IDA Ireland Presents
Attracting Chinese FDI into Ireland
Eileen Sharpe
Head of Strategic Development China
3rd September 2013
Agenda
 IDA Ireland
 China scale & perspective
 China investment trends
 China fundamental differences & underlying
investment drivers
 China challenges & opportunities
IDA Ireland Role & Structure
Prime Minister
 Attracts Foreign Direct Investment (FDI) into
Ireland
Minister for Jobs,
Enterprise & Innovation
IDA Board
 Supports existing clients to develop additional
business activities within Ireland
 Builds relationships and makes connections for
client companies within Ireland
 Assists companies with their entry visa and work
permit issues
Overseas Offices
Regional Offices
Sectoral Divisions
250 staff globally
 Provides incentives to companies in certain areas
and locations
IDA Ireland Strategy Focus 2020
Sector Focus
ICT
Life Sciences
Activity Focus
Global Business Services
High Value Manufacturing
Engineering
Financial Services
Research, Development & Innovation
Clean Tech
Content & Business Services
Why Ireland
Favourable
Tax regime
Large
Talent Pool
Good
Track Record
Pro-business
Environment
Large Talent Pool
 Internationalized culture
 Youngest workforce in Europe, with 34%
under 25 years of age
 Excellent skills and knowledge base with
reputation for worker flexibility
 IMD World Competitiveness Yearbook
2011
•
1st for the availability of skilled labour
•
One of the best education systems in
the world for Higher Education
achievement (ranks 9th)
Good Track Record
 8 of the top 10 in ICT
 9 of the top 10 in Pharmaceuticals
 17 of the top 25 in Medical Devices
 More than 50% of the world’s leading
Financial Services firms
 10 top “Born on the Internet” companies
Favourable Tax Regime
 Current rate of 12.5% amongst the lowest in
the EU
 Research and development tax incentives
(25% Tax Credit)
 Ireland’s extensive double taxation treaty
network with treaties with 69 countries, of
which 59 are currently in force, and
negotiations for new treaties are on-going
with a further 18 countries.
 Ireland has signed an excellent double
taxation treaty with China

Withholding Tax 0%

Capital Gains Tax 0%
Pro-business Environment
 Ireland is a member of the EU and also of
the OECD
 Only English speaking member of the
Euro-zone
 Efficient and responsive pro-business
government
 Advanced telecommunications
infrastructure
 Common law jurisdiction
 IMD World Competiveness Yearbook
2011 - 1st for business legislation for
foreign investors
China – Perspective & Scale
CHINA
•World’s 3rd largest
country
•World’s largest population
1.4 billion
Harbin
Shenyang
Beijing
Baoding
Shijiazhuang
Tianjin
Linyi
Nanyang
Nanjing
Wuxi
Suzhou
Chengdu
Chongqing
Wuhan
Hangzhou
Changsha
Shenzhen
Guangzhou
Hong Kong
Shanghai
Beijing (2013)
•Centre of Government and
political power
•2nd largest city
•HQs of main banks and
financial institutions
•Home of State-Owned
Enterprises
Shanghai (2006)
• Largest city by
population
• Massive inward FDI flow
• Major transport hub
Shenzhen (2010)
•Designated Government
high tech center
•China’s most successful
economic zone
•Home to PRCs top high
tech companies
China – Scale & Diversity of Market
 World’s largest population - over 1.4 billion
people & world’s third largest country
 Urbanisation– 8 cities with population of 10
million, 93 cities with population of 5
million, 263 cities with population of over 1
million
 Growing middle class forecasted to expand
to 700 million by 2020
 Diversity – Culture. Though Hans make up
91% of the population there are 56
officially recognised ethnic groups, 44 of
which occupy autonomous regions
 Diversity – Gender Imbalance. Today in
China 119 boys exist for every 100 girls; in
some regions the ratio is 130 boys to 100
girls
China – Economic Growth
 World’s second largest economy
Shanghai in 1992
 GDP growth rate of 11.6% in 2011, falling to 9.7% in 2012
 Slowing in 2013 with 7.5% for the 2nd quarter. Though this
represents the slowest expansion since 2009, it remains
significantly higher than western economies
 All indicators suggest growth of 7% plus will be sustained
in the medium term because of continued urbanisation,
educational and infrastructure investment
 Distributed economic growth – less developed regions
such as Sichuan, Inner Mongolia and Chongqing are
growing at rates of between 10% and 15% annually

Largest merchandise exporter in the world @ $1.58 trillion,
50% to Asia

Second largest importer of goods ($1.4 trillion)

