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Don’t Be Put Off by Chinese Whispers – Demand is Unmet in Many Sectors

You could be forgiven for thinking China’s economy is running into trouble, if you believed some of what you read.

But a recent World Bank report paints a more accurate picture. It points to growth of over 6pc this year and next, a healthy inflation rate of over 2pc and employment market capacity. China is establishing, “a gradual shift to slower, more sustainable growth”, the Bank says.

So Irish businesses thinking of entering the world’s second largest economy should not be put off by Chinese whispers. There’s business to be done here, provided you are geared up for the challenges.

More than 300 million people have increasing purchasing power in China and a taste for western goods and services. And Chinese businesses have a growing appetite for technology, systems and infrastructure that cannot be satisfied domestically.

Food is Ireland’s major export to China but for the last few years, prospects have been developing for Irish businesses in: aviation, education, ICT, healthcare, industrial, financial services, clean technologies and agritech. Companies like Movidius, Arralis, Cubic Telecom and Aerogen have broken through in recent years and our educational institutions are also active in China.

Of course, that’s not to say that businesses outside those sectors cannot also succeed. A company with strong innovative technology addressing a real gap can do well.

Advice for Irish companies exporting to China

Generally, the Chinese have limited knowledge of Ireland. Nevertheless, the Irish Embassy and State agencies have been developing awareness of our capability across key sectors. Already, we are known for our high-quality food and dairy and are developing our reputation across the aforementioned sectors.

To avail of these opportunities, the wise business needs to prepare carefully and be patient in more ways than one. There are still a few hurdles to overcome.

For some sectors, ensuring compatibility or obtaining necessary licences can be slow – which is the way with many aspects of business here. Getting the first sale therefore takes time and can be resource consuming. Frequent visits – or better still, staff on the ground – are a must. That means having the finance to make a sustained commitment.

But if Irish companies offer something the Chinese cannot yet provide, they will be welcomed.

China’s private sector is more open with regard to the origin of a product or service. But the Chinese government tends to prefer local services in some sectors, notably pharmaceutical engineering, which requires foreign companies to partner with a local design firm.

The Chinese concern when considering smaller, foreign partners is responsiveness, flexibility and smoothness of communication compared to their Chinese counterparts. If you can assure your potential customer that these are not barriers, you will have a better chance of winning contracts.

Partnership can bring a number of crucial advantages; for instance, tapping into established networks, access to resources that can be critical in winning sales, or even enabling bidding for projects that are closed to foreign companies.

For example, the partnership between small Irish cleantech company MicroGen Biotech and a subsidiary of the largest cleantech conglomerate in China, CECEP Dadi, enabled the Irish firm apply their technology to (otherwise unreachable) state-funded contracts.

But just as a good partnership opens doors, bad ones close them. Do your due diligence. Before you commit to any partnership, be certain it matches your long-term objectives.

So my advice to anyone thinking China for export, is prepare then commit – you cannot flip-flop your way to success in China. Ensure you are adequately resourced, willing to invest time to get a return, and finally, be open to the cultural differences. The Chinese are quite an indirect people and remember that in business, relationships are often more important than words on a page.

David Byrne is Enterprise Ireland director for Greater China, and is based in Shanghai

This article originally appeared in the Sunday Independent

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