| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Irish Economy

Global Income Per Capita

Global Cost of Living

Irish Tax - Income/Corporate

Global News

Bloomberg News

CNN Money

Cnet Tech News

Newspapers

Irish Independent

Irish Times

Irish Examiner

New York Times

Financial Times

Technology News

 

Feedback

 

Content Management by interactivetools.com.

News : Irish Economy Last Updated: Dec 10, 2012 - 1:13 PM


Irish Economy: Opportunities in emerging markets for businesses in Ireland
By Finfacts Team
Dec 10, 2012 - 1:07 PM

Email this article
 Printer friendly page

Irish Economy: Facing weak growth rates at home, business leaders in mature economies like Ireland are looking for international expansion opportunities in higher growth emerging economies, according to the latest Grant Thornton International Business Report (pdf: IBR). Targeting emerging economics remains a key focus for Irish exporters, and was assisted in last Wednesday’s budget by the extension of the Foreign Earnings Deduction for employment related travel to additional African countries.

The IBR results reveal that, globally, 57% of those business leaders considering international expansion are looking at the five biggest emerging economies - - China, India, Russia, Brazil and Mexico - - compared with 38% looking at Western Europe and 33% at North America. The research shows 19% of business leaders are looking at opportunities in Africa. 

Commenting on the analysis Grant Thornton partner Patrick Burke said:  “Irish businesses are no exception in relation to this global trend, with Irish exporters constantly looking for growth opportunities particularly in China and India. Emerging economies traditionally offer low-cost inputs such as labour and land, and also vast consumer markets. The extension of the Foreign Earnings Deduction in the Budget to new countries in Africa adds to the pool of emerging markets that the government is incentivising Irish businesses to access.”

Prior to the Budget the Foreign Earnings Deduction applied to employees working for part of the year in Brazil, Russia, India, China and South Africa. The deduction has now been extended to cover Algeria, Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal and Tanzania. It gives employees tax relief on the portion of their income earned whilst on business in the designated countries provided they are there for a minimum of 60 days.

Irish exports to Africa grew by 50% in 2010 and 2011 (Irish Exporters’ Association 2011 Year End Review, page 8) and  stronger annual GDP growth forecasts of 6% in sub-Saharan Africa between 2013-17 compares favourably with less than 3% growth in the Eurozone economies.

To help investors understand which emerging economies offer the greatest potential for business investment, in 2008 Grant Thornton developed the Emerging markets opportunity index. Updated for 2012, this third iteration sees China once again top the index, followed by India and Russia. Brazil has moved above Mexico into fourth place. The biggest movers include the ‘frontier economies’ of Indonesia (up two places), Chile (up two), Nigeria (up nine) and Peru (up five).

The IBR also shows that international expansion is no longer a one-way street. Increasingly cash-rich businesses in emerging economies are looking for expansion opportunities in mature markets, whether through opening premises or buying distressed assets. Businesses in Turkey (59%), Russia (37%), India (33%) and China (27%) are looking at opportunities in Western Europe. And 33% of Latin American businesses, rising to 58% in Mexico, are looking at North America.

Patrick Burke added:  “Investment from mature economy businesses offers peers in emerging economies significant productivity gains in the form of technology transfer and access to new skills and processes. We should not be surprised if investors from China, India and other emerging economies start to look much more closely at possible opportunities to make acquisitions and invest in Ireland.”

Data collection is managed by Grant Thornton International's core research partner -Experian. Questionnaires are translated into local languages with each participating country having the option to ask a small number of country specific questions in addition to the core questionnaire. Fieldwork is undertaken on a quarterly basis. The research is carried out primarily by telephone.

Sample: The data for this release are drawn from interviews conducted between May and September 2012 with over 6,000 businesses from all industry sectors. The target respondents are chief executive officers, managing directors, chairmen or other senior executives.

Finfacts Comment:

Developing new export markets in emerging economies is not for the faint-hearted. I am based in Kuala Lumpur and I lived in Saudi Arabia in the 1990s.

Irish export data is no guide to the challenges. For example, about 95% of Irish exports to China are made by foreign-owned firms in Ireland and generally decisions regarding the destination of exports from Ireland are not made in Ireland

Putting Mandarin on the school curriculum is a typical proposal from armchair ‘experts’ who have no experience of the challenges of selling in China - - 1.3bn consumers and all we need is a  very tiny slice of the pie!

