Irish business must think big

CONFIDENCE is an admirable quality in business, but could a tiny dot of a country like Ireland really sell the fruits of the land to a nation with one of the biggest land masses on earth?

Could we sell building systems to the country that built the Great Wall? Could we sell medical devices to the people who gave the world traditional medicine? And could we dare to sell technology to a country that has nuclear know-how and a plan to put men on the moon?

The answer, according to a supremely confident Enterprise Ireland, is not only that we could do it but that we already are — and the opportunities exist to do much, much more of it.

About 240 Irish companies export to China and 140 have a physical presence in the country, but Kevin Sherry, manager of the agency’s international sales and partnering division, says there is room for many others.

“It’s a huge market; it’s growing very rapidly and in the longer term it’s a tremendous opportunity for Irish companies to do more business,” he says.

Just how huge is hard to get your head around if you’re used to supplying the domestic Irish market, but with a population of 1.354bn, China has 20% of the world’s people living within its borders.

They are by no means all ready, willing or able to get their hands on Irish goods and services, as a decent income for a worker is only about €400 a month.

However, there is a growing middle class and a wealthy elite and as John Bryan, president of the Irish Farmers’ Association puts it: “Even a small percentage of 1.3bn is a big market.”

The potential significance of that market for Irish farmers was highlighted during last month’s visit to Ireland by China’s next leader, vice-president Xi Jinping, when a key part of his itinerary was a trip to a Co Clare dairy farm.

With the increasing flight from the land to urban centres, water and grassland shortages and decades of neglect, China’s agricultural sector is seriously under-productive and the government’s latest five-year plan makes food security a priority.

Mr Bryan was a guest at the farm visit and says it was much more than a courtesy call by the Chinese president-in-waiting.

“I was absolutely amazed at his knowledge of Irish agriculture. He wasn’t talking like a man who’d read a half-page briefing note, as many politicians would do. He knew about grassland, food technology, the carbon footprint. He’s done his research. He knows we’re ready to do business.”

The big dairy companies know it too, he says.

“Kerry, Glanbia, Dawn — they all have people in China now and those companies are not putting staff out there for the scenery.”

However, there are a few obstacles to overcome to putting Irish produce on Chinese plates. Dried goods such as milk powder are easy to ship but transport costs for fresh products over such a distance are high.

Bryan is undeterred.

“There is a disparity between exports and imports with China, and a huge amount of containers are going back there empty,” he says.

Agriculture Minister Simon Coveney will next month lead a Bord Bia trade delegation to China to see about getting more of those containers filled. According to Bord Bia, Irish food and drink exports to China were worth about €185m last year but given that the country annually imports about €50bn of agri-products, there is scope to get a much bigger share of the market.

Securing the reopening of the market for beef, banned since the BSE scare in 1996, is an obvious target of the mission and Bryan is convinced it will succeed.

“China is looking at a hugely reduced supply of beef from other sources. Argentina was doing 700,000 tonnes of beef 10 years ago but it will be 200,000 tonnes this year. There’s been a huge collapse in the herd. And the drought in Texas and Mexico has meant herds being cut there too. The ban on European beef is a hangover from BSE but that’s 16 years ago now. They would have to lift the Europe-wide ban and then have each country apply for certification individually but if there’s agreement by the end of next month, I could see certification for Ireland by the end of this year.”

There are other kinds of goods that could be going in those empty containers, including pharmaceuticals and medical devices for the greying Chinese population which is fast discovering the ills of diabetes and hypertension among the other downsides of longer life and more westernised lifestyles.

Increasingly, the kind of exports Irish companies are being encouraged to consider are those that can be transported in the human head or a laptop.

Software for the financial services sector, for engineering and construction design, and for the cleantech sector is badly needed in China, a country which can boast that it makes just about anything cheaper than anywhere else but have to admit they often need to use an outsider’s blueprint.

“The cleantech area is a big challenge in China,” says Kevin Sherry.

“Being clean and green and efficient in terms of energy, waste and water is a stated priority and they are looking for ways to improve their track record.

“Financial services is another area where Irish firms could perform well in China. We’ve had a retail banking issue here, that’s true, but our international financial services sector is strong.”

Colin Lawlor, vice-president of the Irish Exporters’ Association and chairman of its Asia trade forum, shares Enterprise Ireland’s optimism not only about the Chinese market but the Asian market in general.

“Asia represents about 26% of world trade and the forecasting is that by the time my children leave college, which is about 15 years away, it will represent more than 45% of world trade, so half of my children’s earning potential is going to be in Asia.”

However, he is concerned that the potential, well flagged for more than a decade, was not seized upon earlier.

“There is no doubt we have left it late. Our attention to Asia hasn’t been strong enough at national level or indeed in private business so that Asia represents only 4% of Irish exports.

“It’s not too late, but resources on the ground are completely inadequate. I deal with some of the Enterprise Ireland people in Tokyo, Seoul, and China and they are fantastic but they are completely under-resourced.

“In the case of Beijing the diplomatic corps is also too thin on the ground. There is a perception of the diplomatic corps as an expensive luxury. It’s not a luxury — you have to have them working on the ground for years and years to build relationships.

“Our people are very good. They punch well beyond their weight, but there are not enough of them.”

Sherry certainly wouldn’t say no to extra overseas personnel but he has a lot of faith in the existing arrangement. “We have 30 offices overseas in total, of which three are in China — in Hong Kong, Beijing, and Shanghai — so our resources in China are actually disproportionately large.

“The people in those teams employ local teams and would deploy a network of pathfinders. We also work with the embassy and consulates too and we make use of the Irish diaspora.

“Increasingly the new diaspora are not just Irish people but Chinese people who have studied or worked in Ireland or have family in Ireland. It’s a real Ireland Inc approach.”

Many of those elements came together for a specialised trade mission to China a fortnight ago which saw education sector representatives take part in a series of education fairs across the country.

About 3,500 fee-paying Chinese students are enrolled at Irish universities and institutes of technology and more are on short-term language or private courses. Ciaran Cannon, minister of state for training and skills, who led the trade mission, says there is plenty of scope to increase those numbers.

“To set the context, Ireland earns about €800m from international education. It’s one of our biggest exports. In the Programme for Government we state that we want to push that to €1.2bn over the next two to three years so there is very much a concerted effort to grow and develop it. China is one of the places we can grow it.

“We should realise our education system is hugely respected abroad. It’s a very valuable brand that we have. We have very high academic standards, we have a safe environment and we seem to be quite competitive on price.”

He says the only issue raised during the trip was the range of courses available. “Traditionally we’ve seen a lot of Chinese students come to study medicine and computer sciences. They want to expand that to the humanities and arts and life sciences but that won’t be a problem.”

Sherry would also like to see more Chinese in Ireland, particularly if they come with scissors to cut the ribbon on a new factory or office. “We would be marketing Ireland as a great place to come and establish a new business and we have increasing interest in that. US firms have always seen Ireland as a gateway to Europe and a population of 500m and the Chinese are beginning to look at us in the same way.”

There’s no doubt Enda Kenny and his entourage will be endeavouring to push all the above buttons in China this week, but Colin Lawlor warns we’ll have to commit to keeping our fingers on those buttons if we want to see results.

“What the Taoiseach should do before he leaves China is get the next date in the diary for a follow-up trip.

“Let’s not have this as a once-off rush of enthusiasm for one year. Let’s have sustained follow-up.”

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