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Asia Economy Last Updated: Jun 24, 2014 - 6:58 AM


China is a big market but not crucial for Irish indigenous exporters
By Michael Hennigan, Finfacts founder and editor
Jun 23, 2014 - 2:47 AM

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

When Richard Nixon, US president, visited the Great Wall of China in 1972, he was reported to have remarked: "I think that you would have to conclude that this is a great wall." However, he was disappointed that the rest of his statement was generally ignored: "and it had to be built by a great people." Superlatives are easily used in respect of China and while it does offer opportunities in food and niche areas for Irish indigenous exporters, the armchair experts from afar can opine about getting a small piece of the market of 1.3bn, but 'It Ain't Easy' as the song says.

Intel, the US chip giant, is Israel's biggest exporter to China and Intel Ireland is likely Ireland's.

Richard Bruton, enterprise minister, is currently on a 5-day 3-city trade and investment mission to China and Korea.

41 Irish companies are participating in Enterprise Ireland's programme targeting increased exports to high-growth Asian market and the usual trade mission routine is that existing business will be presented as new in coming days.

Forty-one events will be held in Beijing, Shanghai and Seoul.

The Enterprise Department says in a statement: "This is Minister Bruton’s 21st trade/investment mission since taking office 40 months ago. This Government has doubled the number of trade missions since taking office, as part of its strategy to support increased exports and jobs."

Credit where it's due for activity but with the travelling, jobs announcements and photo opportunities, it's not surprising that there is little time for useful policy making.

Goods and services exports to China in 2012 accounted for about 2% of the headline value of total exports.

The indigenous component was about 6% of that 2%.

Services data is not yet available for 2013; goods exports were valued at €1.9bn down from €2.2bn in 2012.

In 2013 food and drinks exports of €10bn accounted for 5.7% of total Irish exports and exports to China amounted to €390m.

Goods exports to India in 2013 were at €280m compared with €270m to Greece.

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.

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 until recently chaired 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.

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