Tag Archives: recession

Buy China or Bye Ireland?

The Chinese New Year Holiday that ushered in the Year of the Ox was a forlorn time for me as everyone I knew fled the city of Hangzhou to the homes of parents and grandparents in far away towns and villages. As usual I had left it too late to buy any plane or train tickets to whisk me away to a far flung place of my own. So I was left to the mercies of my new Dell notebook and the Internet.

Really, what a downer!!…. I mean the myriad Irish newspapers and blogging websites I found myself reading…  A lot of Ireland‘s current economic problems seem to stem from our national trait for talking ourselves up, to the point of being infallible, when the economy is
going great, and then talking ourselves, seriously deep deep, down when the economy skids and hits the buffers. So many of the grim reapers write Armageddon-like as if Ireland is descending into financial oblivion.

Irish news media should start printing and broadcasting the following Health Warning:

If you keep reading the newspapers / or listening to the news about our economic meltdown you are either going to become severely depressed or cut your throat, or, alternatively, you can take the bull (or Ox) by the horns and assume a manner of optimism, be more cheerful, and accept that what goes up must come down before going back up again.

Year of the Ox - Grab the bull by the horns

Recessions are a part of life to be followed by progression. 

Anyway, the more I read, the more it became apparent to me that China should be viewed as an essential partner in restoring and maintaining Ireland’s economic stability.

Over the next decade China’s huge economic potential is likely to present more business, educational, and cultural opportunities for Ireland than any other country.

Consider the fact that despite the breakneck development of China over the last 30 years to become the world’s third largest economy, in 2007 its population of 1.3 billion still only enjoyed a per capita GDP that was 1/14th of the European Union average.

History shows us that it would be foolhardy indeed not to recognise that we are still in the very early stages of China’s re-emergence.

If there is one country that can quickly navigate the global slowdown it is China.  Even at an annual growth rate of to 7 to 8% forecast for 2009, which for China is a recession, China is still contributing more to global growth than any other country.  What’s more China’s own development, and the importance of growing prosperity, will require further substantive economic reforms to make sure growth is stable and sustainable.

China is already the 2nd largest outside the EU for Irish exports, and at a time of weakness in all of Ireland’s traditional export markets, developing China market opportunities is even more important as a driver of Ireland’s future growth.

And so my Year of the Ox resolution is to be patient, diligent and inspire confidence in others, such that come year-end Accurate will at last be viewed as a key channel for developing profitable China / Ireland business.

As we say in Ireland: “Feck the begrudgers!”

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Filed under 2009, Business, China, Economy, Hangzhou, Ireland

Accurate China Insight: Entering The Dragon’s Den

Huge Opportunities lie waiting for Irish businesses in China, but know your market

From Ireland’s ‘Business and Finance’ magazine’s ‘Enterprise Insight’ supplement, Q2 2008 edition, by Niall O’ Reilly

The world’s second largest economy China, is now the largest market in Asia, and outside the Euro Zone only second to the USA for Ireland’s exports. According to the latest figures from the Central Statistics Office (CSO) exports to mainland China (excluding the Hong Kong Special Administrative Region) for the first two months of 2008 totalled €324.6 million, a year-on-year increase of 112%.  Exports to the Hong Kong Special Administrative Region over the same period reached €110 million.

 

In the face of the current global economic downturn, a difficult exchange rate and other cost base factors, including the flight of manufacturing processes to low overhead, low material cost countries in Asia and Eastern Europe, as our manufacturers struggle to maintain productivity, the rise in our exports to China is a major achievement and presents convincing evidence that Ireland is at last starting to hit the mark in China business. Given that over the past decade the development of our economic and trade relations with China has been a top priority the Irish Government will maintain that its Asia Strategy, with its particular emphasis on China, is the key reason for  this positive development. What the CSO figures do not reveal, however, is how indigenous Irish businesses are performing compared to multinationals businesses based in Ireland.

 

China’s rise to become Ireland’s eight largest export destination is directly linked to its own export prowess and the craving for technology, infrastructure equipment and knowhow by Chinese enterprises that cannot be satisfied by domestic suppliers. From this perspective it is not surprising that the majority of our exports to China should consist of the information communications technology, machinery and equipment China requires to fuel its heady growth. Buoyed by breakneck 7% to 8% GDP growth in China over the past 10 years, a trend that shows little sign of abating, so long as businesses based in Ireland stay ahead of the technology curve and maintain their competitiveness exports to China will only continue to expand, thus strengthening China’s position as a major export market for Irish produce.

 

Looking ahead, where are the China market opportunities for Irish exporters?

 

Ireland commands a very strong position in the world trade rankings for internationally traded services. Recently published statistics by the World Trade Organisation 2006 show Ireland as the 12th largest services exporter, commanding a 2.6% share of world trade, while services exports now account for 35% of our total export trade. China has only opened up the service market to any great extent over the past four years and there are clearly significant additional market opportunities now for Irish service exports in engineering consultancy, aviation services, information communication technology, education and tourism services. The latter two service sectors are particularly significant given the rise in the spending power of the Chinese consumer.

 

According to the China National Bureau of Statistics, in 2007, China’s retail spending rose 16.8 percent to 8.92 trillion Yuan (US$1.24 trillion), thus adding credence to a widely held view that Chinese demand will this year for the first time become the main driver of world economic growth, with the increase in its domestic spending in current dollar terms contributing more to global growth than US domestic demand. As such, Irish suppliers should be relishing lucrative domestic sales opportunities presented by an increasingly affluent population.

