High tech revenues bust $7b in 2011

Last updated 05:00 30/10/2011

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New Zealand's technology and high-tech manufacturing sectors are buoyant and growing, according to a new data which contradicts findings from the New Zealand Institute think tank released last week.

Relying on the World Economic Forum's Global Competitiveness Index, the institute said Kiwi competitiveness is constrained by "a lack of innovation and business sophistication". New Zealand's ranking is down two places this year, to 25th out of 142 countries.

"Government has increased efforts and investment in innovation but we have not seen evidence of improvement yet," the institute said.

Well, that evidence may now be in.

According to the TIN 100, an annual census that tracks the health of the IT, high-tech manufacturing and biotech businesses in New Zealand, a revenue decline in the sectors last year has been reversed and turned into a 5% increase overall.

The 100 companies included recorded revenues of $7 billion and exports up by 4% to over $5b. That compares with revenues in the dairy industry of around $11b in 2010.

Employee numbers in high-tech companies also grew, by 5% to 30,000, while revenue in the information and communications technology area grew by 13%.

But perhaps the most encouraging statistic is that the number of companies with revenues of $50 million or more grew to 30 for the first time.

"It is evidence of a maturing sector increasingly defined by larger, more capable companies," Greg Shanahan, who led the project for the Technology Investment Network (TIN), said.

However, amid the good news are some concerns – a record nine foreign acquisitions since April 2010 and four company failures.

The revenue increase in 2011 could have been even stronger, at around 7%, without the impact of the New Zealand dollar's strength against the US currency, the report said. Exporting technology companies, though, appear to have adjusted to that challenge by refocusing on Australia, which has had a more favourable currency cross-rate for most of the year.

"Favourable currency movement, ease of market access, cost and risk make Australia an attractive vehicle to increase scale in an unpredictable international environment," Shanahan said.

The potential for growth remains high, with TIN 100 companies expressing their confidence through investment. Marketing and research and development investment increased by 5% and 14% respectively.

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- Sunday Star Times

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