Infrastructure: Auckland's light rail project poised to take a major step (NZ Herald)

Infrastructure: Auckland’s light rail project poised to take a major step (NZ Herald)

Before the end of this year, the Government will decide on the route, mode, and delivery for the project for the light rail project, which will run between Auckland’s city centre and Māngere, connecting major employment hubs in the city and the airport at each end.

Transport Minister Michael Wood acknowledges the decision has been a long time coming. He first launched the promise of light rail during his campaign for the Mount Roskill by-election in 2016 which brought him into Parliament. Labour campaigned on light rail at the 2017 election, but the move was stymied by Labour’s coalition partner New Zealand First in the last term of Government.

“It is no secret that it was in a fairly challenging stage at the end of the last term, and it had the political knockback between parties,” Wood says. “We had to have a reset which is effectively what happened this year. But it’s put us in a good position to take it to the next stage.”

The three options under consideration are:

• Light rail, a modern tram on city streets;
• Light metro, underground in a tunnel under the isthmus, and underground in Māngere and Onehunga, and at street level in other areas; and
• Tunnelled light rail, underground from Wynyard Quarter to Mt Roskill, and then up at street level to Auckland airport.

They were chosen after an assessment by the Auckland Light Rail team from over 50 different options for modes and routes against the project’s three objectives: improving accessibility, reducing Auckland’s carbon footprint, and unlocking urban development in the corridor.

Not a simple decision

Infrastructure: Credit for green credentials

Green finance is an important focus for ICBC. Kevin Xu explains to Tim McCready how the bank is active in global sustainable financial governance, learning from international practical experience, and contributing financial power to serve the sustainable development of the economy, society and environment.

Herald: ICBC’s attention to environmental, social, and governance (ESG) factors is growing. How is this affecting the bank’s involvement in international infrastructure projects?

Kevin Xu: ICBC has fully integrated ESG and green financial management into its investment and financing processes. Our head office has formulated green investment and financing policies for 16 sectors and nearly 50 industries, including infrastructure construction, and has positioned key areas such as green transportation, clean energy, energy conservation and environmental protection as active or moderate entry into the industry.

Environmental, climate and social risks arising from the credit granting process have been brought under classified management. Differentiated credit policies have been implemented in domains such as economic capital occupation, authorisation, pricing, scale, and a “one-vote veto system” is used for environmental protection. Green management requirements are extended to a wide range of investment and financing businesses lines such as bonds, wealth management, leasing.

ICBC New Zealand follows head office’s approach and has been actively involved in local infrastructure projects. More than NZ$300 million in loan commitments has been provided to support NZ renewable energy, sustainable projects in the past 12 months.

Herald: What factors do you take into account when integrating ESG factors into investment decisions?

Xu: We pay close attention to hazards and related risks that financing customers and related parties may bring to the environment and society in construction, production, and business activities. This includes energy consumption, pollution, land, health, safety, resettlement, ecological protection, environmental and social issues related to climate change.

ICBC implemented the “one-vote veto for environmental protection”for the entire investment and financing business process. The customer credit risk rating has embedded ESG factors.

Environmental risk factors are included in the customer rating model, including corporate environmental credit rating and green credit classification index. For corporates that are environmentally unqualified or unfriendly, the rating model will prescribe a limit to the customer’s credit rating.

The customer rating model covers governance risk factors, and incorporates corporate governance and corporate management indicators, including corporate governance structure, shareholder control, and related party transactions.

The inclusion of negative environmental events in the rating and early warning monitoring system, including factors such as environmental violations.

Our head office also clearly requires relationship managers to prudently evaluate the environmental and social risks of customers during the due diligence process and has introduced relevant supporting policies and systems.

Herald: What else does the bank take into consideration for infrastructure projects?

Xu: We also consider credit risks, market risks, country risks and other related factors that may affect investment safety and returns.

ICBC implements a unified credit risk appetite for all types of credit risk exposures across the bank, and implements full-process management of credit risk, covering the entire process from customer investigation, credit rating, loan evaluation, loan review and approval, loan issuance to post-loan monitoring.

For cross-border investment and financing, we also need to pay attention to the country risk of the country or region where the counterparty is located. ICBC uses a series of management tools to manage and control country risk, including country risk assessment and ratings, country risk limits, country risk exposure statistics and monitoring, and stress testing, etc.

Anti-Money Laundering is also the focus of our attention in handling investment and financing business. We strictly abide by relevant Anti-Money Laundering laws and regulations and steadily promote customer identification governance and high-risk areas management.

Herald: What impact has the pandemic had on ICBC’s infrastructure projects?

