Ireland’s Centre of Excellence for Asia Business Knowledge & Partnership

The 2nd Global Asia Matters Business Summit 2018 follows the Inaugural Summit in 2017, seven prior Asia Matters EU Asia Top Economist Round Tables and two Asia Matters Financial Services & FinTech Forums held in Beijing, Tokyo, Hong Kong, Singapore and Dublin. The theme was

Asia: The Epicentre of Global Business.

Key Findings

The Global Economy:

Uncertainty and tension characterize the current state of the global economy. This could pose a real threat to stability, jobs and growth: indicators show that businesses are holding off on making job-creating investments and export orders are on the decline.

It is vital that business leaders are involved with discussions on and shaping the direction of the global economy – partially circumventing the more political differences we face. Events like the Global Asia Matters Business Summit play a valuable role in bringing together key policymakers and business leaders for meaningful discussion.

Brexit is providing the opportunity for Asian multinational businesses to look at how their business is configured in Europe and how this may need to change in the future. Ireland as a leading member of the EU offers certainty in an English language environment for Asian business leaders.

The Scale and Importance of Asia to Ireland:

In the changing global landscape, Ireland’s relationship with the Asia region is extremely important.

The Asian Market has over two billion consumers and by 2025, Asia is likely to account for almost half of the world’s output, while the continent is set to overtake the combined output of Europe and North America before 2030.

By 2030 more than half of the world (4.9bn) will be middle class and primarily in Asia.

This represents a unique opportunity for Irish companies which have the capability to engage and offer world-class products and services. As trade between Ireland and Asia strengthens at a rapid rate, critical success factors include:

• High Level ministerial-led trade missions to the region
• Building relationships of trust with the right partners in Asia – Enterprise Ireland both here and on the ground in Asia have huge knowledge and experience.
• Gaining insight and building senior networks through relevant events like the Summit- Asia Matters is playing a vital role in growing the Asia Ireland relationship.
• The role of trade agreements is vital – in 2018 the EU signed two important free trade agreements, the EU-Japan Economic Partnership Agreement and the EU-Singapore Agreement. The EU- Vietnam free trade agreement is also on track to be signed in 2019.
• Connectivity – two direct flights between Asian and Ireland, including Hainan Airlines from Beijing, were confirmed during 2018. A result of many years of hard work by key stakeholders including DFAT, Tourism Ireland, DBEI and the DAA. Continued improvements in connectivity are key to the realisation of business opportunities for Irish exporters.

The Future of Business

Innovations like Blockchain, AI and 3D printing will change the way global business operates – we are at a key turning point in global affairs. The likely scenario is that technological change will lead to lower trade costs, more opportunities for developing economies and smaller companies, and an even greater emphasis on services. There is an opportunity here for Ireland in niche sectors of strength. Continuing to invest in Innovation and R&D will determine how Ireland performs in the global economy of the future.

Attracting Asian FDI:

IDA Ireland has played a pivotal role over last 70 years in generating significant and sustainable value propositions for contribution to Irish GDP – Ireland is a small open economy and the role IDA has played has been extraordinary in terms of its competitive ability to win and retain FDI.

The key learning from this effective engagement has been that Asia is not homogenous – approaching in a country-specific culturally appropriate way is vital. Truly understanding that engagement must be strategic and long-term is crucial. Whilst the approach to China has matured – with the game-changing investment won from WuXi for example – the dialogue with WuXi began 15 years ago.

The scale of FDI from Asia is enormous. Looking at China alone, in the first 6 months of this year newly announced Chinese M&A into Europe was $20 billion (compared to $2.5 billion in North America*). Despite these facts, the nature of Chinese FDI is changing. The future opportunities for us in Ireland are less about M&A and having Irish companies that Asian companies will acquire. Rather it is about how we present Ireland as a location for future knowledge-based business solutions.

There is also scope for Ireland’s positioning as a European gateway for distribution for sales organisations and customer services. The clear advantage Ireland has is that the 2nd language in Asia is English.

* CNBC – https://www.cnbc.com/2018/07/17/china-is-investing-9-times-more-into-europe-than-into-north-america.html

There is a clear opportunity for further European FDI from Asia – despite recent wins Ireland is a small country with limited resources at the periphery of Europe – the following are critical success factors:

• Understanding that in Asia, Europe is viewed as far away and complex – the Asian multinationals looking to expand globally will often look to Europe last and then immediately prioritise focus on the three large countries of Germany, UK and France.
• Realising and assessing the contestable market – Smaller European countries like Ireland must focus on competitive USP – understanding where can truly add value e.g. after Brexit, Ireland will be the key English language country in the EU.
• Effective collaboration and joined up thinking between the state agencies including IDA Ireland, Enterprise Ireland, Tourism Ireland, SFI, Bord Bia.
• World Class cities like Barcelona and Frankfurt have a cohesive vision for the whole city. Ireland needs to adopt the same approach.
• There is a global war for talent – if Ireland can achieve recognition by Asian multinational companies as a best in class location to build multinational highly skilled teams, this will be of huge benefit. In this respect immigration policy is critical – again events such as this Summit create a platform for policymakers and business to build future-proof policy.
• Place Making will become increasingly more important than Place Branding – future jobs such as AI are in huge demand and such talented professionals can work anywhere.

Effective engagement with Asian Policies – Business opportunities:

It is vital to develop a strategic mindset for engaging effectively – both to navigate complexities and in planning for the immediate future.

