Fernz: a lesson in patience, planning

By Mark Reynolds

Between the lines

Doug Rathbone, the chief executive designate of chemicals company Fernz Corporation, reflected this week on the difficulties his company had in marketing its chemicals in China. At one stage during the early 1990s, Chinese regulatory authorities suspended, then revoked, registrations for the company's products after alleging Fernz had not undertaken appropriate quality testing procedures and was guilty of "irregularities" in its product testing systems.

A year of executive time was spent resolving those issues, including what Mr Rathbone described as a "spectacular decision by me to try and sue the Chinese Minister of Health".

Fernz eventually resolved those problems by working with people who knew the market, rather than taking on the might of the Chinese State. That battle with Chinese bureaucracy was a valuable lesson in one of Fernz's first forays outside of its traditional Australasian base.

Fernz has since had plenty of experience moving into other international markets. Its manufacturing empire now stretches from Australasia through to Singapore, Malaysia, Indonesia, Australia, the Netherlands, France, Britain, the United States and Canada.

In just over a decade, what was an Australasian-focused company with mainly fertiliser operations now conducts more than 90 per cent of its business outside of New Zealand.

Growth has come through acquisition - such as its purchase in 1997 of French chemicals group CFPI and the takeover earlier this year of North American distribution group Riverdale Chemical - and through strategic manufacturing and distribution alliances with larger companies like Monsanto and Rhone Poulenc.

The essence of the company's growth strategy has been to identify a niche within its area of operational expertise that has not been properly developed by existing market participants. Looking at Fernz's operations now, there are some obvious areas for further expansion, such as South American and North East Asian markets for agricultural chemicals. The company has spotted those gaps and is working on filling them.

Similarly, Fernz is keen to expand further into the transgenic crop market. This area of science, whereby crops will be genetically engineered to tolerate powerful herbicides, is an area that some environmental and food safety experts believe is risky.

The company's chairman designate Kerry Hoggard acknowledged that risk and said expansion needed to be carefully handled. But he added that the company had to stay ahead of technological advances in agricultural and chemical production.

From next year Fernz will almost certainly be based in Australia. But its example of careful planning and patience in growing a business is a legacy it will leave behind for all New Zealand companies.