Xu: The outbreak of the pandemic and its prolonged duration have had varying degrees of impact on many industries, including infrastructure, and some projects are facing a certain degree of difficulties in supply chain operation and capital turnover.

ICBC actively fulfils its responsibilities as a corporate citizen by coordinating the prevention and control of the pandemic, financial security, and operation and management, and actively carrying out special activities to ensure the sustainability of the supply chain of large enterprises and the uninterrupted capital chain of small and medium-sized enterprises.

In the global fight against the pandemic, we will fulfil our responsibility, demonstrate our care and concern, and protect our beautiful home together.

Yangjiang Nanpeng offshore wind farm

ICBC approved a loan of RMB 1.6 billion yuan for the Yangjiang Nanpeng Island offshore wind farm project.

The 401.5MW project features 73 wind turbines and is the first single large capacity offshore wind power project in China. It is also the first offshore wind power project in Guangdong Province that is more than 10 kilometres away from the coastline and more than 10 metres deep.

Completed at the end of last year, the offshore wind farm can generate 1.015 billion kWh of annual on-grid power. This is expected to save 311,500 tons of standard coal and reduce carbon dioxide emissions by 828,800 tons every year.

Dubai solar thermal power plant

ICBC is the lead arranger for the construction of one of the world’s largest and most advanced solar thermal power plants.

The 700MW concentrated solar power and 250MW solar photovoltaic power station in Dubai has been jointly invested by Dubai Electricity and Water Authority (DEWA), ACWA and Silk Road Fund.

With a total investment of US$4.3 billion, the project is the largest new energy project financing in the world and has been highly recognised by the market. As the lead bank, ICBC arranged a US$2.5b senior syndicated loan with members from China, Europe and the UAE.

Concentrated power systems generate solar power by focusing a large area of sunlight into a small area.

The light is converted to heat, which is stored in molten salt to supply electricity on demand during the day and through the night.

This method of power generation makes up for the instability of solar power generation and the impact on power grids and ensure the stability of power supply.

The power plant is an important project under Dubai’s clean energy strategy and is expected to provide clean power to more than 270,000 households in Dubai every year, with zero emissions of carbon and pollutants.

The power plant will reduce carbon dioxide emissions by 1.6 million tons and will create 4000 direct jobs and more than 10,000 indirect jobs, providing local employment and economic development.

Baodi district solid waste power generation

With the increasing volume of municipal solid waste in Baodi District, Tianjin, China, the capacity of the original landfill site was not able to meet the needs of the community. To solve this problem, Tianjin Quantai Domestic Waste Treatment launched a domestic waste incineration power generation project.

ICBC granted a loan of RMB255 million yuan to assist with construction. The project began operations in December 2020 and has changed the method of domestic waste treatment from landfill to incineration. It is preventing the pollution of domestic waste into the soil and underground water sources and reducing reliance on fossil fuel-based power and heat sources and CO2 emissions by using waste as a resource for power generation.

Kevin Xu is Team Head, Corporate & Institutional Banking at ICBC New Zealand.

ICBC is a sponsor of the Herald’s Infrastructure report.

Newshub Nation panel discussion (video)

It was nice to be back on the Newshub Nation panel this weekend with Ella Henry and Dileepa Fonseka, talking about opening the border, climate change, and a few laughs about the Winston Churchill painting controversy!
As New Zealand starts its journey to open to the rest of the world world, it was interesting to reflect on technologies being implemented globally that could play a part in NZ’s response:
🎤 The increased use of micro-influencers, particularly in the United States, to reach out to small pockets of communities that are vaccine-hesitant and allay concerns.
📌Wristbands (Singapore, South Korea, Hong Kong) and geotagged facial recognition (Western Australia) for ensuring home quarantine.
📱 Linking the Covid tracer app to vaccine status so that entry requirements can be varied based on risk and are validated when you scan into a venue (such as in Singapore, which requires double vaccination to enter restaurants, but a lesser requirement for office spaces).

 

Agribusiness Report: Accelerating agri trends providing opportunities for NZ

Agribusiness was the shining star for the New Zealand economy last year. Its status as an essential industry meant it was able to continue during lockdowns and provide food to an uncertain world.

But a year on, the world remains turbulent. While we can expect to see markets slowly return to a resemblance of normality as the vaccine rollout continues and lockdown restrictions are reduced, global megatrends impacting the agriculture industry will continue to shape the future of agribusiness.

Need for a cohesive national strategy on sustainability

Covid-19 brought a discussion around sustainable and safe food systems to the fore, with the boosted emphasis on climate change, carbon offsetting and ESG (environmental, social, and governance) credentials all having an impact on the behaviour of consumers.
They are looking for sustainable business models that consider all aspects of the production process — including the impact on natural resources.

