Reasons to consider ASEAN markets

Nov 18, 2015
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By Mark Dykes, Director and Asia Sales Manager, Thermaflomanu

New Zealand places a strong emphasis on trade with China, so I’m certain there’ll be a lot of talk about export opportunities in North Asia at the upcoming National Fieldays.

China is a huge market and many New Zealand exporters are forging incredible futures in the market. However some companies, such as Thermaflo, don’t actively chase China’s bright and shiny business opportunities.

It’s not that we can’t see what’s on offer, or that we wouldn’t love the thrill of operating in that market; it’s just that when you’re a small player, other markets can be a better fit.

For us, South East Asia has been perfect.slide1-020613224522

Thermaflo designs, manufactures and builds, installs and commissions food processing equipment for the liquid food industry. We’re based in Palmerston North, selling product everywhere from Sri Lanka to Matamata.

In many ways opportunities in the Association of South East Asian Nations (ASEAN) were the catalyst for setting up Thermaflo.

About 15 years ago, we recognised the potential to sell food processing equipment into Thailand and Malaysia. Five years ago we renewed our push into the ASEAN region. Since then, we’ve increasingly focused on Indonesia, with its population of 250 million, and one of our original export markets, Malaysia.

In Indonesia, we’ve recently commissioned a trial plant for a dairy operation. It all fits in a shipping container. Add power, milk and water, and out flows consumer-ready dairy product. The container plant, which promises a hygienic food production environment set to rigorous New Zealand standards, completely eliminates concerns about the comparatively rudimentary food safety processes in a market like Indonesia.

We’re sending a factory manager up to run the plant and train local staff, and we’ll also develop their testing, hazard analysis and food safety systems. Inquiries from other potential clients are flooding in.

One of the key factors in developing business in South East Asia is finding trusted local partners. We’ve spent, literally, hundreds of hours investing in relationships in Indonesia but we’ve ended up with a brilliant partner. They know and trust us, and vice versa. Development of this relationship involves regular visits to the market to build the partnership and gain better understanding of the market.

ASEAN feels to me like a great untapped opportunity for New Zealand businesses. Right now, Malaysia and Indonesia are heavily dependent on imported food products; a situation which causes a huge drain on the economy in terms of foreign currency. Both countries are actively developing their food production industries.

On top of that, milk supplies are desperately short in Indonesia, which should give any New Zealand business in the dairy industry 250 million reasons to help find a solution. A country like Indonesia will need help with dairy plant set-up, modern farming systems and workforce training. New Zealand has an opportunity to capitalise on its world-leading infrastructure and expertise in the dairy industry.

Of course, there’ll be lessons along the way. We’ve learnt to adapt expectations and standards to the market. New Zealand has the world’s most exacting dairy production standards, but South East Asian producers aren’t always willing to pay more for top-of-the-range technology. The market doesn’t demand that level of sophistication and such purchases could erode our client’s profit. You need to find technology and solutions appropriate to the market.

We continue to learn with every new contract and every new client. I salute the Kiwi companies taking on China and am proud to see them doing so well. But ASEAN is the right fit for us and I have a feeling we’re only just getting started.

Mark Dykes is a director and Asia sales manager for Manawatu-based Thermaflo, specialists in liquid food process engineering solutions for domestic and export customers.

This article was originally published in the National Business Review.