World’s 3rd largest recipient of FDI ($100 billion) with ODI
growing substantially
Shanghai in 2013
China – Government Policy
 Aggressive global expansion policy being pursued by
Chinese Government called the Go-out-Strategy:
18,000 Chinese enterprises now overseas
(investment: US$424.8 billion)
 Centralised decision-making on economic issues with
strong Government influence on all large scale
overseas investment
 This influence extends to company level. All SOEs
have an operational CEO who reports into a
designated Communist Party of China official, based
in the company. Two parallel structures exist –
political and business
 Impact of Xi Jinping’s visit to Ireland in 2012 cannot
be overstated as it positions Ireland positively with
senior party officials in the new 10 year Government
China – Outward FDI Trends
10.0
9.0
All units in USD Billions
8.0
Destination for Chinese Outward FDI:
United States vs. Europe, 2003-2011
7.0
EU-27
6.0
5.0
United States
9.8
4.0
3.0
5.3
4.8
2.0
3.6
2.8
1.0
2.4
1.9
1.4
0.1
0.2
0.9
0.4
0.6
0.8
0.2
0.5
0.8
1.1
0.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
China – FDI Flows Relative to Global
2000
All units in USD Billions
1800
Despite significant growth in outward FDI from
China since 2004 , the volume is still modest in
global terms - less than 4%
1600
1400
Chinese Outward
FDI Flows
1200
1000
800
600
400
200
0
Global Outward
FDI Flows
Chinese Direct Investment in EU-27
(2000 – 2011)
90
82
80
70
69
60
54
54
50
Number of
Greenfield
Projects
45
42
40
37
30
29
28
26
20
16
13
10
0
3
0
2000
5
4
4
3
2001
2002
12
16
14
12
5
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
Number of
Acquisitions
Chinese Direct Investment in EU-27
( 2000 – 2011)
10000
9000
M&A still the engine of outbound FDI
All units in USD Million
8000
7000
6000
8,594
5000
4000
Value of
Acquisitions, USD
mn
Value of of
Greenfield
Projects, USD mn
3000
2,074
2000
1,970
1000
1,042
606
0
2000
2001
2002
2003
1,539
443
306
254
301
625
170
337
353
2004
2005
2006
2007
2008
1,217
820
2009
2010
2011
China – Fundamental Differences
Dining
Ego
Socialising
Queuing
Lifestyle
Transportation
Weekend Activities
Attitude to Punctuality
Behaviours
Leadership
Chinese Investment - Underlying Drivers
Track Record
Natural Resources
Chinese Diaspora
Brand acquisition
Sales Networks
Technology
Familiarity & ease of doing
business
China – Recognising the Challenges
Challenges to FDI business delivery
Peripherality / no direct access
Schengen visa constraints
Scale and diversity of market.
Culture / Language
Low base of awareness
Pattern of FDI – Market based and/or M&A
Relative cost base
Asian/domestic market focus for some sectors
Long conversion cycles and relationship
building
Macroeconomic Risks
Social
Risk of social unrest due to
urbanisation, inequality & gender
imbalance
Political
Transition from traditional
Communist Party rule to market
socialism
Financial
Largely unknown – any significant
credit tightening will put the brakes
on FDI flow
IDA’s Presence in China and Sector Focus
IDA Office in China
Sector Focus
•
Shanghai (2006)
•
Information Communication Technology
•
Shenzhen (2010)
•
International Financial Services
•
Beijing (2013)
•
Life Science
•
Clean Tech
•
State Assets and M&A
Chinese Companies in Ireland
在爱尔兰的中国企业
High Level Strategy for China
1.
Win High Quality Investments and promote job creation concentrating on
sectors with highest potential for delivery
2.
Build a reputation for Ireland as leading location for Chinese MNCs
particularly in Financial and ICT sectors
3.
Expand Government to Government partnership at all levels
4.
Pursue Collaborative and Innovative Approaches to the Business, both
internally and externally, including game changing national initiative
5.
Build resource capability in China and Ireland to ensure operational
effectiveness
6.
Undertake High Visibility Marketing & Communications / Reputation
Enhancing
Ireland / China Value Proposition
Focus
Financial Services
Target
Activities
Aircraft & Asset Leasing, Mid
office functions to support EU
expansion, Regional HQ /
operations, Project Financing,
Payments / Remittances,
Funds & Insurance
ICT including Digital
Media
State Owned Enterprises /
Conglomerates,
Engineering LS players
M&A, Partnerships,
Regional Manufacturing –
final assembly, R&D,
Regional HQ & Sales,
Customer / Tech Support,
Localisation.
Value
Propositions
State assets for sale or
development
Excellent China Ireland
relations
Familiarity / ease of doing
business / language
EU Membership /Status
market access
Track Record / Client base
Tax Regime, DTA
Key Tech Expertise
Sino Irish technology
funding
Special Projects
Strategic Acquisition,
Infrastructure Projects
Legal System
Holding co regime
Government Access / State Interest in Chinese investment
Ireland – Bridge, links China to the World
THANK YOU
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www.idaireland.ie
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