A whole new ball game as Ireland Inc is advised to look East
The Irish economy must make a paradigm shift to build stronger links to the trading powerhouse of the future
Apply any metric, use any yardstick, and compare any sector, but the answer will be the same: Asia is the future for global business.
This is the 'Asian Century' and the Irish economy must make a paradigm shift to capture a share of this boom. But this will require Irish firms to pivot away from a reliance on post-Brexit Britain and post-Trump America, and to focus their efforts more directly on this economic powerhouse of the future.
The enormity of the combined Chinese, Japanese and ASEAN market represents a "scale of opportunity" that is unprecedented, and one that can't be ignored, say Irish business leaders.
The figures are head-spinning. The Asian market represents in excess of two billion consumers - roughly 500 times the population of Ireland and four times that of the European Union. The region accounts for 40pc of global GDP and over 60pc of global consumers - with large and growing middle- class populations.
"The historical Irish economic model of focus on the western Anglophone world has served Ireland well to date but the new reality of geopolitical change (Brexit and the new US administration) demands a paradigm shift in mindset," said Martin Murray, executive director of Asia Matters, Ireland's only Asia-focused think tank for businesses.
China rightly receives most attention regarding its continued growth path: the nation's GDP grew from $218.5bn in 1978 to $11.2 trillion in 2016 - a 50-fold increase in less than 40 years, lifting more than 700 million people out of poverty in the process.
Murray also points to Japan, Malaysia, Korea, Vietnam, India and Indonesia as other powerhouse countries where Irish firms should be diversifying.
"Indonesia alone will build 15 new airports and 25 new ports by 2019," said Murray, who is also the honorary consul of Indonesia in Ireland.
Asia Matters is organising a two-day summit in Cork starting on Wednesday that will bring together Asian and Irish business leaders, policy makers and senior diplomats.
The think tank, which was founded in 2011, believes there are "massive opportunities" for trade between Ireland and Asia in the areas of agri-food, medical devices, project management, fintech, aviation leasing, and high-tech industry.
"Asia needs to invest $26 trillion in infrastructure by 2030. That is the scale of opportunity," said Murray.
China remains the Asian giant in terms of future growth potential, however.
Total trade across all sectors between Ireland and China was worth approximately €11bn in 2015, according to new figures from the Central Statistics Office, up from €8bn in 2014. It is Ireland's most important market in the region.
China is now Ireland's second-largest market for pork and dairy. Bord Bia predicts that Ireland will pass the €1bn mark in the next three years.
Trade flows in both directions continue to grow, and the last year has seen substantial Chinese investment in the Irish economy, most notably when Bohai Leasing acquired Avolon, and ICBC established the headquarters of its aircraft leasing division in the IFSC, cementing Dublin's reputation as a leading centre for the aircraft leasing industry.
Awareness of Ireland is increasing among Chinese investors. Ireland's Immigrant Investor Scheme, for example, saw a massive 500pc spike in applications last year, driven by a surge in demand from Chinese nationals.
Investors are granted residency in exchange for investing in Irish bonds, stocks, property and enterprises, or for making a large philanthropic gift or endowment.
Tourist numbers from China have also spiked. Tourism Ireland estimates that the number of Chinese visitors hit 50,000 in 2016, a year ahead of target. The all-island body also estimates that approximately 25,000 Indian visitors came to the island of Ireland in 2015, an increase of more than 25pc when compared with 2014.
The trade links between Ireland and China that have been cultivated over the past decade are beginning to reap rewards. Credit Suisse has opened a top-tier global trading floor in Dublin with a strong Asia focus from its prime services business in Europe.
Cork-based retail group Musgrave started exporting SuperValu products to China on St Patrick's Day this year after sealing a deal with internet giant Alibaba.
Musgrave, which controls the SuperValu and Centra brands here, has expanded its overseas operations by using Alibaba's Tmall ecommerce platform to sell SuperValu breakfast cereals, coffee, jam, biscuits and other products to consumers.
Getting onto to this platform could be a game-changer for Musgrave as Chinese consumers are increasingly purchasing overseas products through online shopping.
Alibaba is China's biggest e-commerce group, handling more transactions each year than eBay and Amazon combined. Jack Ma, its chairman, has pledged to serve two billion consumers around the world within 20 years.
Musgrave offers 40 own-brand products for sale on Tmall Global, selling directly to Chinese consumers. The company is the first Irish firm with a presence on the platform and has already clocked up 40,000 customers in just two months. Its top-selling products are SuperValu Wheat Biscuits and Signature Tastes Muesli.
It has a SuperValu storefront on the Tmall Global website. A large number of retailers such as Sainsbury's from the UK, Costco from the US, Spain's Dia, and Germany's Metro also have storefronts on the website.
"The global growth opportunity is certainly in China," said David O'Flynn, head of business development at Musgrave Group. "The region is an economic powerhouse that you really have to see to appreciate it. With the population growth and the economic growth at the moment, they are unquestionably the engine of the future.
"By 2022 over 550 million people in China will be considered middle class and this presents a huge opportunity for Ireland with our reputation for quality and authentic products from a clean environment.
"Working with Alibaba has allowed Musgrave to enter the Chinese market and we are developing our understanding of the Chinese consumer," he said. "As our understanding grows we plan to tailor our range of SuperValu own brand products and potentially expand the range to include products from other branded Irish suppliers."
Ireland's pre-eminence in the global air finance market has attracted Chinese interest too.
The number of Chinese lessors with Irish operations has increased considerably in recent years.
"All of the 'big four' Chinese state-owned commercial banks - Bank of China, China Construction Bank, ICBC and the Agricultural Bank of China - have aircraft-leasing operations in Ireland, as well as other major Chinese banks such as China Development Bank, China Merchants Bank, Bank of Communications, and also non-bank financial institutions such as Ping An Insurance.
Bank of China also opens its first Irish branch in Dublin next month, a major post-Brexit boost for the financial services sector. Ireland - which first established formal diplomatic relations with China in 1979 - was also recently approved for membership of the Chinese-led Asia Infrastructure Investment Bank, which has more than $100bn in capital at its disposal.
Ireland is only one of three EU countries that maintains a trade surplus with China.
Cork-based engineering firm PM Group - whose blue-chip clients include firms such as AstraZeneca, Jazz Pharmaceuticals, Google, Dell and Glanbia - generates an estimated €40m in revenues from its Asia operations.
The company has offices in Singapore and Shanghai.
Japan, a more mature developed economy which remains the world's third largest, is another key trading partner and the largest source of FDI into Ireland from Asia. Trade with Ireland was worth just under €10bn in 2015, up from €7bn in 2014. Japan is an important springboard to other Asian markets.
Another key achievement is that a growing number of Asian students are participating in Ireland's third-level education system. The number of Asian students attending HEA-funded Higher Education Institutes increased from 4,448 to 10,094 between 2010 and 2014/15. There were significant increases in students from Singapore, Malaysia and China.
Asia and South America have been the biggest driver of growth in the international student sector in recent years.
"The diverse markets of Asia present different challenges within different cultures, but there is expertise in Ireland to help with this," said Murray of Asia Matters.
"But all business is about partnership based on a foundation of mutual respect and trust," he said. "The cultural and time perspectives in Asia are different to the West but all companies understand and learn that 'you buy in your own language, you sell in the language of the customer'. Once trust is earned, and you build a relationship with Asian business people, the returns can be significant."
Just when it looked like clouds were drifting across Ireland Inc's relationship with US multinationals, and with Brexit bringing its own threats, the sun in the East may be starting to rise.
Sunday Indo Business