In terms of Ireland – China political and trade relations 2014 was a pivotal year. The following birds-eye view draws attention to the main breakthroughs as well as offering a hunch or two regarding how the kinship can be expected to develop into 2015.
Part 1: 2014 – The year that was
Part 2: 2015 – The year that will be
– Open Sesame
– Export opportunities
– Strategic sourcing
– Foreign Direct Investment (FDI)
Accurate Group – China Market Makers
Part 1: 2014 -The year that was
– The year had barely commenced when China Investment Corp (CIC) and The National Pension Reserve Fund announced an investment of US$100 million in The China Ireland Technology Growth Capital Fund which is turn will invest in fast-growing Irish start-up technology companies trying to expand into China.
– Another subtle telltale sign of the improving relationship was the Chinese Embassy in Dublin‘s anticipation of ” a need for increased facilities to carry out embassy, consular and state business“, as noted in the Irish Independent last February. It was around this time the Irish Government announced its intention to open a Consulate in Hong Kong.
– The first big dairy export deal of the year was won by Northern Ireland‘s Dale Farm – whey protein, a deal which effectively pushed its annual exports to China up to £20 million a year.
– Chinese leasing company Bank of Communications Financial Leasing (JY Aviation) became the third Chinese aircraft leasing company to set up its European headquarters in Dublin..
– In March, Northern Ireland bus-maker Wrightbus of Ballymena won orders for more than 50 new buses in Hong Kong.
– While the photograph of President Higgins of Ireland being welcomed to China by President Xi Jinping in December 2014 represents the highest form of State engagement in diplomatic protocol, perhaps the most iconic image of the Ireland – China relationship in 2014 was the greening of China’s most important cultural icon, the Great Wall to celebrate St. Patrick’s Day.
– Meanwhile, the Bank of Ireland became the first bank in Ireland to offer business customers the facility to make payments in Chinese Yuan / RMB.
– H.E. Xu Jianguo was appointed Chinese ambassador to Ireland. Tellingly, his previous posting was as Chinese ambassador to New Zealand, the main conduit for dairy product imports into China (courtesy of a generous free trade agreement).
– However, the year wasn’t all about agriculture. Tencent, games industry giant and China’s largest and most used Internet service portal, chose Ireland’s Havok to deliver for its Iron Knight game dynamic battlefields, enhanced graphics, efficient character AI, more realistic animations and detailed destruction effects to offer players the most authentic fighting action possible. All-in-all, a huge milestone for Havok, the premier provider of interactive software and services for digital media creators in the games and entertainment industries.
– In May 30 Irish diary companies had products approved for export to China following stringent audits by Chinese authorities, a significant milestone for Ireland’s dairy industry.
– Also in May, then Minister for Tourism Leo Varadkar leading a trade mission to China commented: “I think everyone accepts that sooner or later there will be direct flights between Ireland and China, most likely Dublin and Beijing...”
– …while a leading tourism survey in China observed that 62% of Chinese travellers were reasonably familiar with Ireland.
– Huawei Technologies, the leading Chinese multinational networking and telecommunications equipment and services giant announced the establishment of a new R&D centre in Athlone.
– ChinaHR, the fast growing Asia-focused recruitment company owned by Leslie Buckley and Denis O’Brien, which employs 2,600 staff in 26 cities across China, was said to be mulling over plans to float in Hong Kong. There was also muted talk (but little substance) of a potential listing in Hong Kong by PCH International, which sells product development and supply chain management services – and is widely considered Ireland’s biggest exporter in China.
– On a serious note the Chinese sheep shearing team arrived in Ireland to compete for the first time in the World Sheep Shearing Championships. On a less serious note, Irish-American comedian Des Bishop wowed Chinese television audiences… in Chinese!
– H.E. Xu Jianguo, the new Chinese ambassador to Ireland, undertook a well-publicised pilgrimage to what Chinese officials consider to be Ireland’s Mecca – the Shannon Free Zone, following in the footsteps of Jiang Zemin’s 1980 trip to study the Shannon Free Zone model, which has since been adopted across China in the development of its hugely successful special economic zones.
– In June, Dublin Airport announced its intention to secure a direct air-link to China by mid-2016.
– June also saw a boost to Irish businesses as AIB Merchant Services enabled acceptance of the Chinese card UnionPay.
– During the same month a new visa to let Chinese tourists travel freely between Ireland and the UK was announced, a significant milestone for Irish tourism.
