Asian dream takes flight for Irish exporters eyeing new growth markets
New air links and the scrapping of trade barriers means Irish firms have direct access to two economic powerhouses in the East, writes Simon Rowe
'If you sit on top of a cold stone for three years it becomes warm," a Japanese proverb goes. "It's a very Japanese way of saying that anything worthwhile takes a minimum of three years, to build trust and to nurture relations," says Martin Murray, executive director of Asia Matters, Ireland's only Asia-focused think tank for businesses.
After three years of warming stones in Asia, Ireland's Inc's efforts are paying off.
Recent developments in air connectivity and the scrapping of trade barriers means that Irish exporters now have direct access to the two biggest Asian economic powerhouses.
The big "game changer" has been the launch of a new direct air link to Hong Kong.
Cathay Pacific has announced that from next June it will operate a new direct Dublin-Hong Kong service four times per week. The year-round service will be Dublin Airport's first direct route to the Asia-Pacific region.
Plans for new direct flights to mainland China are also nearing take-off. Chinese carrier Hainan Airlines is preparing to launch a Dublin-Beijing direct flight. Hainan is China's fourth-largest carrier and is owned by the huge HNA conglomerate, which also owns Dublin-based aircraft leasing firm Avolon, and has stakes in 20 airlines and nine airports in China.
In addition to progress on air connectivity, a new EU-Japan trade deal, which took more than three years to conclude, has scrapped barriers to EU farming products and in return the EU will further open its market to the Japanese car industry.
Tariffs will also be eliminated on medical devices and pharmaceutical products, industries which have significant presences in Ireland.
The launch of direct flights to Tokyo can't be too far off away either, the Tanaiste and Enterprise Minister Frances Fitzgerald signalled during a recent five-day joint Enterprise Ireland/IDA Ireland trade mission to Singapore and Japan.
These developments are a "game changer", said Murray. "Direct flights from Ireland to Asia-Pacific mean that Ireland stands on the threshold of a new 'third wave' of global trade relations".
The Irish economy is poised to make a paradigm shift, pivoting away from a reliance on post-Brexit Britain and post-Trump America, and is turning eastwards, he believes.
Murray is urging Irish businesses and government officials to seize the opportunities from what he calls the 'Asian Century'.
His pitch is simple: 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.
Home to two of the world's three largest economies in China and Japan, the Asia-Pacific market represents in excess of two billion consumers - roughly 500 times the population of Ireland and four times that of the EU. The region accounts for 40pc of global GDP and over 60pc of global consumers - with large and growing middle-class populations.
Although China rightly receives most attention regarding its growth potential, 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.
Singapore is proving to be a lucrative market for Irish firms, with the likes of PM Group and CRH already well established there.
Cavan-based insulation giant Kingspan has just opened an office in Singapore and expects the Asia-Pacific region to be a focus for future growth, with sales on track to double to €20m this year.
Combilift, an Irish engineering company based in Co Monaghan, signed a contract with Paves Asia to launch its new "straddle carrier" product in Asia.
Dublin-based Novaerus signed a partnership agreement with Singapore-based biotech firm Axxessbio and launched its first patented technology for airborne infection control which kills viruses and bacteria.
Ireland's tourism chiefs are equally alert to the opportunities in Asia.
Niall Gibbons, ceo of Tourism Ireland, said the new Cathay Pacific service "will help to further open up important tourism and business opportunities for Ireland in Hong Kong and China, in Australia and New Zealand and across the Asia-Pacific region".
"It's good news for Irish tourism as we plan for 2018 and beyond, to continue the roll-out of our market diversification strategy in light of the UK's decision to exit the EU. As an island, the importance of air and sea access cannot be overstated - they are critical to achieving growth in visitor numbers."
Tourism Ireland has already seen a big increase in Chinese visitors this year, with numbers as high as 70,000 - up from a forecasted 50,000.
In 2016, the number of outbound tourists from China reached 122 million, and they spent almost $110bn in overseas destinations.
Last year, the island of Ireland welcomed approximately 20,000 Japanese visitors. So-called 'screen tourism', which highlights the island's connection with Star Wars and Game of Thrones, helped raise the country's tourism profile in Japan.
Air access is critical for economic development. This is particularly the case for Ireland as a small open economy positioned on the western tip of Europe.
A 2015 economic impact study of Dublin Airport, for example, demonstrated a clear linkage between connectivity and tourism, trade, FDI and GDP growth.
The report by consultants InterVistas found that the value of exports with well-connected countries is five to six times that of trade with poorly-connected countries. Between 2002 and 2012, the value of exports to well-connected countries increased by 14pc, but declined by 11pc to poorly connected countries.
Using data from the past 10-15 years, the report demonstrated a clear linkage between air connectivity and tourism, trade, FDI and GDP growth.
"We've got to go where the numbers are. The numbers are in Asia," said Murray, who is hosting a one-day summit 'Going global faster: the new Asia reality' in Dublin on November 7. The conference will bring together Asian and Irish business leaders, policy makers and senior diplomats.
"The scale of opportunity in Asia is massive. It's time for Ireland to have a third wave of global trade."
Direct air access means that Irish food exporters can now get fresh produce to Hong Kong overnight, said Murray.
"Hong Kong is one hour by train from Shenzhen, the Silicon Valley of China," he pointed out.
"About 60pc of outbound investment coming out of China going anywhere in the world comes through Hong Kong, and that now has a direct air link to Ireland. That must make Irish firms think: 'What else is possible?"
In a further boost to Irish food producers, Bord Bia has secured a contract to promote EU beef and lamb in China, Japan and Hong Kong in a €3.75m campaign. This is made up of €3m in EU funding and €750,000 from Bord Bia.
Bord Bia's leading role in the campaign comes at a time when the Irish food industry is looking for opportunities to diversify into new and emerging markets in response to the issue of Brexit.
Two Bord Bia trade missions to Japan and South Korea are scheduled for next month as part of a major market diversification drive.
The Global Asia Matters Business Summit, held in association with The Department of Business, Enterprise and Innovation, will take place on November 8 at The Shelbourne Hotel in Dublin. Gold sponsors include IDA Ireland and A&L Goodbody. Book your tickets at www.asiamatters.eu/summit2017/
Sunday Indo Business