Ireland can benefit from booming Chinese economy

The difficulty for Irish companies seeking to do business in China is finding their way through the minefield of regulations, bureaucracy, relationships, language, culture, and laws which doing business in China entails.

A typical Irish company’s experience of trying to access the Chinese market in the past 10 years might consist of between one and two years of intermittent visits — resulting in €50,000 to €100,000 of costs incurred with little or nothing to show at the end of the process, other than feelings of frustration and the conclusion that China has nothing to offer but heartache.

The difference between those who succeed and those who do not is in their ability to adapt to the way things are done in China.

The most important requirement for success is “guanxi”, or relationships. Such relationships can only be established over many years and so a new entrant to the market must use an intermediary who has such relationships already in place.

This does not mean hiring an interpreter but rather a capable and connected Chinese business professional or using the services of the emerging cohort of Western agents/ trading companies.

Witnessing this situation over many years is what motivated me and some Chinese colleagues to set up MTL as a vehicle to provide local support to foreign firms to enable them to overcome the challenges of entering the Chinese market.

MTL offers a bespoke solution to each client. We can be the customer and simply buy the product for resale in China, we can act as an agent or consultant or whatever is appropriate. We are now seeking Irish manufacturers and producers of quality products which we can bring to the China market.

A recent BCG report stated that China’s middle class will triple to 280m by 2020. The result of such growth is a gluttonous demand for almost everything and anything that Ireland can supply.

While the areas with particular opportunities for Ireland would be food/ agri products, pharma/ healthcare, commercial property/hotels, education and so on, there is another area worth mentioning.

There are growing numbers of mid-sized Chinese corporations seeking ways to enter the European market. Having a European face in the European market would allow the Chinese firm to develop its business faster and better than trying to do it itself.

There are many Irish SMEs of 10 to 30 years standing who are being “strangled” by a lack of sales and cash who would flourish in a partnership with a Chinese company who can give them a whole new lease of life.

The Chinese property market has been on a major upward trajectory for the past 10 years and seems to have now levelled off. The value of the renminbi has also risen substantially relative to the euro. A consequence of these two developments is that Chinese investors are more open to overseas property investment and Ireland is very well placed to benefit from this.

Irish commercial prop-erty prices are low, rental returns are good, the medium-term prospects for our economy are good, and we have good legal protection, all of which are attractive to Chinese investors.

Luxury hotels are of particular interest and there is already activity in this area.

When people ask me where the growing number of Chinese tourists go I say “wherever they can”, meaning wherever they can get a visa and a flight. We need to be more open to issuing visas to Chinese tourists and the Government needs to lobby for direct flights.

China has experienced dramatic growth over the past 10 years. This rate of economic development will be maintained for at least the next 10 which makes it an extremely attractive proposition for almost any Irish business to embrace, either directly or indirectly.

* Thomas Brosnan has been doing business in China since 1985 and is MD of MTL (China Trade and Investment) which specialises in supporting foreign companies in China and Chinese companies and investors internationally. www.mtlchinatrade.com