Donald Nordeng: Over a quarter of a century of exporting experience
For 26 years, Donald Nordeng lived in Japan where he was involved in importing and exporting organic products. He brought the expertise he developed during that time to New Zealand when he moved here in 2015. We spoke with Donald, who is the CEO of BioGro New Zealand and deputy chair of the Organic Exporters Association of New Zealand, and he shares with us lessons he has learned in the export business. A member of the Institute of Directors since 2016, Donald also offers some advice to directors who are new in the trade space.
1. Tell us briefly about your background, the companies you have worked for as a director and please include their exporting scope – their products or services, markets and scale.
My current role is CEO of BioGro New Zealand Ltd. BioGro provides market access certification via Ministry for Primary Industries’ (MPI) Official Organic Assurance Programme. This programme provides market access to 28 member states of the European Union, Switzerland, Japan, Taiwan, the US and soon China.
I am also deputy chair of the Organic Exporters Association of New Zealand (OEANZ). Organic exports exceeded NZ $300 million some time ago, with Zespri, Fonterra, Bostocks and Villa Maria all having a large part of this market. OEANZ works with the New Zealand Trade and Enterprise (NZTE) and MPI to maintain market access to the above markets as well as promote products in those markets.
Japan was my home for 26 years before moving to New Zealand in 2015. In Japan, I worked at two different trading companies importing and exporting certified organic products. We imported everything from fresh chilled organic beef, organic ice cream, organic bananas, organic palm oil, to organic pasta, organic beer, organic olive oil and organic soap.
2. Tell us about a challenging trade-related experience you/your company had. What did you learn?
When I was importing organic jam and ice cream, we had a customer who ordered several full containers that were private labelled. When they were delivered, it was clear that he wasn’t really authorised to make the purchase and the warehouse they were due to be delivered into made a claim that they were defective. So we had to pay a professional ‘tapper’ to tap on 25,000 jars of blueberry and strawberry jam. The result was less than 24 jars had a ‘faulty’ seal. When the jars were opened it was fine. Throughout this process it was important to not lose our cool and to maintain that our products were to the quality standard as described in the contract. Put into the contract what your quality standard is as a starting point. If the customer asks for something different, then you can reflect some of that in the price.
3. What other things have you learned through your time as a director of exporting companies?
Being a director of an exporting company means you need to have a good understanding of the legal requirements of the importing country as well as the business practices of that country. For example, whether you ship ‘Free on Board’ (FOB) Auckland or ‘Cost, Insurance and Freight (CIF) Tokyo makes a huge difference to the risk the company must bear as well as the cash exposure if there is a problem during shipment or customs clearance. Especially with fresh products, it is good to understand how to manage this risk. Beware the CEO who brags about a $100,000 CIF shipment to the board in March and then informs them in May that there won’t be a payment due to fumigation!
Also understand the impact of exchange rates on pricing. Selling in USD is a risk if the NZD weakens. Export contracts are won through relationships. It is also important to go and meet key trading partners. The importance of sending board members overseas to get an understanding of the business environment there can’t be overstated.
4. What do you think is the biggest challenge for New Zealand businesses in the trade sector?
Competition is as difficult as it has ever been. The New Zealand dollar has quite a lot of movement that it can really affect profitability if management doesn’t price for it. Freight costs have also been trending up and can really affect the marketability of products. It’s also getting increasingly difficult to get skilled labour.
5. What should directors of exporting companies have on their radar?
Directors need to understand the issue of competition and who the buyer is. What is the status of the buyer? Are they selling a competing product? Why do you sell to them? Is it possible to have two importers or does the market not accept that?
6. What do you believe are New Zealand exporters’ strengths and weaknesses?
New Zealand exporters have a great story to tell and are good at telling that. It is important to be able to deliver consistency. Many markets don’t tolerate substitutions or short shipments. It’s imperative to do what you say you are going to do, and for the board to be aware of the status of these trading relationships.
7. What skills/knowledge do you think directors should have given the changing operating environment?
Be open to asking questions and challenging management on data to support any soft subjects like relationships. Also, pricing strategies are sometimes not discussed at the board table. Understanding the strategy behind pricing is critical to knowing the market potential.
8. How do you keep yourself on top of your game? How has your membership of IoD helped you as a director?
The nature of being on a board and reporting to a board is really one of being able to keep the long-term goals of the company in focus and not letting the details of the month-to-month get too much emphasis. I read IoD’s Boardroom and other publications and read quite a few books about governance as well as general business books on strategy and implementation. When I have a chance I attend the IoD conferences. BioGro’s board is a BoardWide member and have had board reviews via IoD.
9. When do you know you have done a good job as a director?
I think that achieving budget while maintaining a good working culture are the main goals of any trading company.
10. What advice will you give directors who are starting out in the trade space?
Try and attend any IoD events you can. The art of being a director is about focus on the fundamentals of the business. Once you understand the fundamentals of the business you can add value. I would say that the revenue, profit and the growth percentages are not the things to focus on straight away as they hide the real story rather than tell it. Perhaps ask who is buying what and why. If those relationships can be improved or not will really determine the future success of the trading company. Being in the wrong relationship could be the end of the business in that market.