Some developments on this were made last month, with the Climate Change Commission releasing its final report: Ināia tonu nei: a low emissions future for Aotearoa. It lays out a roadmap for New Zealand to meet its greenhouse gas reduction obligations by 2050, and calls for immediate action by government, local government, individuals and businesses.

For agriculture, the Commission says New Zealand needs to reduce its livestock numbers by 13.6 per cent by 2030. It predicts that while New Zealand will still produce roughly the same amount of milk and meat, it will do so with fewer animals, and expects some farms to convert from livestock agriculture to horticulture.

It says low-methane sheep will play an important role (and help cut methane 10 per cent by 2030), along with a reduction in the use of fertiliser, and new technologies will need to come on board, such as vaccines that can help reduce emissions from livestock.

Transparency into provenance and supply chains

As part of making more conscious sustainable choices, consumers in some of our major trading markets are demanding detail and transparency on provenance and supply chains of food, to make informed decisions about what they eat. In some cases, this detail is sought down to individual farms and farmers.

A discussion paper on the future of food and the primary sector by University of Auckland thinktank Koi Tū: The Centre for Informed Futures, headed by Sir Peter Gluckman, notes that this trend is one New Zealand can approach with some confidence. We have high social and environmental values, and our primary sector produces quality, safe animal protein with a low carbon footprint relative to our competitors.

But while we have a favourable global profile, Koi Tū says that in order to sustain it for our high-value agricultural exports we must develop a cohesive national strategy that is connected to quality assurance:

“Our national product branding needs to be refreshed and not just seen as a slogan. It needs to be linked to measurable progress on key indicators of value to consumers. These are likely to be origin and environmentally linked.”

The new coal?

Although it may seem extreme, the growing awareness from consumers of the environmental impact of the food they eat means that some are predicting beef to become “the new coal”.

Alternative protein has reached a tipping point where it is becoming mainstream, with plant-based options such as Beyond Meat and the Impossible Burger increasingly common on restaurant menus and in supermarkets. Last year around 13 million metric tonnes of alternative proteins were consumed globally — including those from plant-based ingredients, cultured meat products, and alternative sources such as insects. This represents around 2 per cent of the animal protein market.

Boston Consulting Group (BCG) believes by 2035 — when alternative proteins reach full parity in taste, texture, and price with conventional animal proteins — 11 per cent of all the meat, seafood, eggs, and dairy eaten around the globe is very likely to be alternative.

This could save as much carbon dioxide equivalent as Japan emits in a year, conserve enough water to supply London for 40 years, and promote biodiversity and food security.

In late 2020, Singapore gave the world’s first regulatory approval for meat that doesn’t come from slaughtered animals. Eat Just’s chicken meat is grown from animal muscle cells in a lab, and the company says this “breakthrough for the global food industry” is one it expects other countries to follow.

New Zealand innovators are working to meet this growing demand for alternative protein. Auckland-based Sunfed Meats recently launched its Bull Free Beef product made from vegetables and cocoa butter, alongside its range of other plant protein “meat analogues” including Chicken Free Chicken and Boar Free Bacon.

FoodHQ, which represents NZ’s food innovation organisations, said in a recent report that emerging proteins are a diversification opportunity that could complement New Zealand’s traditional animal-based protein sectors.

“While our dairy products, meat, wine, apples and kiwifruit will underpin NZ’s food exports for many years to come, we must explore the opportunities to continue adding diversity to our food product offering in order to meet global demand,” says FoodHQ chief executive Abby Thompson.

Tech to boost productivity and reduce emissions

Sensors, robotics, big data and artificial intelligence are other technologies shaping the future of food production and farming.

They all contribute to what is known as precision agriculture, which was already becoming mainstream before the pandemic, but has in the past year demonstrated its importance in creating resilient farming systems.

A local example that integrates several of the above-mentioned technologies is Halter — a company developing a smart collar for fence-free animal management. Last month, Halter secured $32 million in a Series B round led by Australian VC firm Blackbird Ventures (supported by current shareholders including Rocket Lab’s Peter Beck).

The collars, loaded with Bluetooth, GPS and solar panels, allows farmers to virtually herd their stock from anywhere by using an app on their smartphone. Sound and vibration help direct cows, and the collar can also monitor the wellbeing of the animals by detecting unusual movement which might indicate if it is lame or on heat.

The technology works well with NZ’s farming system, as well as other regions that put an emphasis on free-range, pasture-based farming such as Europe and South America.

