How investing in growth paid off for SF Engineering

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Visit almost any leading food company around the world and you are quite likely to find production line technology supplied by Irish firm SF Engineering.

Since its establishment in 1983, SF Engineering has been responsible for more than €250 million worth of food processing projects in 63 countries across Europe, North and South America, Russia, the Middle East, and Australia.

Central to the company’s success during that time has been its commitment to innovation and unwavering customer focus.

“We started off in the fish industry,” says CEO and founder, Seamus Farrell. “After that, we moved into the red meat sector and the broader food industry. This wasn’t part of a grand plan. It sort of happened accidently.”

It was a natural evolution, however, given the impact the company had already had on the fish sector. “What we did for the fish industry was futuristic,” he says. “At the time, it cost around €25 per tonne to process fish. We reduced that price to €4 per tonne by automating the process. That was our first big kill and set us up for future growth. After that, we moved into the Scottish and Scandinavian fish sectors – that was quite a natural move for us. We have never been export shy.”

Today, SF Engineering designs, manufactures and installs high-quality food production lines. Specific product lines include conveyors, packing solutions, platforms, weighing equipment, fat analysis, quality control, hygiene equipment, lifting and tipping equipment.

“Our process design expertise enables us to deliver highly efficient food production lines that reduce costs, increase capacity and require less maintenance”, says Farrell. “Our food technology experience covers a range of sectors, including meat, poultry, fish, bakery, dairy, fruit and veg, ready meals and pet food. We are experts in the precision engineering of complex engineering systems for the food sector and we provide a trustworthy support service to our clients who operate around the clock throughout the year.”

Expansion into international markets began in earnest in the late 1990s and this saw the company form a number of key strategic alliances with global partners. “We have formed great partnerships with companies, firstly the main one being Ishida, then following on from that CEIA,  Marelec and Eagle”, says Farrell. “They have been very important to us. They allow us to combine our complementary strengths in different areas to supply turnkey solutions to the global food industry.”

These partnerships have been an important source of new business referrals, but the company is active on international markets winning new orders. “You have to keep driving on,” says Farrell. “We have consistently invested in R&D over the years, with support from Enterprise Ireland and others. Back in 2009, when Irish businesses were severely challenged by the recession, we made a decision to invest in growth.”

That decision saw the acquisition of Opal FPS in St Ives, Cambridgeshire. “That helped us to grow our sales in the UK. It has also Brexit-proofed our business.”

Another key decision around that time was the opening of a new base in Prague, where the company’s Global Installation Team is based. The relationship with the Czech Republic dates back to the late 1990s.

“In the late 1990s and early 2000s we found that we were losing people to the building boom,” says Farrell. “That led to us employing a lot of people from the Czech Republic. We found them to be very good stainless steel fabricators. Without those guys we wouldn’t have been able to expand internationally as quickly as we did. The Global Installation Team is in transit, with all the team travelling around the world from project to project.”

Farrell is grateful to Enterprise Ireland and the other bodies which supported the company in its growth and development over the years. “They believed in the company and supported us, and that was very important.”

He believes export success begets further export success. “Having supplied all these blue chip companies around the world gives us the confidence to go out and win more business,” he says.

“We are also very lucky to come from a country with a very strong food industry, which has travelled well globally and has established a reputation for high quality. Our core values are to be as professional and competitive as possible. We are never going to be the cheapest, but we will add the most value and deliver the best and fastest return on investment to our customers. We are large enough to compete around the world but small enough to be flexible when it comes to delivering solutions for customers. We understand that retailers and consumers want more affordable, safer food on supermarket shelves, and they want very good quality. We provide the solutions that enable our customers to meet that demand.”

These core values have seen SF Engineering expand to employ 110 people in Ireland, the UK and Prague, with business growing strongly year on year. “We will have sales of €20 million this year,” Farrell concludes.

Learn how Enterprise Ireland enables companies to access R&D funding with our innovation supports.

Local Enterprise heroes

Following in the footsteps of Local Enterprise heroes

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For many companies, becoming an Enterprise Ireland client is a significant step on a journey that started at a regional level. Local Enterprise Offices throughout Ireland provide supports, advice and training to start-up companies and existing micro-enterprises of up to ten employees. It is in this environment that experience is gained and vital lessons are learned which allow companies to prepare for growth and to take their ambition global.

