the important skills can be learned.

Dion Nash photograph by Isaac de Reus, David Kirk illustration by Esmé Hanton

The second “HSBC 9 Hole challenge” concluded in December with impressive numbers: 100 golfers from 14 districts competed in the final. Participation more than doubled from 2009’s event, with 2500 competitors progressing from 80 club events through district finals to the grand final at the North Shore Golf Club.

NZ Golf is delighted, according to CEO Dean Murphy. “It is the face of the work we are putting in with the help of clubs and districts to grow the game. Now players can gain fully-fledged handicaps with 9 Hole golf. It’s something that can fit more readily within a family’s busy schedule and it’s a lot of fun.”

Golfers clearly benefit, but what about HSBC? We asked Lesley Pope, the bank’s head of marketing and communications.

How did HSBC get involved in the 9 Hole tournament?
We were approached by NZ Golf in early 2009 to become involved in their new concept for amateur golfers. HSBC has a long history of golf sponsorship around the globe and in New Zealand we had been associated with professional golf as naming rights sponsor of the HSBC NZ PGA Championships.

Are there associated business or brand benefits to HSBC, apart from encouraging more people to play golf?
The prime business benefit is the opportunity for our relationship managers to attend and network at the regional finals and thus identify new prospects; it also provides an interesting experience for customers. There is an excellent fit between this sport and the interests of many of our customers and potential customers.

The HSBC 9 Hole challenge also provides brand benefits in addition to placement of our logo and advertising – as people participate in local and regional final events held throughout New Zealand, it is raising our profile in locations where we have no other physical presence.

Participants in the final go into a draw to win a trip to the HSBC Women’s Champions in Singapore with hosting by HSBC Singapore on site – and the winners have enjoyed this immensely and thus assisted our brand and reputation through word of mouth.

How do you measure the value of the sponsorship?
We monitor the new business gained as a result of the new contacts and referrals made or the deepening of an existing customer relationship; we also assess the uniqueness of any hosting opportunities the involvement can provide. Brand and promotional value is also assigned to the advertising exposure and click-through to our website and we track and value media coverage. We also take note of any feedback we receive to learn what worked well and to enhance subsequent events. All of this is then weighed up in relation to the cost of the sponsorship and is also compared to other sponsorships – so we then continue to enhance our understanding of what marketing activity best supports HSBC’s business objectives in New Zealand.

The HSBC Golf Club television programme also provided excellent profile in the lead up to the event – so additional benefits from that quite separate sponsorship were also achieved.

Participation over the last two years has been described as significant, what future plans do you have for this in NZ?
We do have an excellent relationship with NZ Golf and both of us are looking for further growth in the number of clubs that participate and the number of people that enter. For HSBC this means increased potential customer contact and profile, for NZ Golf it means renewed and new memberships for the clubs.

Is there any scope to replicate this 9 Hole event overseas?
The HSBC 9 Hole challenge is a great concept for amateur golfers and suits our time-poor business and personal customers perfectly. We have certainly promoted what we are doing here in New Zealand to our overseas colleagues and the Group Head of Sponsorship is aware of and interested in the programme.

What are some of the surprising things you’ve found from this sponsorship?
We came across a number of participants who had banking relationships with HSBC offshore; we are known here not just from living in New Zealand but also from overseas.

At the final in Auckland, a number of participants had never had the opportunity to play in Auckland or at a course like North Shore – so it is pleasing that we were able to provide them with this opportunity. Also a number of local clubs had to change their constitutions to allow them to run a nine-hole event – it is a new concept. A past parallel would be the introduction of one-day cricket.

And 2011?
We will certainly be involved again. NZ Golf will be releasing plans for the “HSBC 9 Hole challenge” event in June. Keep in touch with their website: www.golf.co.nz.