Enda Kenny, taoiseach, at the Meji Shrine in Tokyo, Dec 01, 2013. He was offered a ceremonial drink of sake (Japanese rice wine).

Irish Medium-Term Economic Strategy 2014-2020: Enda Kenny, taoiseach/ prime minister, has arrived in Japan with Simon Coveney, agriculture minister, leading a trade mission but despite the spin, markets such as Japan and the big emerging markets will remain as niche opportunities.

There will be an announcement on a beef import deal in Tokyo and of contract signings and old deals that will be presented as new by the mainstream media at home - - Enterprise Ireland for example admitted to Finfacts in 2009 that an announcement that €100m in new orders that were claimed to have been secured by Irish companies during a visit to the US by Brian Cowan, then taoiseach, for the St. Patrick's Day holiday in March of that year, was an economy with the truth. The orders had been issued over the previous six months.

The Irish trade balance with Japan is ostensibly impressive: goods exports of €2.1bn in 2012 and imports of €798m while services exports were at €2.7bn and imports of €0.9bn. Total headline exporters were valued at €177bn (this total includes fake services exports: see Part 1).

Irish Medium-Term Economic Strategy 2014-2020: Exports to plunge by €50bn - Part 1

Irish Medium-Term Economic Strategy 2014-2020: FDI, SMEs, New Normal - Part 2

Irish Medium-Term Economic Strategy 2014-2020: Innovation and entrepreneurs? - - Part 3

Irish Medium-Term Economic Strategy 2014-2020: Change comes ever so slowly in Ireland -- Part 5

Irish Medium-Term Economic Strategy 2014-2020: Government says expect aspirations not strategy - - Part 6

Irish Medium-Term Economic Strategy 2014-2020: Government publishes brochure not strategy - Part 7

Irish Medium-Term Economic Strategy 2014-2020: Where will 300,000 net new jobs come from? - - Part 8

Most of the exports to Japan are by foreign-owned firms in Ireland and for example services exports likely include charges for tax avoidance purposes by Apple Ireland.

The indigenous exports are about 5% of the total.

Much of the commentary in Ireland on exports, including by lobby groups such as IBEC and the Irish Exporters Association, is from people who  have no idea how challenging it generally is to develop overseas markets.

Even where competitiveness improves, there is no magic formula for success. For
indigenous firms, food is the one sector where there is a potential for durable advantage.

There are few sectors in international trade without intense competition .

The UK has experienced a more than one-fifth depreciation in sterling since 2007 but services exports have been flat in real terms since 2008 while goods exports have risen by just 5%.

As for Irish data, while job numbers in both the foreign-owned and indigenous internationally tradeable sectors are below the 2000 level, total headline exports grew at current prices by 71% in the period 2000-2012 and at constant prices by 59%.

Be it Japan and South Korea coupled with leading emerging markets such as China, India, Brazil  and Indonesia, Ireland is not well known, if at all.

With almost 200m head of cattle, Brazil is the world’s leading beef exporter while in Asia, Australia and New Zealand  have long experience in providing European style foods.

Outside of big firms such as Glanbia, which has the resources to acquire local companies and have ready stock available, the typical Irish SME would be challenged to have the resources to build up a presence in markets where it would be necessary to have local staff. Besides, for tech companies, maintaining control of intellectual capital would be a risk area in a joint venture situation.

Irish originated exports to BRIC countries (Brazil, Russia. India and China from the original classification plus South Africa) are very low and are mainly made by the foreign-owned sector.

Exports to these five countries only accounted for less than 5% of total exports in 2012 with China accounting for the lion's share.

As most of these exports come foreign-owned firms, decisions on the destination of the exports are not generally 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,” 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, then Glanbia chief executive, and  Seán O’Driscoll, Glen Dimplex chief. “China is a long-haul, a slow-burn,” O’Driscoll said.

Freight rates to Asia favourable

Bloomberg reported last May that due to the imbalance of trade with China, about three-quarters of the 493,092 containers shipped to mainland China from major UK ports in 2011 were empty, according to data from Britain’s Department for Transport. The figure for the Port of Rotterdam in 2010 was about 40%, the most recent year for which it has calculations.

“You have a lot of empty boxes and so shipping lines are trying to fill them with whatever they can, so there’s a natural lower price for shipping out,” said Neil Davidson, a port adviser at Drewry Shipping Consultants Ltd. in London. “Any increase in export cargo would certainly help the shipping lines to try and address the freight rates on that leg.”

Maersk, the Danish shipping giant, said the average rate per TEU (20-foot container) shipped from Europe to Asia would rise to $495 this year from $389 in 2012, according to London-based Macquarie analyst Rob Joynson. In comparison, the Copenhagen-based company’s charge in the opposite direction would drop 15%  to $1,121 from $1,313, Joynson said. The company’s global average would fall 5.1% to $829.

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