A recipe for successful growth to €21 million annual turnover

It was in 1993 that a young man from Clonakilty got in touch with his Local Enterprise Office (LEO) in West Cork to ask if they could help him turn his business idea into a reality. Diarmuid O’Sullivan wanted to produce traditional churn-made yogurts. He knew how to make yogurts but he didn’t have enough funding to get the venture off the ground.

“I had the idea but not enough money,” Diarmuid recalls. “I heard there was funding available from the Local Enterprise Office, so I contacted them and put in an application. The maximum support they could provide at the time was £50,000 and the LEO in Clonakilty was able to help me put my ideas into a business plan to help secure funding.

“I also received quite a lot of mentoring and coaching. That was all done at concept stage – I hadn’t even identified a production site – but the support meant that I was able to get Irish Yogurts up and running by March 1994.”

Diarmuid’s yogurt-making idea was a recipe for success. His company grew quickly and its products were soon on the shelves of Irish food shops and supermarkets.

“In one of those early years, we grew by about 78.5%. That brought its own challenges, with regard to working capital. The Local Enterprise Office suggested that I move onto Enterprise Ireland, where there were financial supports for fast-growing companies which were creating jobs.

“We hadn’t really focused on exports, not at that stage. That came after we started working with Enterprise Ireland. Our first export customer in the UK was Tesco.”

This progress was recognised in 1998, when Irish Yogurts was named winner of Ireland’s first ever National Enterprise Award. In just a few years, it had gone from being a bright idea with insufficient funding to becoming an award-winning food producer.

Today, Irish Yogurts employs 160 people at its Clonakilty base and sells to every major supermarket chain in the UK and Ireland. Its annual turnover has grown from €300,000 to €21 million, with exports accounting for 30% of their business.

“We appreciate the input of the Local Enterprise Office and Enterprise Ireland, who supported us and our staff every step of the way,” Diarmuid says. “We still work with them and avail of supports and advice. Enterprise Ireland is very much a part of our team.”

A roll of honour

Irish Yogurts is one of hundreds of companies from every corner of Ireland that have transferred from Local Enterprise Office support to become Enterprise Ireland clients. Last year, 80 companies made the move. In 2016, the figure was 40. The roll of honour includes 10 other former winners of the National Enterprise Awards:

It is a track record that the Local Enterprise Offices are proud of. Oisín Geoghegan, chair of the network of Local Enterprise Offices, said, “It’s one of our targets to transfer companies to Enterprise Ireland – it’s progression. Companies which transfer into Enterprise Ireland are companies with growth ambitions to be exporting and creating jobs, which is incredibly important, particularly for the regions. So we would see it as an indicator of success when a company moves on to Enterprise Ireland.”

Local expertise supporting global ambition

Engineering services provider Obelisk engaged with their Local Enterprise Office in Cavan, even before they set up the company in 1996. Four years later, Obelisk won the National Enterprise Award.

Founder director Colm Murphy said, “We were looking to capitalise on the growth of mobile phone usage by offering installation services for operators. The people in our LEO understood the idea that opportunity was coming down the track. That gave us the confidence that our idea was good and could to grow into something big.

“They had an incubator office which we were able to rent and provided grant aid for early employees. They also provided us with advice about how to set up a company, and other supports such as training and mentoring – there was a lot more to it than financial support.”

The support has been paying off ever since, Colm says. “Last year we turned over €27 million. Employee numbers are between 250 and 300 people. We’ve expanded to include infrastructure solutions for fixed telecoms and the energy sector in Ireland, the UK, and South Africa.

“We want to continue growing. We’re looking for further investment. Over the next two to three years, we’re looking to hit the €100 million mark in sales. Exports are currently a third of our turnover but we expect that to become a 50/50 split.”

So what part did being able to access business expertise and support at a local level play in the company’s success? “Back in 1996-97, we would have found it difficult to kick-off from a zero base,” Colm explains. “We were just a couple of guys with an idea, and sometimes going for funding and that kind of stuff can be daunting. But when you get the kind of support that we did from the Local Enterprise Office, that’s a massive kick start.

“I would recommend that any company should be in touch with their Local Enterprise Office. They’ve always been good at describing the product set they have and how they support you. If you don’t ask, you don’t get and if you’re not engaging with them then you won’t necessarily be aware of new supports that are on offer.”

Reassurance and support

The view that “if you don’t ask then you won’t get” is shared by John Lynch, Chief Technology Officer of Acutrace. The Dublin tech company provides software and hardware which allows companies to control and monitor their energy usage. They count the likes of Google, Twitter and IBM among their customers.

