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IDA Ireland Presents

IDA Ireland Presents. Attracting Chinese FDI into Ireland Eileen Sharpe Head of Strategic Development China 3 rd September 2013. Agenda. IDA Ireland China scale & perspective China investment trends China fundamental differences & underlying investment drivers

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IDA Ireland Presents

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  1. IDA Ireland Presents Attracting Chinese FDI into Ireland Eileen Sharpe Head of Strategic Development China 3rd September 2013

  2. Agenda • IDA Ireland • China scale & perspective • China investment trends • China fundamental differences & underlying investment drivers • China challenges & opportunities

  3. IDA Ireland Role & Structure • Attracts Foreign Direct Investment (FDI) into Ireland • 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 visaand work permit issues • Provides incentives to companies in certain areas and locations

  4. IDA Ireland Strategy Focus 2020 Sector Focus Activity Focus Global Business Services High Value Manufacturing Research, Development & Innovation

  5. Why Ireland Favourable Tax regime Large Talent Pool Good Track Record Pro-business Environment

  6. 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)

  7. 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

  8. 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%

  9. 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

  10. China – Perspective & Scale • CHINA • World’s 3rd largest country • World’s largest population 1.4 billion • Beijing (2013) • Centre of Government and political power • 2nd largest city • HQs of main banks and financial institutions • Home of State-Owned Enterprises Harbin Shenyang Beijing Baoding Shijiazhuang Tianjin • Shanghai (2006) • Largest city by population • Massive inward FDI flow • Major transport hub Linyi Nanyang Nanjing Wuxi Chengdu Suzhou Shanghai Chongqing Wuhan Hangzhou Changsha • Shenzhen (2010) • Designated Government high tech center • China’s most successful economic zone • Home to PRCs top high tech companies Shenzhen Guangzhou Hong Kong

  11. 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

  12. China – Economic Growth Shanghai in 1992 • World’s second largest economy • 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

  13. 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

  14. China – Outward FDI Trends All units in USD Billions

  15. China – FDI Flows Relative to Global All units in USD Billions

  16. Chinese Direct Investment in EU-27 (2000 – 2011)

  17. Chinese Direct Investment in EU-27 ( 2000 – 2011) All units in USD Million

  18. China – Fundamental Differences Dining Lifestyle Transportation Ego Weekend Activities Attitude to Punctuality Socialising Behaviours Leadership Queuing

  19. Chinese Investment - Underlying Drivers Track Record Technology Brand acquisition Natural Resources Chinese Diaspora Sales Networks Familiarity & ease of doing business

  20. 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

  21. IDA’s Presence in China and Sector Focus • Shanghai (2006) • Shenzhen (2010) • Beijing (2013) IDA Office in China Sector Focus • Information Communication Technology • International Financial Services • Life Science • Clean Tech • State Assets and M&A

  22. Chinese Companies in Ireland 在爱尔兰的中国企业

  23. High Level Strategy for China Win High Quality Investments and promote job creation concentrating on sectors with highest potential for delivery Build a reputation for Ireland as leading location for Chinese MNCs particularly in Financial and ICT sectors Expand Government to Government partnership at all levels Pursue Collaborative and Innovative Approaches to the Business, both internally and externally, including game changing national initiative Build resource capability in China and Ireland to ensure operational effectiveness Undertake High Visibility Marketing & Communications / Reputation Enhancing

  24. Ireland / China Value Proposition Focus Target Activities Value Propositions State assets for sale or development Financial Services Aircraft & Asset Leasing, Mid office functions to support EU expansion, Regional HQ / operations, Project Financing, Payments / Remittances, Funds & Insurance Excellent China Ireland relations Familiarity / ease of doing business / language ICT including Digital Media EU Membership /Status market access M&A, Partnerships, Regional Manufacturing – final assembly, R&D, Regional HQ & Sales, Customer / Tech Support, Localisation. Track Record / Client base State Owned Enterprises / Conglomerates, Engineering LS players Tax Regime, DTA Key Tech Expertise Special Projects Sino Irish technology funding Strategic Acquisition, Infrastructure Projects Legal System Holding co regime Government Access / State Interest in Chinese investment

  25. Ireland – Bridge, links China to the World

  26. THANK YOU For more information please see our website www.idaireland.ie Or Contact Telephone: +353 (0)1 603 4000

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