Chinese Dragon hungry for some Irish Beef

China and Ireland have had a great relationship in recent decades. Every year more and more legislation is passed in order to encourage trade and cooperation between the two. This infographic tells the bigger picture:

infographic pic                                                                                                                                                                                                                -Source: Enterprise Ireland

Currently 90 Irish companies trade directly with Chinese enterprises contributing to a 45% increase in exports to China in 2015. These companies offer a wide variety of products, the majority of which are infant foods and other miscellaneous food products, pharmaceuticals and organic chemicals.

A closer look

Irish Dairy especially enjoys international popularity. Even halfway around the world, in Chinese supermarkets and online stores consumers are starting to realise their appeal.

Ireland has just surpassed New Zealand as the second largest importer of baby formula to China. Since China is the world’s largest importer of baby formula, consuming 18% of global supply, while Ireland is the world’s largest exporter of infant nutrition it really seems like a match made in heaven.

Additionally, Rabobank estimates a steady increase of 10% for several years in demand for infant formula now that the Chinese government has abolished the one-child policy.

The long list of milk powder scandals has seriously damaged the reputation of domestic providers. The first of which occurred in 2004, when 50 babies died of malnutrition after being fed counterfeit formula.

Then in 2008 China was hit by the biggest upset of them all. Around 300,000 infants were affected including 6 babies dying from kidney stones, after melamine had been illegally added in order to increase the protein level of a locally produced formula. In the following years several other cases of sub-standard products tainted the reputation of China’s dairy providers. The most recent scandal in April 2016 involved counterfeit baby milk distributed over e-commerce sites.

To this day many consumers share the sentiment of Beijing resident Max Zhang, who was asked to comment after a scandal in 2013, stating:”No way am I choosing a domestic brand for my son. It’s a trust issue.” In the eye of exporters, these health scares pose special opportunities for big multinationals and SMEs alike to break into China.

 

ChinaPolicewomen                                                                                                                     -Source: The Politics of Healthcare

Chinese authorities have been trying to reestablish public trust in local producers ever since the first scandal

Ireland’s companies aim to provide quality standards and customer services that the Chinese market sometimes seems to be lacking.

The Irish have reason to smile

China-Photo-1-1024x683                                                                                                                                                          -Source: AgriLand

Minister Simon Coveney at IDB’s Kerrygold launch in China

Consequently, demand for foreign dairy and infant nutrition in particular, is sky rocketing and the Irish are competing amongst the best of them. Conglomerates IDB (Irish Dairy Board) and Glanbia have recently successfully introduced a number of products to their brands Kerrygold and Avonmore. Since Chinese consumers are prepared to pay a considerable premium for foreign brands, Avonmore Milk sells at three times the price of a domestic Chinese dairies. In the case of infant formula, a tin of Kerry’s Green Love+ infant formula sells at €43 in China, whereas in its home country it only costs the consumer €10 per tin.

All good for Ireland’s global players, but what about SMEs?

However, the success stories of Irish exports are not limited to big companies. Limerick based, machinery manufacturer Samco, for example, boasts a prosperous trade relationship with a big farm contractor in Inner Mongolia, selling their maize planting systems with biodegradable plastic.  Another one on the list of successful exporters is Dovea out of Tipperary. In fact, they are the first ever Irish company to export beef bull semen to China.

In 2015 the Chinese Government lifted the ban on Irish beef which has offered great opportunities for exporters as experts also forecast a massive increase in demand. By the year 2025 it is expected to have risen to over 750,000 tones, which will only cover 3% of China’s annual meat consumption.