Founded in 2015, Acutrace wasted no time in contacting their Local Enterprise Office in South Dublin. John says, “We reached out to the Local Enterprise Office immediately and they were brilliant. They gave us an employment grants and we managed to employ two engineers under that scheme. Within the first three months, we were exporting to London.

The company was growing quickly and the Local Enterprise Office was instrumental in steering Acutrace towards Enterprise Ireland’s High Potential Start-up (HPSU) programme.

John says, “Once we learned the criteria for the HPSU, we used that as our yardstick to reach for. We knew we had to have significant exports, we knew we had to have a scalable product that would generate employment and we needed to have the magic number of a turnover of €1 million, so it was a good objective to hit and we exceeded the target that year.

“By the end of 2016, we had turned over more than €1.5 million and we were exporting 40% of a product that was created in Ireland to the UK.”

The advice, professional support and reassurance they received has left a lasting impression on John and Acutrace.

He says, “I’m coming off the back of 20 years in the industry and so is my business partner Aidan, but it’s a little bit different when it’s your own enterprise – the risks are higher and there’s an isolation you feel, it can be profound. Then you engage with your Local Enterprise Office and you feel part of something, that you’re being protected or mentored.

“There’s funding and that’s important, but it’s also having that extra bit of confidence that there’s someone else behind you who has your back, that if you are going to create employment, well there’s someone there who’s grateful for that and they’re helping you, and they’re encouraging you.”

“You might be destined for Enterprise Ireland but until you hit that criteria the LEOs will mentor you and steer you in the right direction.”

Working hand in hand

That direction involves advice and supports, which evolve and change to meet the needs of encouraging start-up companies and other micro enterprises of ten or fewer employees, says Oisín Geoghegan.

“We provide a very broad range of supports – initial business advice, information and guidance, training and mentoring, and financial supports such as feasibility, priming or expansion grants. It can include money to employ people or towards marketing costs, business development, and so on.

“We also point entrepreneurs and companies in the direction of other supports that are available, such as the New Frontiers incubation programme and Innovation Vouchers from other agencies such as Failte Ireland, Intreo, Bord Bia and Microfinance Ireland.”

“For companies with strong growth ambitions, we work hand in hand with Enterprise Ireland on their journey and ensure that they make that contact at an appropriate stage so their development continues to be supported.”

Egypt

Egypt: the original export market

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Mike Hogan, Manager for Middle East & North Africa at Enterprise Ireland, explains why the world’s oldest export market should be on the horizon of Irish exporters.

In an era in which there is much talk of emerging markets for Irish exporters, Egypt can claim to be one of the oldest, if not the oldest, export markets in the world. The pharaohs of ancient Egypt governed a nation that imported huge quantities of wood, metal and precious stones from neighbouring kingdoms. Today, as throughout history, Egypt is a key geographical gateway with a land connection to the continent of Africa and the Middle East and, through the Suez Canal, the sea lanes of Asia and the Mediterranean.

Ireland’s trading relationship with Egypt is more recent, developing in the 1970s and 1980s with the export of cattle and beef, evolving into a market worth over €100 million for exporters today. Much of this trade collapsed in the aftermath of the Arab Spring and the period of political turmoil that followed. However, with the devaluation of the Egyptian Pound in late 2016, and a sustained period of economic liberalisation, Egypt’s economy rebounded. It is now growing at 5.5%, the fastest in the Arab world. Egypt is attracting renewed interest, with over 30 Enterprise Ireland-supported companies attending a ‘Doing Business in Egypt’ event in Dublin on April 16th. Clearly, there is optimism that Ireland can reclaim lost exports and widen its portfolio into sectors such as food products, ICT, life sciences, education services, travel tech and agritech.

Cork’s Mervue Laboratories are active in the Egyptian animal nutrition market, aiming to double exports over the next three years. Commercial Director, William Twomey, says, “Egypt has massive potential and must be a target market for any serious animal health company. It can also be used as a gateway to surrounding markets, which is very attractive.”

