INNOVATION:Upon his return from china, Minister of State for Innovation Michael Ahern on the new challenges for Ireland

For years, Michael Ahern has been involved in trade missions around the world, accompanying delegations of Irish businesspeople as they hunted for contracts.

"One of the big things that I have seen on trade missions over the last five years is that small Irish companies often lead the way on innovation," the Minister of State told The Irish Times.

Over a week in late October/early November, Ahern held talks with senior Chinese politicians, and listened at a conference to the changes that are afoot in 45 nations. "Irish policy on SMEs and innovation includes virtually all of the policy initiatives that were discussed by the 45 nations at the conference. So, we appear to be ahead of the posse in many respects," said the Corkman.

For the five years until his appointment to the innovation post this June, Ahern had been minister of state for international trade, so was well used to the ceaseless travel required from Irish companies wanting to play globally. The biggest stage of all right now is China: "There are definitely major opportunities. We don't have to take on China. We can't. But we can find niche areas."

Already, Irish companies such as electrical heating company Glen Dimplex, engineering firm Ove Arup and Liam Casey's PCH, which specialises in sourcing solutions for the electronics sector, have substantial operations in China, supported by colleagues based in Ireland.

"Liam Casey is just one example of what is being done, and can be done. He has one of the most dynamic companies that are developing there," he said.

The Chinese are interested in doing business with Ireland, he says, particularly in using Ireland as a base to launch operations into the rest of the European Union.

However, China's progress is relentless and the scale of development is staggering. Chinese Academy of Sciences' president, Dr Lu Yongxiang told him that China will have 80 national institutes devoted to innovation and science and technology in three years' time. Already, China has 48,000 PhD students and 24 million are already working on research and development of all shades and hues throughout the vast country.

For Ahern, innovation is about putting knowledge and ideas into practice: "Innovation isn't about sitting with a white coat, dreaming. It is about getting your hands dirty and putting your dreams into job creation, and providing services better and cheaper. The message is slowly getting there, I believe," said the Fianna Fáil Cork East TD.

Since March, the State has offered €5,000 Innovation Vouchers to encourage small firms to link up with a local Institute of Technology to research something that would be useful to their businesses.

So far, 350 vouchers have been given out in three rounds of funding. "It gives them a chance to get a toe in the water in terms of accessing the research available in academic institutions."

Since his appointment in June, the Department of Enterprise, Trade and Employment has been working on a new strategy for the next five years, which will be published shortly. The document will review existing practices; investigate ways in which the public procurement system could be used to spur innovation amongst Irish suppliers; intellectual property rights and a host of other issues.

The grants system operated by Enterprise Ireland and the Industrial Development Agency is due for a complete overhaul early next year, following a recent nod from the European Commission in Brussels.

"Before, firms had to identify where they sat on R&D. Now, it doesn't matter. People won't have to fit into existing systems. The system will fit them."

The first six of a series of new Competence Centres, an industry-led co-operation with universities, will be up and running within a year, or so, each backed by up €2 million of State money.

From a knowledge point of view, Ireland is up there with the best of them, he believes. "Now, it is no longer about third level. It is now about fourth level. We need people of that stature to drive the economy ahead. Unless we are at the higher end, we will be at the mercy of competitive, educated countries that have a lower cost base."