Ireland, which has won accolades for getting its economy back on track after a post-2008 downturn, is now aiming to expand its external trade by strengthening links with China, particularly in food in dairy products.
“The growing middle class in China is perfectly prepared and eager to pay for top-quality food and dairy products and is turning increasingly to Ireland,” Paul Kavanagh, Irish Ambassador to China, told EJ Insight in an interview.
Kavanagh expects China to become Ireland’s second-largest food market within two years, next only to the United Kingdom.
“It is possible that within a decade China could be our largest food market,” he said.
The opportunity comes from not only the rising middle class in China but also the increasing production capacity of Ireland’s dairy industry.
At the end of March 2015, the European Union lifted milk quotas, which were introduced in 1984 to prevent overcapacity and waste, and allowed its member countries to increase their output.
That has created growth opportunities for Ireland’s dairy products firms and helped fuel new investment in the industry.
“With the quota lifted in the European Union last year, there has been significant investment in the Irish diary industry, and capacity is rising dramatically,” Kavanagh said.
The country’s dairy products industry currently has the capacity to feed 35 million people annually, a huge number compared to the nation’s population of around 4.7 million.
The capacity is expected to increase to a level that can meet the needs of 50 million people within five years.
All the additional output will be used for export, the ambassador said.
As the only way that Ireland’s industry players could improve earnings under the quota system was to migrate to the top-tier segment, the country now produces premium dairy products, he said.
Ireland, which currently produces 15 percent of the world’s infant formula, received full marks in a technical inspection done by China early last year.
“There needn’t be any worry that we are running out of milk production capacity,” Kavanagh said.
Last year, Ireland was the first EU country to get a ban lifted on import of beef into mainland China.
“Hopefully, we will see a commitment in shipment of Irish beef within this year,” the envoy said.
Tourists and students
Apart from exports, Ireland is also focusing on luring more tourists and students into the country.
Kavanagh says he is glad that Skellig Michael, an Irish island where a Christian monastery was founded between the 6th and 7th century, served as a scene in the latest Star Wars movie.
“They found Luke Skywalker there at last,” he said. “A large proportion of the shoot of the next Star Wars movie in 2017 will also have been in that location.”
Ireland welcomes Hong Kong tourists and students, Kavanagh says, touting the beautiful natural environment and cultural experience that can be had in the country and also “world-class education”.
“We welcome all to come to Ireland or maybe consider the possibility of send their children to school there. If Ireland is good enough for Luke Skywalker, it should be good enough for the young people in Hong Kong,” Kavanagh said.
He pointed out that Ireland has produced four Nobel laureates in literature.
Kavanagh, together with Neil Ryan, assistant secretary general from Ireland’s Department of Finance, was in Hong Kong recently to attend the Asian Financial Forum and promote FinTech cooperation between Ireland and the city.
“We have to explore the synergy in FinTech further,” Ryan said in the same interview. “We see ourselves in a very similar position to Hong Kong.”
“Hong Kong is the gateway for China while Ireland is the gateway for Europe,” he said, adding that Hong Kong and Ireland will make good partners for each other as they share the same language, values and legal system.
Over the last few years, the Irish government has been aggressively pushing the development of its FinTech industry. In 2015, industry players such as Payments Ireland and Fintech Ireland Community Group formed Fintech & Payments Association of Ireland (FPAI) to enhance cooperation with the government.
Ryan said the Irish government will help promote the industry and encourage cooperation between the private sector and universities.
In 2014, the Irish National Pensions Reserve Fund (NPRF) and China’s sovereign wealth fund — China Investment Corporation (CIC) — announced the establishment of a US$100 million investment fund focused on Irish and Chinese technology companies.
The US$100 million fund has been fully deployed in some big data and cloud computing projects, and both sides are now looking forward to raise another round of funding, Kavanagh said.
Last year, the Irish government opened a consulate in Hong Kong, its first diplomatic mission in the city.
Chinese investments in Ireland
Amid warm political relations between Chinese and Irish leaders, a lot of Chinese companies have been investing in Ireland over the last few years.
Telecom equipment major Huawei Technologies has a research and development center in Ireland while Internet giant Tencent Holdings (00700.HK) also has some operations there.
Five of the six major Chinese banks have leasing operations in Ireland, mostly for aircraft leasing and some for shipping leasing.
Last year, a unit of the Chinese aviation and shipping conglomerate HNA bought Irish aircraft leasing firm Avolon Holdings for about US$2.5 billion.
Despite a slowing Chinese economy, trade and investment cooperation between China and Ireland will continue to grow, Kavanagh said.
“It’s true that the Chinese economy is slowing but this is a result of the government policy. They want to slow to a more sustainable growth rate so that they can transform, recalibrate and rebalance the economy,” he said.
China can benefit from the Irish experience in industry upgrade, Kavanagh said.
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