With a middle class of more than 400,000 million people, demand for Irish goods and services in China has surged in recent years and Ireland is now one of only three European countries that has a positive overall balance of trade with China, along with Finland and Germany.
Total trade in goods and services with China in 2016 was worth €12.9 billion. This is an increase of 14 per cent on 2015, when it was worth €1.13 billion. The affluent segment of the population is seeking out our gins and whiskeys, food products and baby formula as well as aircraft parts and hearing aids, to name but a few. Ireland also caters to 5,000 Chinese students, who come here to study.
The total merchandise trade in 2017 was worth €9.58 billion, which was an increase of 19 per cent (about €1.58 billion) compared to 2016. Total trade in services in 2016 was worth €4.89 billion. This was an increase of 10 per cent compared to 2015.
That produced a trade surplus of €4.56 billion.
China is the second-fastest-growing economy and the types of products and services the middle class is looking for are "well aligned" to what we have in Ireland, according to Tom Cusack, Enterprise Ireland director of Asia Pacific.
Last year, Ireland’s food and drink exports to China were valued at more than €900 million – double what they were in 2013, he points out.
“The largest exports are dairy and meat, dairy being the largest, particularly around infant formula. Outside of that, other exports include education – there are 5,000 Chinese students studying in Ireland – that is a growing market. Financial services, aviation, engineering services, digital, electronics, life sciences, pharma and agri-tech are all growth sectors,” Cusack says.
Asia Markets manager at Bord Bia James O’Donnell says that, “as the populations grow, particularly in the middle class, their demand for protein, be that dairy, meat or seafood grows. We are a major exporter of protein in the dairy, beef and seafood sectors, in some areas exporting over 80 per cent of what we produce. Asia is an obvious partner for Ireland in these sectors,” he says.
Three years ago, China formally lifted a ban on Irish beef exports imposed after the BSE crisis and in April this year Chinese food authorities approved several Irish meat plants to export beef to China again, opening up a burgeoning market.
“To compete in these markets in a premium position you need to be able to articulate impeccable food safety and traceability standards. EU food safety standards are seen as platinum standards and as a member of the EU we benefit strongly from the fact that not only do we implement these standards, we go even further with national standards,” says O’Donnell.
“Ireland recently secured access for Irish beef to China – this will play a significant part in assisting us in growing our exports. Additionally, there are opportunities to expand our dairy exports, particularly in servicing China’s growing bakery sector, which has a demand for butter, cream and cheese.”
So, what can be done to continue to grow this market and how can Irish companies carve out a piece of it?
“The market is growing at such a pace, this year it will be close to 7 per cent in China,” says Cusack. “For us, it’s about the realisable opportunities, so how many of our companies can take advantage of the opportunity? It’s about being prepared – it’s a market that takes time and resources. They are very driven by relationships and long-term relationships at that. You need to build credibility. It’s different than the west.”
Strong relationships
O’Donnell agrees that building strong relationships with key players is the first step to doing business. “The Chinese tend to develop strong relations before they have the confidence to trade. It’s very much a question of building trust. This is not something that can be achieved by flying over once a year to visit the market.”
In this regard, direct flights, which kicked off this summer from Dublin to Hong Kong and Beijing, will be invaluable as traders can now spend more time in the markets and less time getting there, Cusack says.
“Direct flights bring the two countries closer together and make it easier for exporters and importers to connect. Additionally, the route offers a more direct and faster way of getting chilled and live seafood to the market,” O’Donnell says.
Both offer sage advice when viewing the market: "Do your market research and work with local agencies like Tourism Ireland and Bord Bia. Segment your market – this is a country with 1.3 billion people, so focus on a region. Hong Kong is a good landing point and with the direct flight into Hong Kong it's a good place to start your reach," Cusack says.
“Patience is required and there are no quick wins in China. From a food perspective, it’s important to realise product tastes are different, as are packaging requirements. China has an ever-increasing need for protein as its middle class expands, be that meat, dairy or seafood. Ireland is a net exporter in these areas, so we are ideal partners,” O’Donnell adds.
Exploring new frontiers
Headquartered in Dublin, Novaerus has taken plasma technology to the next frontier by applying it to the air, killing harmful microorganisms. Úna Ní Raghallaigh, director of business development for EMEAA, talks about her experience in the China market.
When did you enter the China market?
We have been preparing to enter the China market for about one year and started shipments to China in June of this year.
How do you find trading with the Far East?
It is challenging and requires a lot of work to ensure you have the right partners in the region. Enterprise Ireland is an invaluable source of information and advice. They have excellent people in the region to help find suitable partners.
Do you travel there a lot?
We have been attending various trade shows and attending meetings with potential distributors. We have a sales director based in Singapore who manages the accounts in the region. It has been a great experience and an interesting project.
What benefits and opportunities have arisen from this?
The China market is an excellent opportunity due to scale and their awareness of air quality.
What is your advice to anyone considering entering these markets?
Take advantage of the excellent advice and expertise on offer from agencies like Enterprise Ireland.
Energetic solutions
Designed and manufactured in Galway, C&F Green Energy is the global leader in small and medium-sized wind turbines. Sean Ganley, C&F Green Energy's sales and marketing director, talks about his experience entering markets in the Far East.
Tell me about your business?
Our mission is to miniaturise megawatt wind technology and make it accessible and affordable to the farm, commercial, residential, and municipal sectors, across multiple distributed energy applications. C&F Green Energy is the market leader in Europe and Japan. We've installed more than 1,700 machines in these markets, with 60 million operational hours across the fleet.
How are you preparing to enter the China market?
We are studying the market opportunity in China at the moment, but we are about to enter the Taiwanese and Hong Kong markets.
How do you find trading in the Far East?
Trading with the Far East has been very positive for our company. Japan is the biggest market in the world right now for small and medium wind turbines, and we’ve become the outright market leaders there. We hope to replicate this in China and elsewhere in Asia.
Do you travel there a lot?
I travel a lot to Taiwan and Japan, with more markets coming on stream soon.
What benefits and opportunities will arise from this?
There are many opportunities arising in distributed energy and our class-leading wind turbines and scale enables us to quickly establish a strong foothold in new markets.
What is your advice to anyone considering entering these markets?
Asia is a wonderful region in which to do business and developing personal relationships with the best local partners as early as possible in each market is hugely important for Irish and EU exporters.