Understanding the impact of Brexit for Irish companies and leveraging the success of Chinese businesses were some of the pertinent international business questions posed at the recent IMI National Management conference. Frances Ruane, former director of the ERSI and Professor George Yip, Professor of Marketing and Strategy at Imperial College Business School both gave key note speeches.
According to Professor Yip, who has spent the last five years living in China and researching key trends in Chinese businesses, China will become a dominate force in knowledge driven industries in the future. This disruption to the world economy has only happened twice in history, the rise of the British Empire and the era of mass US comercialisation. China has been well known for years as a world leader in low cost manufacturing and is currently developing expertise in a number of niche markets. This development will morph into dominance of knowledge industries, which are currently the remit of Western organisations. According to Professor Yip, China’s unique characteristics will enable this to happen. These include a large forgiving domestic market allowing companies to try out new ideas and get them right before launching them on the world stage, in addition to a world class manufacturing capability to build on through innovation and the development of robotics. China is also developing a significant scientific and technical capacity through the education of Chinese nationals in the West, who subsequently return home and will become the future competition.
How does all of this translate to Irish business? Two approaches that might help to protect against the future Goliath of China is perhaps through:
- Developing new niche markets by identifying new needs
- Finding innovative ways to work with Chinese companies, either as partners or as competitors.
What is the impact of Brexit on Irish businesses?
While the world waits to see what deal the UK negotiates with Europe and whether all ties will be cut or if the UK remains in the European Economic Area, a lot of uncertainty exists. With a number of possible scenarios post Brexit, Frances Ruane highlighted the key potential threats but also the opportunities.
Firstly, potential trade tariffs could make Irish goods and services to the UK more expensive and reduce the demand for them. Currently, over 16% of all Irish exports go to the UK, including 40% of all exports from indigenous companies, who rely heavily on an Irish supply chain to produce these goods and services
This could present Irish companies with an opportunity to diversify markets, perhaps to the BRICs and rely less on our closer neighbour for revenue. Brexit could also mean that a flood of businesses might leave the UK and use Ireland as an English speaking base for the EU market.
Think of the opportunity for all the local businesses, from recruitment firms to local restaurants that might service these new UK and multinational organisations that have just moved to Ireland. To ensure the latter happens, Frances Ruane did highlight, however, that Ireland Inc. needs to ensure that local English skills remain good, both at a written and oral level and that Ireland needs to operate to the highest standards of integrity at all levels including corporate tax rates.
Norma Murphy is Programme Director of the IMI Diploma in International Business Development which develops the capability of managers and business owners to manage across multiple jurisdictions or to grow their businesses in the dynamic global marketplace. Her expertise is in Global Strategic Management and Project Management on Masters level and customised executive education programmes and she has over 14 years industry experience in Multinational IT companies. Her work focuses on combining research-based knowledge into practical organisational strategy.