 

ChinaIrishBeef-Infographic                                                                                                                                                               Source: Board Bia

Irish beef has also enjoyed a positive response by the Chinese consumers

 

Besides beef and dairy, Irish exporters are also trying to enter the seafood market. China being the biggest seafood trader in the world, shipments and air deliveries of fresh Irish crab and oyster are becoming more and more commonplace. With the aid of seafood exhibitions, Irish family owned SMEs like Atlanfish or Burren Smokehouse are taking the first steps towards establishing a customer base in mainland China. There are in fact Irish companies already based in China. Joint Venture Jade Ireland operates out of Shanghai, pushing brands such as McBride Fishing and Carr Shellfish into market. WebPort Global has been working alongside with them and helping to increase their brands’ global reach.

 

Other Irish strengths

Though agri-food exports to China are valued at €620 million, thereby forming a centre piece of Sino-Irish trade, there are several other important sectors that attract the interest of Chinese Businesses. A number of operations of major Chinese companies such as Huawei, Lenovo, Bank of China Aviation or China Development Bank are based in Ireland. It is these technology, business and financial services Ireland offers that form the other pillar of trade relations to China.

 

It goes both ways

 China imports

Source: The Atlas of Economic Complexity

Of course, the mutual trade relationship has also provided Ireland with essential goods and services. Imports from China amounted to $4.2 billion in 2014. From the graph above one can quickly tell that Chinese imports hit an all-time high of $5.5 billion just before the World Financial Crisis in 2007. Fortunately, imports are on the rise again though at a much smaller rate than before the collapse.

 

China’s greatest hits in Ireland

ChinaImports2014MIT

Source: The Observatory of Economic Complexity

Imports from China amounted to 5% of all Irish Imports and are almost 50% machinery. More specifically Ireland mostly imports computers and other ICT equipment from China. This is an essential trade channel in order to support Ireland’s quickly growing IT sector.

Overall, Chinese imports represent a true lifeline to the economic development on the Emerald Isle.

In return, despite recent rather apocalyptic news from China’s stock markets, it seems the Chinese Dragon is still very much alive and roaring and hungry for more of Ireland’s goods

 

Christopher Doyle

World Trade Centre Dublin

 

 

 

 

 

 

 

 

 

 

 

References:

China and Ireland:

https://www.djei.ie/en/ImageLibrary/China-Trade-Mission-Infographic.pdf

https://www.enterprise-ireland.com/en/News/PressReleases/2015-Press-Releases/Minister-Bruton-departs-on-5-day-4-city-trade-and-investment-mission-to-China-with-36-Irish-companies.html

a closer look:

http://www.irishtimes.com/business/agribusiness-and-food/ireland-now-second-biggest-exporter-of-infant-formula-to-china-1.2360659

http://www.theguardian.com/world/2004/apr/21/china.jonathanwatts

http://www.scmp.com/news/china/article/1294570/foreign-milk-brands-still-seen-superior

https://web.archive.org/web/20081205093042/http://www.guardian.co.uk/world/2008/dec/02/china

http://www.scmp.com/business/markets/article/1934204/chinas-new-baby-milk-scandal-trigger-tighter-cross-border-e

The Irish have reason to smile

http://www.agriland.ie/wp-content/uploads/2014/11/China-Photo-1-1024×683.jpg

http://www.thejournal.ie/ireland-milk-exports-1880771-Jan2015/

All good for Ireland’s global players, but what about SMEs?:

http://www.independent.ie/business/farming/irish-dairy-brands-set-for-take-off-in-china-30733485.html

http://www.bordbia.ie/corporate/press/2013/Pages/IrishSeafoodIndustryTacklesChineseMarket.aspx

http://www.irishtimes.com/business/agribusiness-and-food/seafood-brands-join-forces-to-supply-chinese-market-1.1330457

Other Irish strengths

https://www.dfa.ie/our-role-policies/our-work/casestudiesarchive/2015/may/ireland-and-china/

It goes both ways

http://atlas.cid.harvard.edu/explore/stacked/export/chn/irl/show/1995.2014.2/

China’s greatest hits in Ireland

http://atlas.media.mit.edu/en/visualize/tree_map/hs92/export/chn/irl/show/2014/