This is a very common situation. However you should try to answer few things
where is this potential competitor based ? If in New Zealand then you will face stiff competition. But if he is outside then you still can have a look at it.
What is the overall market size of the product or idea ? Bigger the market size , better for the situation since it can absorb the competition ?
If the market size is not big then re look at the idea first think of the value proposition and see if there is a differentiation which can be created
Investors will look at this as potential threat because already an existing player is available and this will make the funding difficult.
If the idea is still in conceptual level then you can think of other opportunities as well.