While Irish eyes tend to focus on South Africa and Nigeria as Africa’s biggest economies, Egypt is the continent’s second-largest economy. This status was buoyed by the discovery of the offshore Zohr natural gas ‘superfield’ in 2015. Egypt’s economy should be understood within a wider context. It is a lower middle-income country akin to Vietnam and Indonesia, with a population of over 100 million. Unique in the Middle East, it has a sophisticated industrial base producing white goods, textiles, industrial goods, electronics and components, and an emerging automotive sector that includes among its exports London’s iconic red double-decker buses, but with hybrid engines. Within these sectors lie strong opportunities for Ireland’s industrial sub-supply and services sectors. Openet and Openmind Networks from Ireland’s telecoms cluster already sell to Egyptian mobile operators, and with Egyptians spending USD $6.1 billion per annum on media and recreation, there is scope to expand our digital content solutions.

Egypt maintains a strong position in the fast-growing global halal pharmaceuticals and cosmetics sector. It is the fourth-largest Muslim consumer food market, behind Indonesia, Turkey, and Pakistan. Egypt has already been targeted as a key market for Irish dairy product exports, and the rapid expansion of its retail sector, including large scale shopping malls and the emergence of hyperstore operators such as Carrefour, will potentially generate opportunities for the wider Irish food sector.

Thomas Cook brought its first tourists to Egypt in 1869. The country’s rich cultural heritage and beach resorts contributed a record 19.5% of GDP in 2007. Since then, its tourist sector has suffered shocks, due to terrorist attacks and the downing of a Russian Metrojet airliner in 2015. That triggered the cancellation of flights from key markets such as Russia and the UK. As the security situation stabilises, tourism has started to recover, with revenues jumping 123% in 2017, and higher-spending German and Russian tourists set to return in 2018.  The tourism sector is rife for modernisation, presenting a clear opportunity for the Irish tourism and travel tech cluster to assist Egypt to develop and reposition its product. Enterprise Ireland’s own travel plans include sectoral visits for Irish companies in autumn 2018 with the goal of re-establishing Egypt as an important Irish export destination.

This article was originally published in the Sunday Independent.

If you’re exporting internationally and interested in researching new markets learn more about the Market Discovery Fund.

Ireland is becoming an agritech island

How Ireland is becoming an agritech island

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James Maloney, a senior regional development executive at Enterprise Ireland, outlines how innovative Irish agritech companies are helping to combat some of the world’s toughest challenges.

One of the biggest challenges facing the world is how to feed a population set to grow from today’s 7.6 billion to 8.6 billion by 2030, 9.8 billion by 2050, and 11.2 billion by 2100. Irish agritech companies will play a key role in helping to meet that challenge.

Enterprise Ireland recently announced two initiatives that are part of its ongoing work to support agritech companies to innovate and win in international markets, from start-up stage to the point at which they become established international players.

Last month, Minister for Business, Enterprise and Innovation Heather Humphreys officially encouraged Irish agritech and agricultural companies to apply for the Innovation Arena Awards that will be announced during the National Ploughing Championships in Screggan in September.

The Enterprise Ireland Innovation Arena is a unique platform in which Irish companies display pioneering developments, with more than 100 international buyers attending in 2017. Last year’s competition attracted 200 entries, 69 of which were shortlisted as finalist exhibitors at the Innovation Arena.

Enterprise Ireland also recently funded the development of a dedicated agritech R&D facility in Tralee to further support agritech innovation.

The word ‘agritech’ tends to conjure images of drones patrolling farms, autonomous tractors and harvesters, robotic milkers, and other futuristic technologies. While those images are accurate, the most important agritech developments will be those that support sustainability and allow us to do more with less, as we continue to produce high-quality food for the world’s rapidly growing population.

Ireland might be a relatively small agricultural producer globally but what we do in the sector, we do extremely well. Ireland has the highest standard of agricultural education in Europe and has established a well-deserved reputation for innovation across the entire agricultural value chain.

Irish agri-engineering exports are now worth a quarter of a billion euro annually to the Irish economy. Machinery produced by Irish manufacturers harvests grass throughout the world and is responsible for feeding cattle on every continent.

With regard to food quality, Ireland competes with the very best internationally, thanks to extremely low rates of antibiotic usage, no hormone usage, very high standards of animal welfare, and full traceability from fork to farm.

None of these developments occurred by accident. Striking the right balance between increased production and high standards of animal welfare and sustainability requires a combination of best farming practice and the kinds of innovative agricultural technologies Irish companies are becoming increasingly known for developing.

Irish companies like Abbey Machinery, McHale and Hi-Spec are already world leaders in the specialised production of machinery, such as mixer wagons for feeding cattle, high-quality baling and wrapping systems, slurry spreaders, agricultural trailers, and handling equipment for grain.