As new technologies like Halter emerge and farms become better connected to digital infrastructure, the use of precision agriculture and other technologies in agriculture will dramatically accelerate.

These technologies will play a critical role in helping the industry operate with more resilience, increase food security, boost productivity and reduce emissions in farming systems. All of these are integral aspects of the megatrends shaping a sector that is so important to New Zealand’s economy now and into the future.

Agribusiness Report: Why care is a consideration, according to NZTE

New Zealand has relied on tourism as a way of keeping us alive in the hearts and minds of global consumers.

Research released by New Zealand Trade and Enterprise (NZTE) in April revealed that the five major challenges New Zealand exporters are grappling with are: building brand awareness, finding the right partners and channels, dealing with strong overseas competition, understanding how destination markets differed from New Zealand markets and each other, and determining the right export pricing strategy and product-related costs to remain competitive and profitable.

All these challenges have been heightened during the Covid-19 pandemic, particularly brand awareness and developing the right business connections, given there is no international travel.

NZTE’s “Made with Care” campaign aims to help lessen these barriers. Launched in October 2020, the campaign has been designed to grow awareness, preference and demand for New Zealand food and beverage products in key markets offshore, and share New Zealand’s commitment to being a trusted, sustainable global food source. It provides New Zealand food and beverage exporters access to a suite of free, ready-made marketing assets to use in their own sales and marketing efforts.

The campaign is part of a wider “Messages from NZ” country brand campaign — a New Zealand Inc effort to raise our international profile in key markets across trade, education and tourism with international consumers, buyers, and investors to help rebuild our economy.

To establish the Made with Care campaign, NZTE joined forces with Tourism New Zealand, Ministry for Primary Industries, Education New Zealand, and New Zealand Story, building on the positive sentiment felt toward New Zealand and raising the international profile of the New Zealand brand across priority markets.

NZTE’s lead for food and beverage, Craig Armstrong, says the openness of all organisations to work differently has been the key to the campaign’s success.

“We have borrowed a lot of tourism people for the last 15 months to make this work — it’s been fantastic,” he says. “It really became a partnership to say: ‘Well, how can we promote New Zealand products, as opposed to promoting New Zealand as a destination?'”.

Armstrong says businesses were telling NZTE the biggest issue for them was not being able to be in market to talk to buyers and consumers.

“What we realised was that we could use this budget to talk to shoppers and buyers at a time when New Zealand businesses could not get there and do it themselves.”

The Made with Care campaign includes paid media, social campaigns, and a suite of creative assets including templates, logos, stories, videos, and vignettes that businesses can use as part of their own marketing.

Since its launch, over 340 companies have been involved in the Made with Care campaign — by using the free marketing assets made available, or by participating in promotions managed by NZTE in Australia, China, East Asia, the United Arab Emirates, the UK and North America.

NZTE says because of the campaign, preference and appeal measures for New Zealand food and beverage are trending slightly upwards. As an example, after a short burst of promotional activity in the UK, spontaneous awareness of New Zealand as a country that produces premium quality food and beverage increased 5 per cent, with 57 per cent of research respondents stating they have either bought or are considering buying food and drink from New Zealand because of seeing the campaign.

In North America, awareness of New Zealand food and beverage increased by 10-14.5 per cent across seafood, wine, meat, and honey.

Armstrong says he has been surprised by the results and the cut through the campaign has had with consumers internationally.

“When you reflect back on it, we managed to get what can be at times a very competitive industry to work together and agree on something.”

Underpinning the Made with Care sentiment, and what distinguishes New Zealand food and beverage products from others, is the principle of Taiao — the interconnectedness of our people and the natural world.

The values of Kaitiakitanga (guardians, caring for people, place and planet, now and for future generations), Manaakitanga (caring for others and showing hospitality, kindness, generosity, support and respect) and Ingenuity (challenging the status quo with original and bold solutions) are also woven throughout the campaign messaging.

This interconnectedness of people and the natural world, and the desire for sustainable, safe and innovative products are all aspects of the megatrends that are currently shaping the industry, and Armstrong says the desire for these attributes have all been accelerated due to the pandemic.

“What Covid has done is really bring forward consumers’ changing preferences by years — whether that is five years, six years, 10 years… I’m not quite sure,” he says. “But what we are seeing now is a need or a preference from consumers that is playing into New Zealand’s hands. We are a very ethical producer of food, treat our people well, treat our animals well, and generally treat our land well.

“We have got to be able to tell that story and be able to capitalise on what most advanced and developing economies now care about.”

He says telling that story is critical, and that most of the growth from exporters is not hampered because we are not in the right markets or don’t have the right product, but rather because people don’t spend any money on marketing and telling their story.

