Opinion: China wants to reach out to Irish food businesses

China’s political leaders are driving business expansion abroad through its One Belt One Road initiative —a development plan focused on boosting trade across Asia, Europe, Middle East, and beyond.

Opinion: China wants to reach out to Irish food businesses

China’s political leaders are driving business expansion abroad through its One Belt One Road initiative —a development plan focused on boosting trade across Asia, Europe, Middle East, and beyond.

This presents a moment of opportunity for Ireland.

That’s because traditionally Chinese companies have chosen to set up their EU operations in the UK, Germany, and the Netherlands.

And despite the escalating trade war between Beijing and Washington, new figures demonstrate that Chinese foreign direct investment into the Republic ran out to over €128m in the first six months of the year.

China is now the second-largest economy in the world, only second currently to the US, but which it is expected to overtake by 2030.

However, China’s domestic economic growth has been slowing and Beijing is encouraging Chinese companies to win new markets overseas.

An example that RSM can cite is the work it carried out to help Emeri Nutrition to open a €54.5m infant formula facility in Co Meath. The project is considered the most significant Chinese deal in Ireland to date.

The increase of overseas investments into the Republic came despite Chinese companies severely cutting back on their total global overseas investments, to $20bn (€18.2bn) in the first six months.

The UK with €4.2bn, Germany on €2.1bn, and France with €1.6bn continue to lure large amounts of Chinese investments, but their shares of the total Chinese global investment cake have fallen sharply.

Meanwhile, the value of bilateral trade in goods and services between Ireland and China amounted to €17bn last year, according to figures from the Department of Foreign Affairs, up sharply over the past five years.

Brexit presents a significant advantage for Ireland when it comes to attracting more investment from China. That’s because when Britain leaves the EU, Ireland will effectively be the English-speaking gateway into Europe.

Direct flights to Dublin from Beijing, Shenzhen and Hong Kong have helped boost connections between the two countries.

At this crucial moment, the Government must play to the country’s strengths and build on Ireland’s soft power.

Chinese investors are eager to expand in Europe but they face some difficulties with their plans.

Cultural differences can lead to barriers toward building trust and relationships.

Chinese people are not necessarily familiar with western culture or international business.

And Europeans may not be familiar with the Chinese approach.

This is where an intermediary is needed to help guide the parties.

Understanding the business culture in both Ireland and China is essential for investors. Once trust is built, the business will follow.

Ireland has a small but highly globalised economy, with a well-established multinational sector that generates significant exports across a broad range of products and services.

Its pro-business attitude enables companies to set up swiftly, with a minimum of red tape.

This business culture in Ireland has been very attractive to Chinese investors as it allows them to get started quickly and get on with growing their businesses.

Compliance issues are important for Chinese clients.

This gives the clients the confidence that their Irishinvestments are built on secure footings and allows them to get on with trade.

The key growth areas for trade development are Ireland’s food and agri-business sectors.

There is also increased investment in IT, the Irish energy sector, and Irish aircraft leasing.

As we approach the budget in October and navigate through the uncertainty of Brexit and other global issues, the Government would be advised to strengthen relations with Chinese investors and other trading partners.

Warren Keogh is director at RSM Ireland. Its China desk aims to support all aspects of China-related business for clients and to assist clients to set up in Ireland.

More in this section

Budget 2022 Logo

What impact will this  year's budget have on you and your business.

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up