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News : Irish Economy Last Updated: Aug 1, 2013 - 9:15 AM

Gilmore says China key to Irish recovery; Exports at 2% of total
By Michael Hennigan, Finfacts founder and editor
Jul 31, 2013 - 6:30 AM

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Enda Kenny, taoiseach, meets Xi Jinping, then vice president of China and now president, in Beijing, March 2012.

Eamon Gilmore, minister of foreign affairs and trade, and tánaiste (deputy prime minister), is in China this week leading a trade mission and he said in an interview in Beijing that China is key to Irish economic recovery. The claim is absurd as exports to China in 2012 accounted for about 2% of the headline value of total exports.

“China is a priority market for Ireland and strengthening our relations with China is critical to our exporters and to our economic recovery as a whole,” Gilmore said, according to an Irish Times report.

China is an important market and it's important for Ireland to have good relations with the country. However, for Irish indigenous exporters, its relevance is in niche areas. This amounted to about €200m in 2012.

The decisions on China as the destination of the 95% of exports from foreign firms in Ireland, led by Intel, the US chip giant and the big pharmaceutical firms, are not made in Ireland. These firms generally do not have their main sales functions located in Ireland.

Gilmore uses an old trick to egg up the impact of the data by conflating exports from indigenous firms with the foreign sector.  

The total value of Irish exports in 2012 was €177bn. Merchandise exports to China were valued at €2.18bn, down from €2.33bn in 2011. Services exports in 2011 were valued at €2.2bn. Total imports from China were valued at €3.1bn.

Gilmore told Xinhua, China's official news agency, that there is already arrangement for 45 hours of teaching in Mandarin in Ireland's junior certificate cycle.

"We are currently reforming the junior certificate cycle, this is the education at second level between normally the age of 12 and about 15 or 16, and we intend to make Mandarin part of that reform. We see that in the course of time Mandarin will be a subject for the leaving certificate, which is the point at which people leave the second level school system," he said.

This month the Government announced the opening of a new IDA Ireland office in Beijing, which will focus particularly on attracting more investment and jobs in the financial services sector from China to Ireland. IDA already has offices in Shanghai and Shenzhen.

However, 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,”
Liam O’Mahony, former CRH CEO, 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
 John Moloney, Glanbia chief executive and Seán O’Driscoll, Glen Dimplex chief. “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 €235m in 2012 compared with €337m in exports to Romania.

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