“Look at the results we are getting through the Made with Care campaign,” he says. “Those kinds of numbers should give you an indication that if you invest in marketing and look at it as an investment, rather than a cost, you will get a return out of it.”

Insights into key purchase drivers from 14,000 international shoppers

NZTE partnered with global research and insights company Kantar to identify key purchase drivers, supported by insights into behavioural and emotive needs of the primary household shoppers in Australia, China, Singapore, Japan, United States of America and the United Kingdom.

With Kantar, NZTE conducted an online survey with household shoppers in January/February 2021 to examine what’s driving purchases within eight different F&B categories and 29 sub-categories, including meat, fruit and vegetables, dairy, seafood, alcoholic beverages, non-alcoholic beverages, sweet snacks and vitamins, minerals and supplements/mānuka honey.

“We learned that eight attributes drive consumer purchases: tasty, affordable, trusted brand, safe product, healthy, fresh, ethical and on-trend,” says NZTE’s Craig Armstrong.

“Those may sound obvious, but we must understand our consumers rather than base what we do off assumptions. Plus, there is a huge amount of depth and data behind these insights.”

Armstrong says the research found five key paths that companies could take to capture a premium: ethical, on-trend, health, safe product and trusted brand. However, he says these vary depending on the market and category, so how businesses construct and communicate their offer needs to be tailored.

“For example, China is influenced by health and safety; Japan by health, taste and freshness; Singapore contains a broader spread of drivers; while Western markets are more driven by affordability, taste and trusted brand.

“However, affordability and taste do not pull in a premium whereas there is real potential for ethical and on-trend purchases to do so, particularly in the US.”

Locking in brand sustainability

David Babich, chief executive of Babich Wines says they have seen a 4 per cent lift in website traffic over the time Made with Care has been running.

“While not double-digit growth, it is off good base traffic and in an environment where the investment (hence competitiveness) in this area has been intense due to the global constraint on face-to-face.

“As an exporter you have to make an investment in travel and visiting customers. While people understand the reasons why we can’t visit, the time that you can get away with not doing that is fundamentally finite.

“We are going to hit two years without visiting our customers, and meanwhile other competitors are either domiciled in the market or have face-to-face market access because of their own infrastructure — especially the large players.

“We have four people in the US, three in China, one in the UK, so we are not without representation in our key markets, but we don’t have an enormous team to continue to push our message relentlessly. A lot of other NZ companies are in that situation.

“Since we can’t put a billboard in Times Square, social media has worked particularly well for us to market to the world and get our brand messaging out.

“What has resonated for us in the Made with Care Campaign is that one of our brand platforms is sustainability.

“We lock right into that.”

Agribusiness Report: Plant & Food working to increase fish production

Open ocean aquaculture

Plant & Food Research, a Crown Research Institute, is working on ways to increase fish production through open ocean aquaculture.

Global demand for seafood continues to grow, but if production remains static, supply will fall massively short of demand. Managed sustainably, mobile oceanic fish farms off New Zealand’s coastline may soon provide a means to supply nutrition and sustenance to the world.

Suzy Black, Open Ocean Aquaculture Direction leader at Plant & Food Research, says the research programme is taking a unique approach by looking at the idea from the point of view of fish. “We are asking ‘what do they need to be at their best?’ This means understanding fish needs and behaviour and incorporating that into the design.

Black says the team is taking the knowledge it already has about near-shore aquaculture and making it more sustainable for the ocean.

“Our approach is a bit different from what you see overseas where ocean aquaculture systems are mostly enormous structures built to withstand harsh ocean conditions.
“We are taking a mobile approach and trying to work with the environment, rather than against it,” says Black.

The mobile prototype is still in development, and it is too early to know what it might look like. But Black says the aim is to move the systems around the ocean autonomously so fish can experience the temperatures, currents and water quality to ensure they are in the best environment year-round.

“If this takes off, there is so much opportunity for Aotearoa,” she says. “This has the potential to create a whole new sector with new technologies, new industries and regional jobs”.

The open ocean aquaculture work is being done by scientists at Plant & Food Research in collaboration with science organisations overseas and in New Zealand, including Cawthron Institute and the Universities of Auckland and Otago. The programme is funded by the Ministry of Business, Innovation and Employment and Plant & Food Research’s internal Growing Futures investment.

Extracting protein from pasture

Generations of New Zealand farmers have excelled at growing pasture for livestock. The leaves of these crops are rare examples of plant proteins with a full complement of essential amino acids — the building blocks of proteins that humans need to keep their bodies functioning.