Dairymaster also leads the way internationally, with significant investments in in-house R&D and a strong customer focus. The company’s latest innovation is a smartphone app that allows farmers to remotely control their milk tank.

Another innovative Irish business, Moocall, has developed a collar worn by bulls that detects which cows are in heat and monitors the bull’s activity.

Keenan Systems’ InTouch service uses telematics to connect its mixer wagons in the field to a data centre in Ireland’s County Carlow, allowing for remote adjustment of feed mixes to optimise yield or milk production.

Equilume’s technology, which was originally developed to manage fertility in horses, has been proven to boost milk yields by up to 9% per annum.

In another area entirely, MagGrow has developed a technology which magnetises the droplets from a sprayer, causing them to bind better with plants, thereby reducing the amount of liquid required.

The need for change in traditional agricultural systems is being driven by a range of powerful forces, including pesticide reduction initiatives, the need to reduce antibiotic use, increased scarcity of water, and the challenge to provide sustainable food production systems for the growing world population. As Irish companies develop innovative solutions to meet these challenges, the world is taking notice.

This article was originally published in the Sunday Independent.

Record food exports driven by Irish innovation

Record food exports driven by Irish innovation

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Orla Battersby, divisional manager for food at Enterprise Ireland, outlines the factors driving the rapid growth of the country’s largest indigenous sector.

The value of Irish food, drink and horticulture exports increased by 13% in 2017, to reach €12.6 billion, a new record. This stellar performance marked the eighth successive year of growth for Ireland’s largest indigenous sector.

While many factors have played a role in the achievement, chief among them is the ingenuity and innovative capacity of Irish food companies. Successful exporters in this most competitive of sectors must by their nature be innovative. They must be capable of extremely rapid responses to changes in consumer demand, while at the same time remaining capable of meeting the exacting requirements of grocery multiples in relation to price, quality, and new product development.

At its simplest, innovation in food and beverage products is the market-led development of new or improved products to meet changing customer needs. But innovation is actually much more multifaceted than that. It is about embracing a culture throughout the whole business. Innovation means taking a customer-centric approach to all aspects of the company, from who is hired through to technology and processes utilised, the packaging of products and the way they are branded and sold.

Enterprise Ireland supports food and beverage innovation in numerous ways and has assisted approximately 100 significant in-company research, development and innovation projects for clients across the sector since 2013. These projects range from new, more efficient and lower-cost manufacturing processes to product reformulation and new product development, with the aim of breaking into new customer segments and markets.

Among the innovative companies supported by Enterprise Ireland is Keohanes Seafoods of Cork. They realised that many consumers did not like the hassle of preparing and cooking fish and were the first company in Ireland to produce a microwaveable skin film range of products, which means the consumer never has to touch the product. Keohanes used a packaging technology designed for other purposes and it has basically brought fish from the fish counter to the chilled convenience aisle.

Another Cork company, Dairy Concepts, manufactures hand-held nutritious dairy snacks for children, using patented milk casein technology. The key competitive differentiator of its Fruchee product is that it contains 40pc less sugar along with higher calcium, protein and Vitamin D than competitors.

Dublin-based Nuritas, led by Dr Nora Khaldi, is developing technology that combines artificial intelligence and DNA analysis to discover the health benefits of peptides in natural foods and is a great example of a food start-up company that Enterprise Ireland has worked with at feasibility stage and is now supporting to scale.

Large companies in the dairy, beverage and meat processing sectors are also highly innovative, as their export success demonstrates. In fact, the 2017 export performance was driven by a 19% leap in dairy exports to over €4 billion, and a 5% increase in sales of Irish beef. Dairy now accounts for one-third of all food and drink exports, with beef representing one-fifth of all exports at almost €2.5 billion.

There is clear evidence to demonstrate the role innovation has played in this success. Enterprise Ireland carried out a survey in 2016 which showed that firms who availed of innovation supports from us reported an average 67% growth in global sales.

These supports take many forms. The Agile Innovation Fund gives companies support of up to 50% of eligible project expenditure up to €300,000, which is very useful for projects which must happen rapidly. The approval process is fast tracked, enabling companies to get projects delivered quickly. In addition to in-company R&D, Enterprise Ireland also supports companies in collaborative innovation projects, helping them to access the insights of researchers working across Ireland’s third-level sector, and European expertise and funding under the EU Horizon 2020 programme.