In November 2009, Irish companies were warned by several senior executives who run some of the country’s most successful indigenous companies, to be cautious about expanding into emerging markets and focus instead on developed markets.

“More fortunes have been lost than made by getting in too early,” former CRH CEO Liam O’Mahony told a conference on making businesses international at UCD’s Michael Smurfit Business School.

O’Mahony, who ran the world’s second biggest building materials company from 2000 to 2008 and now chairs IDA Ireland, said Irish companies should consider expanding into the US, UK and other mature markets before looking at countries such as China. “Some of these markets are very large and there is still scope to grow as long as you have value propositions,” he said.

O'Mahony’s advice was repeated by Glanbia chief executive John Moloney and Glen Dimplex boss Seán O’Driscoll. “China is a long-haul, a slow-burn,” O’Driscoll said.

Glanbia has a small presence in Asia.

India is to some a more difficult market than China. Ireland's exports are insignificant at about €300m annually.

- - Michael Hennigan. 

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

Related Articles
403 Forbidden

Forbidden

Execute access is denied.


© Copyright 2011 by Finfacts.com

Top of Page

Irish Economy
Latest Headlines
Irish manufacturing PMI at 42-month high; Official data up 3.4% since 2010
Irish Economy: Cars boost retail sales in July; Ex-cars sales dip
Irish economic performance since 1922 and Scottish independence
Ireland: Recovery on track but fantasy economics endure
Net emigration by Irish nationals at 124,000 in 2009-2014
Q1 2011-Q2 2014: Irish employee jobs up 21,000; 130,000 part-timers seeking full-time work
Irish Economy: Job numbers & workforce fell in H1 2014; Finfacts proved right
Irish Economy: In 4 years to Q2 2014 average hourly earnings fell by 1.5%
Irish Budget 2015 & Economy: More demand for tax cuts
At least one fifth of Irish SMEs have direct exposure to property debt
Irish Economy 2014: Export volume grew by 7% in the second quarter
Irish consumer sentiment increased in July
Domestic ownership of Irish government bonds rises from 28% to 48% since 2012
Irish Economy 2014: Average annual professional vacancies up 6% in July
IMF says Ireland can repay bailout loans early without penalty
IATA says Dublin-London second-busiest international route
Irish Economy 2014: How strong is the economic recovery?
Irish Economy 2014: Industrial production dipped 18.2% in June; Up 3.5% in 12 months
Irish Economy 2014: Annual consumer prices rose 0.3% in July
Irish Economy 2014: Growth to remain strong in 2014/ 2015 says ESRI; High debt, low credit are risks
Irish pension managed funds up an average 6.7% in year to July
Official Irish services index up 0.5% in June 2014; 1.1% in 12 months
Irish Economy: Services PMI rises in July; CSO data more muted
Irish Economy: July Exchequer deficit of €5.2bn is €798m lower than Budget 2014 target
Irish Economy 2014: Live Register numbers + schemes at 469,00 in July
Irish Economy: Bruton publishes new FDI policy; Avoids inconvenient facts
Irish Economy: Central Bank raises 2014 forecasts
Irish corporate tax policy like property bubble driven by short-term interests
Irish Economy: Retail sales volume up 4.8% in year to June; Ex-cars at 3.6%
Irish income inequality fell during the economic bust
Irish Economy: Bruton and politics of jobs numbers; How to add 50%
Corporation Tax Reform: Irish Government should reject pleadings of short-termists
Irish Economy: Bruton's claim of 70,000 jobs added in past 18 months is not correct
FDI in Ireland: Grant Thornton publishes promotional brochure not balanced report
Irish Banking Inquiry: Advisory group says begin crash saga 20 years ago
Moody's forecasts Irish growth rates "of at least 3% for the next few years"
Irish National Competitiveness Council fails to separate wheat from the chaff
Irish SME Finance: Oireachtas committee calls for less dependency on traditional banking
Irish Economy: Merchandise exports up 15% in May
Irish industrial production fell in May; up 32.3% in 12 months & 16.4% in period 2010-2014