In response to the increasing population of people looking for plant-based protein, Plant & Food Research is looking into different ways to harness the goodness of plants.

“It’s important for Aotearoa New Zealand’s economic future that the food industry develops new plant-based food options for consumers, creating a wider portfolio of products and reducing our reliance on animals for both our own diets and for export,” says Dr Jocelyn Eason, GM Science Food Innovation at Plant & Food Research.

“The challenge in being so far from our major markets is that our export products need to be of high value, compared to alternatives. We can’t produce commodity plant protein ingredients, like pea or soy protein ingredients, for export as our competitors operate at scales we cannot achieve.

“We need something extra, something we can market as uniquely Kiwi, such as ingredients from plants that offer more or capitalise on our reputation for innovative sustainably-grown foods.”

Eason says by incorporating these crops into rotational farming practices, we could create a food protein ingredient with the unique characteristics needed for the New Zealand food industry and with positive sustainability credentials.

Proteins from plants could be used as foundation ingredients in a range of different manufactured foods, such as protein-fortified beverages, nutrition bars or healthy foods for seniors. They could also be used to create new vegan-friendly meat alternatives, providing the full range of essential amino acids in one product.

A side-benefit of extracting protein from plants traditionally used in animal feed is reducing the amount of protein in the diet of stock. The by-products of the isolation process still have nutritional benefits for animals but, by removing some of the protein — the compounds responsible for the nitrogen expelled in urine — the amount of nitrogen leaching into soils and waterways is reduced, improving the impact of animal farming on the environment and enhancing New Zealand’s clean green reputation.

High value marine molecules

Cyber Physical Seafood Systems (Cyber-Marine) is a research programme led by Plant & Food Research that is looking at extracting high-value molecules from seafood during processing. The idea is to create automated multi-operation flexible factories, monitored by artificial intelligence (AI) sensor systems. These factories will analyse seafood as it enters the factory and determine the best way to process it to achieve 100 per cent utilisation and maximise the value for all harvested wild and aquaculture seafood.

By making use of all raw material, this will allow the industry to achieve growth targets without increasing catch volume from wild-capture fisheries, as well as maximise value from increasing aquaculture. It is envisioned that once established for the seafood industry, the technology could be adapted for any bio-industrial process.

In addition to its role as a food source, seafood contains a range of marine molecules with special properties. They range from big structural proteins for biomedical scaffolds, through to anti-inflammatory omega-3s, and blood pressure-lowering or anti-aging peptides.

“Many of these molecules can be found in marine by-products and by-catch, so by extracting them for new products our seafood industry can grow without affecting seafood availability or needing more fish to be caught,” says Dr Susan Marshall, leader of the Cyber-Marine programme.

“It also ensures that we can use all of the biomass grown through aquaculture, not just focus on the food portion. The challenge is how to efficiently extract everything from really diverse marine organisms that contain different types and combinations of the molecules, whilst not destroying one component to recover another.”

● Case studies supplied by NZ Plant and Food Research

Tapping into the Multinational Opportunity (Callaghan Innovation)

Originally published on Callaghan Innovation’s Healthtech Activator website

Tim McCready from BioPacific Partners spoke with healthtech multinationals about changes in the industry and why they are interested in NZ innovation

The healthtech sector is broad, and big corporations in pharma, consumer health and medtech all have slightly different attitudes toward accessing external innovation – but they all share an increased reliance on external innovation to supplement and bolster their pipeline.

Multinational corporations can bring with them strong investment, a powerful workforce, and access to global markets for local New Zealand (NZ) innovators. But regardless of whether a partnership or investment happens or not, there are always insights to be gained from them. Even a 15-minute conversation can reveal insights that might help reshape a product to be more suitable or better accepted by the market, or perhaps adapt a business model to one that had not previously been considered.

Most of these multinationals are not embedded within the Australasian region. They might have sales and marketing teams here, but there are few business development personnel. While it can be a challenge identifying and reaching relevant decision-makers within the confusing hierarchies of multinationals, there are many reasons why it can be a worthwhile activity.

Strong desire to access good innovation

“Innovation does not have a boundary. There is no border limit, wherever there is good science, we go for it,” I was told by a business development executive at a healthtech multinational. It helps that generally these companies are positive about NZ innovation – thanks to our well-regarded education and science, robust regulatory environment, and diverse population.

“If something is making headway there, there’s a whole lot of hurdles it has overcome and it makes me think I can pick it up and run with it elsewhere,” they said.