But we cannot allow ourselves to become complacent when it comes to innovation. Food companies throughout Europe and beyond are competing for the same markets, while Brexit will create new challenges for Irish companies. A continued laser-like focus on innovation will be required in order to maintain and add to our success on international markets.

This article was originally published in the Sunday Independent.

Fuelling company growth AsiaPac

Fuelling your company’s growth in AsiaPac

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The size of Asia reflects the scale of the opportunity it presents to Irish businesses, delegates at Routes to Growth AsiaPac, a major conference held in Dublin’s Aviva Stadium, heard recently.

“Three of the four top economies of the world are in Asia. It accounts for half the world’s population and a growing middle class,” said Julie Sinnamon, chief executive of Enterprise Ireland, which organised the event.

“China, India and the ASEAN countries are showing more than double global growth rates, so they are not alone large markets but ones have massive growth within them. And ASEAN is one of the world’s largest economic zones, with a population greater than the EU and economic growth of double the EU’s.”

The AsiaPac region also includes Australia, remarkable for enjoying more than 25 years of continuous growth.

The region offers particular opportunities right now for Irish businesses in sectors such as aviation, financial services, international education and construction & engineering.

But there are challenges too.

“With Asia, you can’t go in, do a bit of business, and come home. You have to be really committed to the market. You need a balance sheet that can withstand the investment and you need an understanding of the culture,” she said.

There are logistical challenges related to distance, cost, lack of relationships and the need for a local presence. It’s not a homogenous block either. “Each of these countries has different culture that we need to recognise and appreciate. The Western mentality – believing we have the answer to your problem – doesn’t go down well in AsiaPac, you have to listen, and have patience.”

Be aware of distinct operational requirements in markets such as China, said MJ Guan, a partner at the China Ireland Growth Technology Fund.

It isn’t a question of simply translating your marketing materials but of doing first hand, on the ground market research for yourself. “Don’t just rely on third party agents,” he said.

Localisation requires much more than translation too, as companies such as Google and Uber have discovered. To assume that just because your business is successful in the Western world it will be successful in the AsiaPac region is a mistake.

Trip wires can include not finding out if you can get a direct licence to operate in your sector, and, if not, partnering with a local business. If you sell B2B get your “China Pricing” right. “In China we like to ask for a high discount from a vendor. If you don’t give a discount the customer may think you are not serious about the business,” he said.

Guan was at the event representing the second China Ireland Growth Technology Fund, which is newly launched. It aims to support Irish companies looking to access the Chinese market, as well as Chinese firms looking to use Ireland as a European base.

Announced in March 2018 by Ireland’s sovereign wealth fund, the Ireland Strategic Investment Fund (ISIF), and its Chinese equivalent, the CIC Capital Corporation (CIC Capital), the Euro 150 million fund is a successor to the now fully-invested China Ireland Technology Growth Fund launched in 2014.

That USD 100 million fund supported six Irish technology firms expanding into China, including Irish-founded Movidius, the global leader in machine vision technology that was subsequently acquired by Intel.

The new Fund will once again be co-managed by Dublin-based Atlantic Bridge and Beijing-based WestSummit Capital.

The sectors it is open to applications from are quite wide, said Elaine Coughlan, founding managing partner of Atlantic Bridge. They include agri-tech and med-tech, enterprise and consumer software, semi conductors and industry-4.0 “all the things China wants access to and wants to buy,” she said.

Even where a company is not ready for investment, the Fund can help applicants make contacts and start building crucial relationships.

“We look at thousands of companies on an annual basis and with a lot of them we say ‘You are not ready yet, here are some contacts, here are some relationships, do a little more work, a little more market research, and come back to us’” said Coughlan.

“It’s very rare we say ‘no, never’. We say ‘not now, come back to us’, and give them some pointers to think about in terms of execution. We’ve a portfolio now of companies – of CEOs, VPs (vice presidents) and BDs (business development executives) – who are in China and who can share that knowledge with other Irish companies.”

One company the Fund has already invested in is indoor positioning systems company Decawave, which currently has five people based in China.

“You need to get out there on the ground so use Enterprise Ireland and the Department of Foreign Affairs and all the resources open to you. There is always someone who can give you introductions,” said Paul Costigan, chief sales and marketing officer at Decawave.