– Mr. Liu Yunshan, a leading member of the Politburo Standing Committee of the Communist Party of China, was the most senior Chinese official to visit Ireland in 2014. He was accompanied by four ministers in a delegation of fifty-one officials. Since 2011 nearly thirty Chinese Ministers or Vice-Ministers have visited Ireland. Clearly, the Chinese leadership considers a strengthening of the ties between the two nations to be of benefit for China.
– In October it was announced that China is to open a consulate in Belfast, Northern Ireland.
– On the education front, Jan O’Sullivan, Minister for Education and Skills’s trade mission to China in late October was a fitting backdrop to a slew of positive news announcements:
– University College Dublin (UCD) opened an office in Beijing as Irish universities sought to step up their expansion into China. UCD estimated it has 1,000 alumni in China with over 100 based in Beijing.
– Trinity (TCD) announced a new Masters in Chinese Studies and the opening of the Trinity Centre for Asian Studies, which it says “aim to advance Chinese scholarship and to promote Ireland as a leading knowledge centre for pan-Asian language studies and research”.
– University of Limerick (UL) also signed deals with four Chinese institutions.
– In November, as the year drew to a close, Agriculture Minister Simon Coveney led a major trade mission of 37 companies to China. He also had plenty of positive news to announce:
– Kerrygold unveiled a new milk product for Chinese market, under the Chinese trade mark “Jin Kai Li”.
– UCD, Irish company Richard Keenan & Co and the Chinese Academy of Agricultural Sciences joined forces to form the China-Ireland Dairy Science and Technology Centre with the goal of improving feeding efficiency, animal health and reduced environmental impact of dairy farming.
– Kerry Group launched a new Irish made infant nutrition product ‘Green Love’ for the China market. Produced at Kerry’s new €40 million facility in Charleville, Co. Cork. More importantly, 100 new jobs were created.
– Glanbia launched its Avonmore UHT milk brand in China.
– Richard Keenan & Co entered into a franchise partnership with Shanghai Shengmu Livestock Company, a €7 million deal to accelerate sales of Richard Keenan‘s mixer wagons across the Chinese market.
– Machinery company Samco, based in Adare, Co. Limerick, secured a purchase agreement with two companies based in Inner Mongolia, Northern China for their SAMCO maize planting machine and bio-degradable mulch film.
– Bord Iascaigh Mhara (BIM), along with 12 Irish seafood companies, exhibiting to key buyers at the premier China Seafood Expo in Qingdao, highlighting boarfish in particular as a new viable product option.
– Irish mobile technology company Cubic Telecom signed a lucrative global agreement with China Unicom, to provide machine-to-machine (M2M) services to enterprise customers across mainland China and Hong Kong.
– Arthur Cox Listing Services acted as Listing Agent on the first Chinese transaction to list in Ireland, when China Petrochemical Corporation acted as guarantor for Sinopec Group Overseas Development (2013) Limited which listed its Dollar and Euro Senior Notes on the Irish Stock Exchange (ISE).
– Other notable deals for the island included: AB Pneumatics, a Lisburn Northern Ireland-based manufacturer of air springs for vehicle seating, won new business to supply £600,000 (€766,000) a year of equipment to Commercial Vehicle Group (CVG) in Shanghai; Antrim-based Fastank won a deal to supply portable liquid storage systems for environmental clean-up operations at a major chemical plant in Shanghai; while BI Electrical, a specialist in electrical engineering services, has signed a £20 million (€25.5 million) China agreement with Keenshine in Shanghai.
– In December a team of Chinese veterinary inspectors visited Ireland to officially inspected Irish beef slaughtering and processing facilities. Irish beef producers are competing with Canadian and USA beef producers to gain China export approval. For Ireland to be the first EU member to have its beef approved for export to China would be major coup.
– The year ended on a high note with President Higgins of Ireland’s historic state visit to Beijing, Shanghai and Hangzhou, during which it was announced that President Xi Jinping of China had accepted an invitation to visit Ireland. (For additional insight into President Higgins of Ireland’s State Visit to China click the following url: http://wp.me/p15Yzr-182)
Part 2: 2015 – The year that will be?
The one certainty in the relationship is that in the run-up to President Xi Jinping‘s return trip to Ireland, which is more likely to happen in 2016 (although with the next Irish general election expected to take place no later than 3 April 2016, the Irish Government will be pushing for President Xi Jinping to make undertake his State Visit to Ireland during the latter part of 2015) the political, economic and cultural relationship can only grow stronger. The one vulnerability is the transient Chinese economy, which although experiencing an extended period of volatility is unlikely to go off the rails.
