China wins in a race to bottom line

Trade with China was worth €6bn last year so Ireland tends to soft-pedal rights issues, writes Clifford Coonanin Beijing

THE OLYMPIC Games in Beijing are meant to be China's big coming-out party, as much a platform for the country to highlight its growing economic muscle as it is to show its strong athletics abilities.

However, last month's crackdown on Free Tibet demonstrations in Lhasa, and the subsequent protests which have dogged the Olympic torch relay, have led to growing calls for leaders to boycott the opening ceremony of the Olympic Games on August 8th - the political part of the event - while allowing athletes to attend the athletic events.

Ireland tends to soft-pedal human rights issues in China as the Government is unwilling to raise the hackles of the world's fastest-growing economy. There are scores of Irish companies operating in China, with two-way trade worth more than €6 billion in 2007, a rise of nearly 14 per cent year on year.

Ireland may be tarred by the same brush in the eyes of the Chinese if EU leaders boycott the opening ceremony as called for by the European Parliament, a move sure to anger the Chinese.

The International Olympic Committee (IOC) has adopted a notably irritated tone in reaction to calls for a boycott and accuses Western governments of hypocrisy, choosing an easy target like the Olympics for their high moral tone because economically they have relatively little to lose.

Hein Verbruggen, chairman of the IOC inspection committee, reiterated the committee's mantra that it was a sporting organisation and not a political one, and has reserved particular ire for threats by some EU politicians to boycott the Olympics opening ceremony.

"I have very little admiration for politicians that come here to sign big business contracts and three or four months later say, 'perhaps I won't come to the opening ceremony'," he said.

Earlier this year, French president Nicolas Sarkozy visited China to pocket some large contracts for French companies, but has since made noises about boycotting the opening ceremony. German chancellor Angela Merkel has made similar noises, even though Germany is a huge trading partner with China.

Sarkozy's outspoken stance on the crackdown in Tibet and the protests that greeted the torch relay in Paris has resulted in calls for a boycott of French goods. Text messages are doing the rounds in Beijing calling for a boycott of the supermarket chain Carrefour and other French goods. "From now on, no longer drive Peugeot cars, no longer use French perfume, no longer eat French cuisine," they say, or "Rise up, take off your Louis Vuitton clothes".

China is the core element in the Irish Government's "Asia strategy", a document overseen by Bertie Ahern and aimed at boosting Ireland's trade links to the continent.

China is the world's factory, manufacturing over half of all finished industrial goods. India is rising but it is still finding it difficult to compete with China's efficiency when it comes to luring international manufacturing, while China's manufacturing centres such as Dongguan and Shenzhen, or in Jiangsu, have economies of scale that regional rivals such as Vietnam find difficult to match.

A company like CRH has very little option but to be in China if it wants to continue to compete internationally. The unprecedented building boom has made China i the world's biggest consumer and producer of cement, home to half of all construction activity on the planet.

In January this year, CRH signed a €200 million deal to take 26 per cent of Yatai Cement, which marked the latest phase in its strategy of making sure it is well placed to tap into China's construction boom.

Treasury Holdings has been busy in the Shanghai and Beijing property markets, involved in developing the eco-city at Dongtan in Shanghai and other retail developments.

Similar levels of growth in areas such as renewable energy have attracted environmental firms to China. Airtricity has been involved in developing wind farms there, hoping to tap into what will be the world's biggest market for renewable energies in coming years as pollution becomes an ever more important issue.

Some of the biggest names in Irish business are in China - Glen Dimplex has a plant in Shenyang and Glanbia has a plant in Suzhou processing food ingredients.

Ireland's biggest exporter out of China is Liam Casey's PCH. Founded in Cork in 1996 and now based in Shenzhen, PCH is a gateway into the Chinese markets for US multinational groups in the consumer electronics, high-tech and medical sectors. The company employs 800 people in Ireland, China, Taiwan, Japan, Singapore, the US, Brazil, Britain and South Africa, and has some of the biggest international IT and telecoms brands on its books.

Casey, who has become known as "Mr China", arrived in China with little money but lots of enthusiasm and his transformation of PCH from small beginnings into an outsourcing company with €100 million revenues is one of the most remarkable Irish success stories in China, recognised by Ernst & Young when they made him Entrepreneur of the Year.

Political commitment and the bottom line often make for uneasy bedfellows. The lure of 1.3 billion consumers may prove too strong.