For the pharmaceutical industry, the cost of research and development for new drugs, the high risk of failure, and the significant exposure many have due to the expiry of blockbuster drug patents means they increasingly look to external innovations for their product pipelines. If the technology fits a gap in the company’s pipeline they will be interested – and are largely ambivalent about the stage of development.

But for medical technologies this is slightly different. For traditional medical devices, multinationals will often prefer to wait until a technology has regulatory approval and can demonstrate strong sales. This is because some of the most challenging aspects of bringing a device to market are the registration of the device, and the considerable work required to convince physicians and surgeons that an innovation is worth considering (and often retraining for) over existing alternatives. Multinationals prefer to see a technology that is proven to mitigate these risks.

Digital innovation

There has been a rapid shift in digital innovation in healthtech, and the development of technologies for a consumer market, including mobile phone sensors, smartwatches, fitness trackers, apps and the use of big data for diagnostics and treatment. This is causing huge concern in the medtech and consumer health industries about where future revenues will come from.

I was told by a business development executive in a medtech multinational: “I joke that I’m glad I am closer to the end of my career than the beginning because I’m not wired to think this way. My gut feel used to be pretty good, but I don’t have that for the future… I think it is incredibly naïve to think that technology and digital won’t fundamentally change the sector.”

The onset of digital giants entering the healthtech space has made traditional medtech multinationals nervous. They are hesitant to enter the consumer market since the big players – the likes of Amazon, Samsung, Apple, Google and Huawei – could quickly wipe out the market share of new technologies that begin to gain traction.

A business development director joked with me that “One day I will need a new hip. I’ll go onto Amazon, where there will be a base one, and then ones with extra features… I’ll select my hip, pick my doctor, choose a hospital – after checking their reviews – and take my basket to the checkout. Somebody is going to figure that out.”

Making the connection

Before the pandemic, these big players were reluctant to travel the 12 to 24 hours required to visit NZ and saw the significant time zone difference as a barrier.  This meant that costly visits to the big conferences – the likes of the BIO Convention or The MedTech Conference – were the only places to sit down for 15 minutes with the relevant people in these companies.

But over the past year these interactions have moved online, and with it so has a growing acceptance from large corporations that new technologies can be discovered using digital platforms – no matter where in the world they might come from.

Capital Markets report: Three business leaders on the Government's wealthy investor proposals (NZ Herald)

Capital Markets report: Three business leaders on the Government’s wealthy investor proposals (NZ Herald)

Anna Kominik

Wisk’s Asia-Pacific regional director Anna Kominik leads a multinational team bringing the world’s first all-electric, self-flying air taxi to market.

On the government’s recent announcement about changes to immigration policy she says anything that supports greater investment in New Zealand is useful.

“But we need to do more to amplify New Zealand’s capability and capacity to scale businesses,” she says.

Kominik says we also need people, like current and former chief technical officers and chief operating officers — those people not just with the funds, but also the skills and experience in growing companies and taking them global.

“We need to be really ambitious for the start-ups that have been nurtured over the past decade and who are ready and wanting to take on the world.”

While the announcement came with little detail, Kominik says rather than letting in random high net worth individuals, we must identify the gaps in the New Zealand companies that are scaling fast and/or who need the capital most acutely along with the ability to have the biggest impact both economically and socially.

“This is the perfect time to be focused on building high-value jobs,” she says. “But our Covid advantage won’t last for long and we need to seize it more aggressively.”

Kominik says we need an overarching strategy for how we are planning to grow our trending industries, including digital, creative, gaming, medtech, food and aerospace.

“These are industries that are growing quickly in New Zealand and have the potential to deliver high quality returns — both socially and economically.

“It would be good to see how this scheme was feeding into supporting these sectors and companies to scale up and become even more ambitious.”

At the Auckland’s Future, Now Summit held earlier this month, Kominik told attendees that she is aware of companies with amazing technologies that would love to come to New Zealand right now.

“They want to do due diligence, they want to come through the border.”

She says New Zealand has the opportunity to define what our vision is and attract companies that support it to come and locate themselves here.

“These are billion-dollar companies already that are going to create high-value jobs,” she says. “We could take any kid who likes an engine, and we could turn them into an electric aircraft maintenance engineer — it’s a very, very high-value job right now.”

Early last year, the NZ Government signed a memorandum of understanding with Wisk to support a world-first passenger transport trial of its air taxi.

At the time of the announcement, Kominik said: “New Zealand’s focus on decarbonising its economy as part of the electric transport evolution directly aligns with Wisk’s mission to deliver safe, everyday flight for everyone through effective, accessible and sustainable urban air mobility solutions.”

Caroline Rainsford

Country Director for Google New Zealand, Caroline Rainsford, is pleased to see the Government’s announcement to support targeted, high-quality investment in New Zealand.