Open Sesame
So soon after the close of such a vibrant year in Ireland – China relations, any talk of China’s massive appetite for Ireland’s baby formula, beef, pork suddenly metamorphosing into becoming a major cash cow at this point, is greatly overstated.
Every country trading with China wants a piece of the action, and in the food and drink sector competition is set to grow in intensity. For instance, Chile recently started exporting live cattle to China, while Australia recently concluded a free trade agreement with China that will give its exporters preferential pricing similar to that already enjoyed by New Zealand exporters.
It is highly probable that 2015 will see Irish beef producers benefit from the strengthened political bond by having their produce approved for export to China. Moreover, the formal announcement of a direct air-link and a significant rise in the numbers of tourists visiting Ireland are also highly likely.
Export opportunities
Relative to the overall size of the China market, for Irish businesses in search of China market opportunities, we would also beat the drum for:
- Agricultural Technology;
- Cleantech;
- Construction Products and Technology;
- Engineering;
- Food Technology and Ingredients;
- Healthcare and Hygiene Solutions;
- Industrial Components (OEM suppliers), Life Sciences, Medical Devices (class I and II);
While in the B2C space, where domestic consumption is creating opportunities for foreign brands to sell products in China, the sectors we would make a pitch for include:
- Foods and functional foods sold through grocery retail, health stores and on-line.
- OTC and other products, e.g. baby products, consumer medical devices and aids, cosmetics, etc. that are sold through pharmacies, parapharmacies, health stores and on-line;
Foreign Direct Investment (FDI)
In addition, we are of the opinion that the time is ripe for a significant FDI from China, and in this regard two words come to mind: ‘Open Sesame’
Driven out of necessity, Hangzhou-based E-commerce behemoth Alibaba Group – arguably the world’s largest online and mobile company – is actively plotting its expansion to become a truly global company. Investments in Europe and the USA beckon. In this regard, we would be inclined to think the December visit by President Higgins and Minister of Finance Michael Noonan to Alibaba‘s headquarters in Hangzhou would have been quite effective in putting the squeeze on Jack Ma, Founder and Chairman, Alibaba Group, in considering Ireland as a possible location for further European expansion, bearing in mind that Alibaba already has an office in London’s Canary Wharf. (For additional insight into President Higgins’s visit to Hangzhou click the following url: http://wp.me/p15Yzr-18c)
Strategic sourcing
Given the extensive publicity that usually accompanies a China market breakthrough for an Irish exporter, it is easy to overlook the fact that the Ireland – China trading relationship is two-way.
Long known for manufacturing cheap products, over the past few years rising labour and real estate costs, have forced Chinese manufacturers to move up the value stream. Concurrently, an unrelenting series of tainted product scandals have generated a multitude of exacting government decreed benchmark quality standards. The ensuing marked improvement in product and food safety standards represents an economic transformation that is already rekindling China’s export competitiveness. By its very nature, we foresee Irish businesses increasingly focusing on China for strategic sourcing options, which over the course of the year will gradually eat into Ireland’s trade surplus with China.
Accurate Group – China Market Makers
“Ireland is a long way away and Chinese people like to see a presence here. The first advice that we give to Irish companies coming to China is that they need to commit to the market. They are not going to come in and make a quick buck.”
– Julie Sinnamon, CEO, Enterprise Ireland” Source: Irish Times, 15th December, 2014
The only way to succeed in China is to be aware and prepared – and to be on the ground. With this vital rule of thumb in mind, in 2014 Accurate Group, which is based in Hangzhou and Shanghai, was directly involved in developing China trade worth up to €4 million for Ireland’s food and drink sectors.
– By Niall O’Reilly
Niall O’Reilly is the Managing Director of Accurate Group, China Market Makers, and Director for China, Irish Exporters Association, has been based in Hangzhou since 2007.
Source: http://www.accuratelimited.com/blog.view.php?id=l1UtkHyIg1Y=
Niall O’Reilly
Managing Director, Accurate Group – Ireland China Market Makers
Website: For more ‘Accurate China Insights’ click http://www.accuratelimited.com/blog.php
Twitter: @AccurateChina – China: The Ireland Angle
China Office : Accurate Group China, Hangzhou – O: +86 571 8709 1253
Ireland Office: Accurate Group, Dublin – O: +353-1 271-1830