Its technology is based around “really precise GPS that works indoors, with very many applications for robotics, drones, AI, automation and smart factories, all the areas that China is so far ahead in,” said Costigan. In fact, “China already accounts for 60% of our revenues and we haven’t even got going yet.”

US flag - exporting to the US

Top 10 Tips for Exporting to The USA

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Ireland enjoys a unique advantage in trading with the US because of our deep historical links. Relations between the two governments are exceptional; and cooperation at an institutional level is excellent including in areas such as research, innovation and education.

There is, without doubt, huge opportunity in the US. Around 700 Enterprise Ireland client companies are exporting there and companies like Aerogen, Fenergo, Cylon Controls, Candidate Manager and Rubicoin have set up offices and accelerated exports in the past 24 months. To date, over 20 clients have won contracts worth over €500,000.

1. Preparation

Before entering the US market, extensive research at home is strongly advised. Make contact with State agencies, relevant support organisations and companies who currently export to the US, if possible. Targeting the US usually requires additional financial and human resources, so to keep costs and operations manageable in such as geographically big country, first-time entrants are advised to segment the market and target a particular region or state. Give careful consideration to the resources needed to serve the selected market, for instance, will the operation use a direct or indirect sales channel. Some companies hire locally and others (often in the early stages) put a C-level member of the team in the market for a short period to get things off the ground.

2. Legal

Corporate – Confirm your corporate structure. Typically setting up a US subsidiary makes sense both for tax and liability reasons. Your US subsidiary also will need to appoint a registered agent, and “qualify to do business” in every state in which you have an office or similar presence.

Intellectual Property – Address US trademark issues defensively (confirming that no one else has prior registered or unregistered rights in respect of name and key brands); and offensively (by filing a US trademark application). Patent issues may need addressed depending on the business.

Contractual Terms and Conditions – These must be converted to the laws of a US state, for legal and commercial reasons.

Employment – Get professional employment advice locally. Most US employees do not have employment contracts but employers are bound by offer-letter terms, employee manuals and other undertakings. Also, ensure confidentiality and IP assignment agreements with all employees are established.

3. Tax Structuring and Compliance

Establish appropriate arm’s-length arrangements between the Irish parent and US subsidiary to separate taxable income. This is particularly important because US corporate tax rates (federal and state), totalling about 40% are typically three times the level in Ireland. Have appropriate compliance procedures in place to address federal and state corporate income tax, as well as other potentially relevant tax regimes (sales tax, personal property tax, etc.), particularly at the state and local level.

4. Trends

US import trends indicate high potential for Irish exporters. Meat imports were valued at €9.4bn which was the second fastest-growing import; while dairy went up over 40% to €2.8 billion. The US also imports pharmaceuticals worth $86.1 billion; medical and technical equipment worth $78.3 billion and organic chemicals worth $52.1 billion. These are all among the top 10 Irish exports by category. It is also a big importer in sectors such as aviation and aerospace, mechanical and electronic equipment, insurance and ICT services – all of which are growing in Ireland.

5. Banking

It can be difficult for a non-US company to set up banking for its US subsidiary. Some banks are particularly focused on banking high-growth companies on a trans-Atlantic basis, which can help ease the process.

6. Immigration

Most Irish companies exporting to the US find it critical to establish a presence in the market. This is particularly true in software and high-tech. An estimated 65% of Irish exporters to the US have a full-time presence, ranging from a single-person sales office to manufacturing operations with thousands of employees. Route-to-market decisions are crucial and the role of agents and distributors cannot be ignored. Buyers rarely purchase directly from manufacturers, particularly those from overseas. So fulfilment centres have become increasingly important in the supply-chain, especially since the growth of e-business. This approach is better suited to non-perishable items and consumer products.

7. Insurance

The US is a high-risk environment. Get an insurance broker with trans-Atlantic experience to advise on types of cover, terms and limits.

8. Recruitment

The most difficult aspect of setting up in the US is finding the right people. Obtaining recommendations from trusted people including investors and advisors is often the best way. Otherwise get professional support (especially with sales people). Consider outsourcing for book-keeping, employee tax withholding, HR and mandatory employee insurance and benefits, and similar matters. Also note that visas permitting Irish personnel deployed in the US to work are needed. Allow three to four months to sort this out.

9. Offices

Get professional advice on office space and other properties such as co-working spaces (like WeWork), accommodation offices (like Regus) or renting an individual premises.