“This will lead us in a positive direction toward bringing skills and new technology here,” she says.

Rainsford says the targeted investment, coupled with the investment of $44 million to support small businesses through the extension of the Digital Boost Training Programme announced in the Budget — which Google has pledged to support — is critical to ensure the benefits of the growing digital economy are shared widely and equitably.

The Government says the programme will provide up to 60,000 small businesses with digital skills training to aid in “the transition to future ways of working”.

Speaking at the Auckland’s Future, Now Summit earlier this month, Rainsford said she has always believed in the role of digital transformation to support Auckland’s economy — but more so now than ever, and what is important is the uptake of skills.

“We can have all this technology and we can invest in ICT infrastructure in New Zealand, but if we don’t have the digital skills and capability, we can’t realise the benefit of it.”

She says whilst we are not doing a bad job in Auckland of embracing some of these, there is so much more opportunity.

“Every day I get first-hand experience of seeing businesses in New Zealand that over the last year have grappled with the impacts of Covid,” she says.

“I have seen companies embracing technology to reach customers digitally online both here in New Zealand and overseas. I have seen people using AI to really sort out the impacts on supply chain during Covid — but we need to do so much more.”

A report commissioned by Google New Zealand that was released last month calculates that if leveraged fully in the economy, digital technologies could create an annual economic value of $46.6 billion by 2030.

“To put this in perspective, this is equivalent to about 14 per cent of New Zealand’s GDP, or the combined GDP supported by Canterbury and Hawke’s Bay,” it says.

To fully capture the digital economy, the report has identified three main pillars of action the country could take.

This includes supporting the adoption of technologies in key industries, digitally upskilling the current workforce and future talent, as well as promoting digital export opportunities.

Across these areas, Google says it has made significant contributions in advancing New Zealand’s digital transformation journey.

This includes supporting the development of digital skills through programmes like the Google Certification Programme, Digital Fluency Intensive for teachers, and its partnership with Spark to run workshops to support New Zealand businesses in using digital tools by delivering digital skills training for small and medium-sized enterprises (SMEs) at no cost.

Rob Fyfe

The Government has foreshadowed opening the door to some 200 foreign investors through a reset of its immigration settings.

The announcement, made earlier this month by Tourism Minister Stuart Nash, was described by the government as a “once-in-a-generation reset” of the immigration system.

As part of the announcement, Nash — standing in for Immigration Minister Kris Faafoi — said new border exemptions would allow those representing high-value international investment interests to come to New Zealand over the next 12 months to conduct due diligence and transact the sort of deals that will play an important role in supporting New Zealand’s economic recovery from Covid-19.

“We want targeted, high-quality investment that establishes frontier firms, brings skills and technology to New Zealand,” he said.

“We have also created border exceptions for the Innovative Partnerships Programme and New Zealand Trade and Enterprise’s Investor Programme to enable representatives from global companies to come to New Zealand to conduct on-the-ground negotiations with companies that they wish to invest in.”

In making the announcement, Nash said the investment through these programmes will create highly-skilled jobs, enable the valuable transfer of knowledge and technology, and increase international connectivity for New Zealand firms as they allow us to position ourselves globally.

Rob Fyfe, who has been working as business liaison for the government, says he has been highlighting this opportunity since July last year, and the announcement took longer to arrive than he had hoped for.

“In the intervening period, some of the comparative advantage that existed in the back half of 2020 that was motivating interest in New Zealand as a significant destination for investment has probably dissipated,” he says.

That said, he says the opportunity is still significant and New Zealand continues to be an attractive destination for international investment.

“In principle I am encouraged by the announcement.

“As to whether 200 is enough — I have got no idea — a heck of a lot could be achieved by allowing 200 pre-qualified, validated investors into the country.

“I would hope if we exhaust that quota, because there is so much demand and opportunity, the Government would extend the quota.”

There is still little detail so far in the announcement, but Fyfe says it is important we move at speed to get the pipeline flowing.

He says we should be prioritising investment that stimulates either demand or supply of high value jobs in the economy and/or investment in technologies and capabilities that will enhance our global competitiveness and the advancement of our green economy and sustainability ambitions.

Competition, IP, and confidentiality issues mean that officials will need to be the decision-making authority to determine which investment interests are allowed to proceed, but Fyfe hopes they will consult with business leaders and academics to identify areas of focus and opportunities.

But he notes that any international investment needs to be supported by domestic investment in education and skills, and skilled migration to ensure we can provide the workforce to support inbound investment and the relocation of high-value businesses to New Zealand.