Companies need to look beyond the statistics and not make assumptions – middle-class purchasing power squeezed for retail in a number of cities – as a business you need to really understand what the value proposition is for your business and where the opportunity actually is behind the headline data.

Understand and follow the policy behind the economics for example Belt & Road as they shape the business opportunities. One Belt One Road offers a huge opportunity for business – this is not always properly understood. The Chinese Government will spend 5-6 trillion over the next 15 years – right at the end of Eastern Europe. As an example of what is possible, the port of Piraeus is now the busiest port in the Mediterranean following COSTCO investment 10 years ago – the net result – 2,000 new jobs created.

The context to which these types of opportunities exists are on a scale never seen – companies need to reflect in detail on the true nature of these opportunities. Engaging effectively means understanding the culture, the politics and the policy in Asian countries. Making the right contacts and sourcing the right advisers is critical.

Transferring learning and skills from global best in class sectors such as aviation leasing is vital to future growth.

Looking beyond the more mature Asian economies offers scope for Irish companies with world-class products and services – across the countries of ASEAN we are looking at the tip of the iceberg when it comes to future opportunity.

Key Learning: Globally Best in class Tech-driven companies successfully competing in Asia

• Partnerships and people are key – building the relationships of trust with the right people in Asia is a vital success factor.
• The scale of opportunity for Irish business is vast – perseverance is key.
• The secret to scaling up quickly in China is based on building long-term relationships of trust.
• Continuously innovating and developing products that meet the market need is essential – spending significant time with customers as you are developing products for them is the key to success.
• Enabling automation and business efficiency is a core requirement for all ICT companies looking to succeed in Asia.
• For tech companies to succeed, it is vital to make a significant investment in global talent.

The Future of Food: Innovation Trends in Asian Markets:

Context:

In the last 5 years, Irish Food & Beverage Exports to Asia have grown from €450 million to €1.4 billion – China has been a key driver of that growth.

By 2025 exports to Asia will more than double again with Market Prioritisation highlighting in almost all sectors the potential for growth in Asian Markets.

Success Factors for Irish Food & Drink in Asia:

• Safety first (security of the supply chain)
• Sustainable and Clean (USP value of Origin Green)
• Health as a new Premium (natural = health)
• The desire for new options – challenge here is developing & delivering new innovative product solutions
• Understanding Technology drivers such as Weibo & WeChat as drivers of influence & commerce
• Investing time to understand the market and individual customer needs
• Using Innovation as a driver of product solutions
• Building relationships of trust

The Future of the Dairy Industry in Asia:

There are opportunities across Asia as incomes rise. India is a huge potential market – growing at almost 5% over the next 5 years. There is an import gap in Asia which creates opportunity – by category for consumers need infant formula, cheese and butter whilst in food service the business demand is in cheese and pizza.

Innovation Trends in Asian Markets:

Sustainable food production is a key driver of success for food companies looking to export to Asia. Innovation is key to this e.g. it is perfectly possible that soils managed properly can manage the growth in carbon.

Consumers in Asia and beyond are looking for foods with health benefits. It is possible now to change the structure of long chain fatty acids in chicken, pork and eggs to deliver real health benefits in terms of reducing the likelihood of strokes, heart attacks and Alzheimer’s.

Irish companies at the cutting edge of production are employing innovations such as 3D printing, virtual and augmented reality drones, artificial intelligence, blockchain and robots. These are the technologies that will drive change in industry and sectors of opportunity for globally best in class disruptive Irish businesses.

Key Learning: Overcoming challenges to maximise business participation partnership opportunities in Asian markets

• IFI organisations such as the Asian Development Bank can act as routes to market for technology-driven Irish companies.
• Companies are recommended to look beyond the mature Asian markets. There are significant opportunities in rapidly expanding South East Asia but there is a lack of awareness of this: Indonesia is a similar sized economy to Brazil and will shortly surpass it.
• Any buyer in Asia buying products and services form Ireland is doing so because those products and services are solving a problem – Innovation in products and services is key.
• Many young Irish technology companies who have won investment from the Irish government are using this as part of their unique pitch – it also enables businesses to invest long-term into the Asian markets.
• It can take time for companies to build the trust to operate and get contracts in Asia – when market development does not initially go as planned, companies need to stay committed, talk with peers who have experience in the market, learn from their mistakes and adapt. Irish companies can use the supports and expertise available from Enterprise Ireland to successfully navigate market development.

About Asia Matters:

Asia Matters is Ireland’s only Asia think tank, a member driven knowledge and connectivity hub for Asia business and partnership. We are committed to building dynamic business links and informed understanding between Asia, EU and Ireland to drive economic growth.

Asia Matters works closely with Irish, EU and Asian governments and corporate stakeholders to produce world class events and thought leadership research.

Since 2012, over 15,000 have participated in Asia Matters events from 47 countries. Asia Matters has hosted eight EU Asia Top Economist Round Tables and Financial Forums in Asia and Ireland as well as the Annual Business Summit in Cork and Global Business Summit and Awards in Dublin. The Asia Matters team has spent over 28 months in Asia engaging with and connecting to key government departments and CEOs in the region. Over 135,000 people have viewed Asia Matters publications, thought leadership and research. The organisation is the go to place for public policymakers, corporates and the media in Ireland on all matters relating to Asia.