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10 July 2017

Robots Paving the Way For New Zealand Businesses


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Robots Paving the Way For New Zealand Businesses

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New Zealand businesses are progressively investing in emerging technology such as artificial intelligence, drones, robots and automation.

The latest Equipment Demand Index indicates 44.8 per cent of businesses intend to buy new assets in the September quarter.

On a regional basis, businesses in Auckland are the most bullish, with 47.8 per cent planning to add to their asset base by an average of 7.3 per cent. In Wellington, 43.1 per cent of businesses intend to add to their asset base versus 39.3 per cent in Christchurch.

Industries adopting technology

Of all the industries, hospitality was the most ambitious with 58.3 per cent of businesses indicating plans to acquire assets in the September 2017 quarter.

This can be attributed to the influx of tourists from Asia with 400,000 Chinese tourists visiting New Zealand in the past year, second only to Australian visitors, with 1.4 million Aussies visiting New Zealand over the previous year.

With the recent announcement of Christchurch Airport’s partnership with Chinese e-commerce giant, Alibaba, New Zealand’s south island could see a lot more Asian tourists visiting as the airport plans to implement Alipay as a new payment platform. This has the potential to have a significant impact on Christchurch’s recovery from 2011’s earthquake which they are still recovering from.

According to the results from the latest Index, 13.4 per cent of New Zealand businesses plan to invest in big data, artificial intelligence, robots or drone technology in the coming quarter. This is up 5.6 per cent from the beginning of the 2017 calendar, and so far, shows no signs of slowing down.

Automation is also seeing an increase with 5.3 per cent of respondents intending to invest in these innovations during the September quarter. Should this continue to rise, this could help New Zealand manufacturers in their bid to bring back manufacturing jobs to the country and help attract and retain talent.

One quarter of agriculture businesses are planning to invest in big data, artificial intelligence or drones, while 12.5 per cent are investing in services and process automation compared to the national average of 13.4 per cent.

Given how important agriculture is to the New Zealand economy, it’s pleasing to see businesses in this sector continue to acquire new equipment and technology. More than half (53.3 per cent) of all businesses in the forestry industry intend to acquire assets in the forthcoming quarter and almost half of all farm businesses (44.8 per cent) have the same intentions.

Of these, one quarter are planning to invest in big data, robots, artificial intelligence or drones, while 12.5 per cent are investing in services and process automation compared to the national average of 13.4 per cent.

With access to a relatively large pool of funds, the research indicates 20.0 per cent of upper corporates intend to invest in Industry 4.0 assets. However, a total of 22.3 per cent of all New Zealand businesses plan to acquire computers and IT assets during the September quarter, the majority of which are SMEs.

While the smaller end of town is looking to invest in more traditional IT, the larger end is moving towards more transformational technology at a far faster rate.

When it comes to managing their financial resources, more than half (54.8 per cent) stated the ‘cost of capital’ as their most challenging constraint, followed by ‘difficulty accessing capital’, at 30.4 per cent.

What’s interesting about these results is that 57.1 per cent of upper corporates stated cost of capital as their most challenging constraint, compared with only 49.7 per cent of SMEs. Normally it would be assumed that this would be less of an issue for upper corporates and more so for SMEs. Could it be that upper corporates are beginning to review how they access capital more carefully than before?

Overall, New Zealand’s economic position is very positive with strong growth across multiple industries. With a continuing increase of businesses looking to acquire new and innovative technology, New Zealand businesses are set to give the rest of the world a real run for their money.

NB. The research and publication of the Equipment Demand Index was conducted under Maia Financial’s previous name, Alleasing. 

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