 

Located two hours south of Shanghai is the prosperous city of Hangzhou, Marco Polo’s ‘paradise on earth’, which Forbes ™ Magazine has repeatedly rated as China’s premier business centre. With a registered population of 6.7 million inhabitants and an urban per capita income of RMB21,689, Hangzhou provides the ideal glimpse into the phenomenal growth in the purchasing power of China’s increasingly affluent middle class.  Not only do Bentley, Maserati, Ferrari, and Prada showrooms do a thriving business here, even more remarkable is the thirst to travel abroad whether as tourists, with Paris and London high on the list of preferred destinations, or graduate students from the third ranked university in China, Hangzhou’s Zhejiang University, seeking further education in the best schools in Europe and the USA. 

 

As individual prosperity rises so too are people becoming increasingly concerned about their living conditions. Recognising such anxieties, and looking ahead to population growth of close to 20 per cent over the next five years, in addition to the huge infrastructure building projects already underway, the Hangzhou Municipal People’s Government is actively encouraging projects focused on providing fuel efficiency, cleaner water, better sanitation, and power generation, all of which whether in material or service form present significant opportunities for Irish suppliers. 

 

As patterns of consumption change, to reflect those found in wealthier countries, such as higher levels of meat consumption, the opportunities for Irish suppliers in the development of both the food ingredients market, such as diary fats and proteins, standard cereal and grain products and flours, vegetable oils, or standardised high-quality meat products, and markets for the products of large scale cropping and livestock activities, become all the more apparent. In 2005, Kerry Group quick to seize the market opportunity established its state-of-the-art China manufacturing, technical and administrative facilities in Hangzhou.

 

However, remove the rose-tinted glasses and it quickly becomes apparent that in China the size of the opportunity is only matched by the difficulty in weighing up the risk, as the great challenges for any Irish supplier in entering what is still a relatively immature market quickly become apparent.  China’s rapid growth since its 1978 opening to the world has not necessarily meant greater transparency.

 

Making sound business decisions can be very difficult when there is little timely information available, and when the information available is either unreliable, or misleading.  What’s more, a simple misunderstanding of local business practices, which can be very different from what is taken for granted in Ireland, can harm efforts to develop solid business relationships and leverage them into strategic opportunities. As Kerry, CRH and Glen Dimplex have found, there is an inherent need for proximity to the customer base  for supplying many services. However, this forces small and medium exporter into the high cost of establishing a commercial presence in the China.

 

Rather than going it alone, working with either the Irish Exporters Association, Enterprise Ireland, or some of the more experienced homegrown market-entry consultancy practices with experts based on the ground in China, and their ability to access key business and government decision-makers,  will greatly assist Irish businesses in getting the most out of the unprecedented opportunities available in China.”

Niall O’Reilly

Managing Director, Accurate Group – Ireland China Product & Business Development (Export, Source, Import, Partner Due Diligence) Consultants doing business in China for over 20 years

China Office : 1-3 Ying Hui Xing Zhou, Jiang Nan Shui Xiang Lian Sheng Road, Yu Hang District, Hangzhou. China 310023| O: +86 571 8709 1253

Ireland Office: 93 Upper Georges Street, Dun Laoghaire, Dublin, Ireland| O: +353-1271-1830

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Filed under Accurate China Insight, Business, China Ireland, Niall O'Reilly, research, writing

China – Under The Hood: Is Ireland in danger of becoming too dependent on China?

A wake up call.
Ah the miracle of the global economy. Having just flicked through several online Irish newspapers, trawled through the websites of well-known Irish hardware stores, clothes retailers, and a host of other outlets selling furniture, garden, indoor, outdoor is very clear that:
Everyone in Ireland is coming to depend on what is happening in China…
Look around you… What are you sitting on? Typing on? Looking at? Talking into? They’re all very likely Made in China, right?
Go around your house and get rid of everything that is Made in China. Take it all away and for the next twelve months don’t buy anything from China, even if it has a Made In China component, just don’t buy it.
What would you have left? Scary isn’t it. Life would be pretty damn awkward.  
China makes around 80% of the world’s photocopiers, 65% of the world’s mobile phonesMobile Phone, 60% of its digital camerasCamera, 50% of its computers,Computer 60% of all its bicycles, 45% of its microwaves, 70% of all its toys, and 50% of all its textiles http://www.accuratelimited.com/entry_detail.php?entry_id=3&entry_type=insight. They are all produded for little cost by low-paid Chinese labourers.
This has huge consequences. Surely Chinese-made products are saving you the average shopper in Ireland hundreds if not thousands of euro a year. Chinese production and Chinese spending mean that you in Ireland get cheap goods and low interest rates.
And there is no way out…. There’s a recession, with all its belt-tightening implications, and you need to save all the money you can. So keep buying Made in China (so long as the same product is not still being made in Ireland), and if you see something from China you like but can’t find in Ireland give Accurate Group a tinkleTelephone receiver and we’ll have you sorted in a jig.Sun
Oh, and a final thought……………. for those of you who enjoy the savings and yet complain about the poor quality of Made in China products, China’s sweat-shop labour conditions, and the loss of Ireland’s manufacturing base to China to be blunt: ‘You can’t eat your cake and have it too’, meaning keep slamming China for its numerous inconsistencies, whether pollution, safety, quality or autocratic abuse of power-related and all those annual savings at the check-out counter of hundreds or thousands of euro will disappear. You know, killing the goose that laid the golden egg and all that…………… Ok enough. I’ll stop here and have a mug of Barry’s Tea, one taste that China can’t replicate, even if the mug, water and milk is from China, the tea from Sri Lanka, and the bag itself is from God knows where.

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Filed under Business, China Ireland, China Under The Hood, Development