Work to do for Irish exporters
By Business Editor David Murphy
There has been much discussion about Ireland being an export-led economy. The country’s track record at selling goods abroad has been highlighted as a bright spot in an otherwise troubled economic landscape.
This leads to the question: Are Ireland’s exports are sufficiently focussed on the high growth markets?
So far the evidence is mixed according to the Irish Exporters Association.
China, which has overtaken Japan to become the world’s second largest economy after the US, is the big attraction for exporters.
Figures from the Central Statistics Office for sales from Ireland to China show they have been falling every year since 2009. That is despite the fact that Chinese economy has been growing.
According to the Irish Exporters Association exports to India and Brazil have also been falling, while the performance in Russia has been improving.
Enterprise Ireland, the State agency which fosters expansion of Irish companies abroad, says 40% of its offices are in the BRIC nations of Brazil, Russia, India and China.
It says it has made good progress in China but admits securing sales in the Indian market has been challenging.
This week Enterprise Ireland released its annual report and there was a big emphasis on emerging markets.
The organisation says – based on its own surveys – companies it supports have seen exports to China, Taiwan and Hong Kong reach €354m last year up from €253m in 2010.
Enterprise Ireland supports 180 Irish firms which trade in Greater China. It tells client companies that the market is complex, not for everyone and generating sales requires significant resources.
However, not all Irish companies exporting to China are supported by Enterprise Ireland or included in its figures.
The chart above is based on CSO exports from Ireland to China and Hong Kong. It is worth bearing in mind this also includes sales by multinationals based in Ireland – in fact they make up the vast majority of exports to China.
Despite the mediocre performance in China, Ireland’s total exports worldwide have risen from €150 billion in 2008 to €177 billion last year. China only makes up 1.2% of Ireland’s exports abroad.
This raises a further issue: if Ireland’s sales of goods and services abroad worldwide have been rising, why have exports to China been falling?
The answer is partly explained by the performance of multinationals and volatile sales of chemicals and electrical equipment.
But despite the peaks and troughs, the big issue is that a very small portion of Ireland’s exports are sold to China.
Ireland slipped back into recession in recent weeks, but if it is going to be able to carry its enormous national debt its exports will have to grow and grow. And that means selling more to emerging markets – even if it is difficult task.