Chinese walls need not daunt us

Comment: Over the last 10 years, the outside world has had a major influence on change in China; now China is exerting a major influence on global commerce.

Irish businesses have to be able to do business there. Using the skills and knowledge base that Ireland has built up over the years we can now leverage this expertise into these developing economies.

In the services sector Ireland is particularly strong in educational services, as is evidenced by the high number of Chinese students in Ireland of which approximately 40,000 are in the Dublin area. Other areas like engineering, consultancy, financial services and IT all present good opportunities.

In the food industry, beef, pork, dairy and fish sectors hold potential for further development as do prepared foods. As the Chinese develop newer tastes and greater affluence their needs will change also.Other industries like pharmaceutical and medical supplies can also feature strongly.

Chinese tourists visiting Ireland in the future offer great potential for the Irish tourism sector.

Businesses which find they are losing competitiveness, due to rising local costs, can also outsource and make themselves more competitive at national and international level by utilising China's vast labour and low cost base.

Irish trade with China has grown dramatically over the last few years. Our exports this year should reach over €830 million, up 37 per cent from 2003. Our imports have increased more dramatically rising almost 45 per cent in the same period to an estimated €3.2 billion.

Export of services has been a growing part of the relationship. However, outsourcing and utilising the low cost base in China, as part of the supply or manufacture of products, has played an even bigger role as Ireland comes to terms with its higher cost base.

Recognising the threat of the low cost economies of the East and finding ways to use them to their advantage has been a major part of the development of many Irish businesses. It has also given them a platform for even greater international development.

It seems at first glance, China is a complicated place to do business. Complicated perhaps, but challenging and fulfilling. China has gone through dramatic changes over the last quarter of a century.

They have made changes and progress in the last 25 years that it took many countries in the western world 80-100 years to achieve. Coupled with these changes is a culture rich in history and tradition, that existed without any organised legal system as we know it.

In China, business has been based on relationships for centuries. The establishment of good trusting relationships with a Chinese partner is a must for successful execution of business. This will involve many dinners, meetings and a lot of commitment from western companies. In China, you do not get the purchase order overnight.

Language is an intricate part of any culture and as such is a fundamental barrier to really understanding it completely. However, China is as eager to trade with the outside world as we are to trade with it, and helping us understand them is in their interests too. Thus, from a communication perspective language is not as big a hurdle as might be thought. English is widely spoken by the educated under-30s. However, interpreters are essential at all business meetings.

Enterprise Ireland offers excellent background knowledge and local contacts into the Chinese markets. The agency has very good contacts that can be used to ensure you meet who you need to meet rather than get caught up with numerous unnecessary meetings and no results.

Establishing a good trustworthy local contact as early as possible will help immensely in building your presence there. As relationships are the key to successful business, it is important you have a "face" in the local community, so expect to visit or have a representative on the ground with some regularity to show your sincerity. As the relationship develops, so will the business and the opportunities.

Cultural barriers are perhaps the wrong term to describe the challenges in understanding the Chinese. Outsiders can never expect to fully understand a different culture. But the fundamental Chinese philosophies of mutual respect and the importance of relationships in business is something we can all learn from.

Gaining an understanding of how business is done in another country is not only pragmatic, it is also basically polite.

China is recognised as being one of the major world powers of the future. In fact, Goldman Sachs economists predict that the Chinese economy will overtake Japan by 2015 and USA by 2039.

Its sheer scale and the size of the opportunities it presents are reason enough to cultivate an interest in what happens there. Currently, China's impact on business is rising exponentially worldwide and Irish business needs to be involved if we wish to continue to be competitive in the international arena.

China is an attractive base for companies that want an Asian presence. China needs to maintain its growth levels to deal with the changes occurring in its society. To maintain this growth they need foreign direct investment at an increasing rate.

Thus, they create many incentives for companies to locate there. Establishing a base in such a dynamic environment would put you at the centre of an economy expected to be the driving force of the 21st century.

Donal O'Callaghan is chairman of the Ireland China Association and managing director of Callaghan Engineering.