Word of mouth the key to investment

BOOSTING AWARENESS of Ireland in China and the tax advantages that the country has to offer Chinese firms is a key challenge in building up business links with the world’s second-biggest economy.

That was the message from Joe Tynan, senior international tax partner at PwC, and Cao Yang, who is Asia business development manager at PwC’s Irish office, who were on an IDA-backed tour of China to tell would-be investors about what Ireland has to offer.

“There is a very low awareness of the detail about why Ireland might be a company location, but there is a broad awareness and there is a Chinese government policy to encourage Chinese companies to go global,” said Tynan, who spoke in Hong Kong, Guangzhou and Beijing during his visit.

A key factor to boost the number of Chinese companies considering Ireland as an investment option is to have examples of Chinese companies which have made a success of being in Ireland.

“It’s very important for Chinese people to hear the message from other Chinese people. People don’t want to be the first, it’s easier to follow another company that has been successful,” said Tynan.

In Guangzhou, the seminar was attended by 70 companies, mostly private sector, while in Beijing there were 90 companies, many of them SOEs.

The sectors of most interest included property, with many investors interested in finding out how exactly one goes about buying real estate in Ireland.

Another area of interest was aircraft leasing. The world’s biggest bank by market cap, ICBC, has an aircraft leasing operation in Ireland, which is a big help in promoting this sector to other Chinese companies.

Ireland has to compete with Singapore in attracting aircraft leasing companies, and this has traditional cultural links to China but Ireland’s reputation is very strong in this area.

“It looks like some of the aircraft leasing companies will be coming to Ireland,” said Tynan.

On dairy, the main interest was in getting access to milk and milk products, especially baby milk formula. This is a sensitive area since 2008 when infant formula laced with the industrial chemical melamine killed at least six children and made nearly 300,000 ill.

“From my Chinese perspective, I found a very common issue is that people failed to be aware of the basics. They find it hard to believe, for example, that there is just one corporate tax rate and it’s that simple,” said Cao Yang, who is from Anshan City in Liaoning Province.

Tynan reckons that Ireland needs a concerted effort to really promote the country, a difficult task in such a huge place such as China.

“The lack of a direct flight is a significant disadvantage that has to be overcome. We need to get Chinese companies to be in Ireland, and we need more examples of people who’ve been successful and can stand up and say Ireland delivered on its promises,” said Tynan.

“In many ways this part is easy. It’s following through that’s difficult, getting the investment,” he said.