10. Incentives and Supports

US supports should not be overlooked. Federal, state and local development agencies and international chambers of commerce can provide very useful support. State and local incentives for investment and job creation also may be available.

 

Enterprise Ireland companies with Global Ambition

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Attendees at Enterprise Ireland‘s International Markets Week heard from established Irish companies successfully selling globally and had the opportunity for meetings with Market Advisors, available to provide expertise on exporting to new markets.

If you are attending IMW please consider the following:

  • In which markets are you successful and how have you achieved this success?
  • What is your business/value proposition?
  • Why have you decided to target this new market?
  • What market validation have you carried out and what evidence do you have for a demand for your product / service?

Contact the International Markets team at International Markets Week for further information.

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

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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

An Opportunity as Well as a Rival: New Zealand’s Agriculture Sector

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It seems counterintuitive that an important market for Irish agriculture could also be a major competitor. But despite the great distance that separates them, a lucrative commercial relationship exists between Ireland and New Zealand.

The two countries share strong historical links, innumerable social and cultural ties and, in many cases, deep personal connections that help business relationships.

With a long history in farming, agribusiness has emerged as a key pillar of Irish innovation and today several of our companies are world leaders in their specialised fields.

So it should come as no surprise that New Zealand, a country in which agriculture accounts for about 60pc of exports and is the largest part of the tradeable economy, should be a market for specialist Irish equipment.

New Zealanders are hugely impressed with the inventiveness of Irish agribusiness and the supports around it such as the Irish Cattle Breeding Federation, which provides breeding information to the dairy and beef industries.

Agri Innovation

A drive for research and innovation has long been a feature of the sector in Ireland, with robust investments in education, animal health, farm equipment and management technology, seed production and plant genetics. These offerings are greatly in demand in New Zealand’s arable farming and livestock industry in particular. Ireland’s presence for the tenth consecutive year at the recent New Zealand National Fieldays – akin to the Ploughing Championships – is testament to the importance of this market for Irish agribusiness.

Doing Business

National Fieldays provides a platform for companies to meet thousands of potential customers from all over New Zealand. The connections made during the week provide valuable insights into the needs of the local market. This year, five Irish companies exhibited on the Ireland stand, with a further 11 displaying independently or with local partners.

Exhibits included electronic calving sensor Moocall and Cross Agricultural’s beet processing machinery.

Irish manufacturers have built up a strong reputation for high-quality, reliable machinery at a competitive price. Balers from McHale, mulchers from Malone, mixer wagons from Keenan, tankers from Abbey and wrappers from Tanco are well known.

Attachments also have appeal. Dromone hitches, Brian Scott buckets and ProDig grabs and forks are building good presences here. Tractor-powered and towed implements in particular have proven their ability to withstand the demands of a New Zealand farm.

Irish companies specialising in facilities are also doing well. Dairymaster has developed world-class dairy equipment for any parlour, Kingspan supply insulation of all specifications and Crowley Engineering offer turn-key solutions for dry bulk-handling industries such as feed milling and grain storage.

Products developed for Irish agriculture are generally a good fit here. Farm sizes are similar, both industries are pastoral-based, premium-quality orientated and highly export-focused. And like Ireland, New Zealand is moving away from bulk commodity exports to more consumer-oriented, processed output.

Innovation is key to the future development of the industry in both countries and with no subsidies, New Zealand farmers are highly business-focused and open to anything that makes their operations more efficient.

So Irish exporters will get a good hearing here. The most successful ones have built long-lasting relationships with distributors with the local networks and necessary resources to cover the market. Separate entry strategies for the North and South islands should be considered.

Delivering good after-sales service is essential for repeat business. Frontline support like maintenance and breakdowns is best handled locally, while more complex issues around software or technology can be supported from Ireland.

Opportunities for collaboration between Ireland and New Zealand – from research, advice, inputs, production and final product -unquestionably exist in this healthy and stable economy. As the Maori saying goes, Naku te rourou nau te rourou ka ora ai te iwi (“With your basket and my basket, the people will live”).

Mary Kinnane is Enterprise Ireland director for Australia/New Zealand.

This article originally appeared in the Sunday Independent.

Winning business in Brazil

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Both time and commitment are key to success in winning business in Brazil where the tax system is complicated and protectionist. Advice from Enterprise Ireland’s Latin America team can help smooth the path to success.

To learn more about Enterprise Ireland supports and for further information on doing business in Brazil click here