! Asia Ireland Trade & Investment Summit!New Asia Realities for Ireland: Strategies, Market Opportunities

and Challenges in a Changing Business Landscape!!5 June 2014 Dublin, Ireland!!

SUMMARY REPORT!!The ‘Asia Ireland Trade and Investment Summit’ took place on 5 June 2014, during Asia Business Week Dublin, an initiative of Dublin City Council and Asia Matters, with Dublin Institute of Technology (DIT) as academic partner. The summit focused on the opportunities and challenges that Asia holds for Ireland in the current period of economic recovery and growth.!!The global economic gravity is shifting towards Asia, which holds significant potential to contribute to the economic growth of Ireland in the coming decade. To examine these opportunities further, the summit featured the presentation of specially commissioned economic research on unlocking Asia’s trade potential for Ireland. Commissioned by Asia Matters and carried out by economist Marc Coleman, the research maps the current and future potential from Ireland-Asia business relations in contributing to real economic and jobs growth going forward.!!The summit provided a platform for top Irish and Asian business leaders and innovators to discuss the key issues facing them in an ever changing and challenging business landscape.!!Ireland is doing more to unlock Asia’s true potential, expanding its reach with new embassies and resources on the ground, while Irish business leaders are seeing Asia’s potential by expanding exports into high growth markets as well as attracting inward investment. !!The summit focused on how Ireland engages with Asia and where the best opportunities are for sectors in which Ireland has core expertise. It examined what Ireland can offer Asian companies and investors, as they seek to use Ireland as a gateway to access the European market.

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Keynote Presentation !!Richard Bruton TD, Minister for Jobs, Enterprise and Innovation, spoke about the role of government and state agencies, Enterprise Ireland and IDA Ireland, in driving Ireland’s economic recovery. Minister Bruton stressed the “mutual benefits of trade” across Asia, citing sectors where Ireland has significant expertise and how Asian countries could benefit from this expert ise, these included ICT, Pharmaceuticals, Financial Services and Medical Devices. Minister Bruton outlined the long-term benefits and added value that greater connectivity could bring to both sides. Ireland’s trade with its partners across Asia currently accounts for 10% of trade, however this figure is growing at approximately 20% per annum and is set to double over the next five years if current trends continue.!The minister discussed the commitment of the government and state agencies to supporting companies in Asia, citing the example of Enterpr ise I re land increasing their presence on the ground by a third. In addition, Minister Bruton highlighted the great work of Enterprise Ireland and IDA Ireland as global leaders

in trade promotion and FDI facilitation, stating that the level of knowledge and expertise in both organisations offer a great resource to Irish business and potential investors. Finally, he highlighted the tangible opportunities and mutual benefits that an increased flow of trade and investment will have for Ireland and its partners across Asia. !!Asia Strategies & Market Opportunities – Insights from Irish Experts !!Session 1 outlined the capabilities, strategies and achievements of Team Ireland in their engagement with Asia. Included were presentations from top figures in Bord Bia, Enterprise Ireland, IDA Ireland and Tourism Ireland. The session offered valuable insights into Ireland’s infrastructure across Asia and some of the initiatives to support business connectivity with key growth markets across the region. !!Niall Gibbons, CEO, Tourism Ireland, opened the session by outlining the major shifts taking place in the global tourism sector, with massive growth in the Asian outward tourism sector. Over the past five years, Asian tourism has grown by 35%, significant for Ireland is the 65% increase of Asian tourists visiting Western Europe. !Mr. Gibbons went on to discuss a recent market research survey conducted on Ireland in China.

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Figure 1: Brand Architecture of Ireland in China – spontaneous responses on image of Ireland

The research outlines how many Chinese see Ireland as a beautiful country with nice scenery and rich heritage. In terms of symbols or recognized brands of Ireland, Chinese respondents were aware of Trinity College and Riverdance. With regards to enticing visits to Ireland, respondents cited a number of services to enable a smoother travel process, this included direct air connectivity, ease of visa application and the use of China Union Pay (a popular debit/credit card payment system in China).!!Conor Fahy, Regional Director, High Growth Markets, Enterprise Ireland, highlighted the network of Enterprise Ireland offices and services across Asia and how exports from Irish companies exceeded over €1 billion last year. Conor listed examples of success stories of the over 500 client companies active across Asia. He recommended five key factors for companies that are seeking to move into the Asian market, these included (i) understanding the marketplace (ii) understanding the b u s i n e s s c u l t u r e t o b u i l d relationships through humility, patience and respect (iii) having a compelling offer or a proven product (iv) commitment to the market (v) capabi l i ty to operate in the marketplace. One final piece of advice Mr. Fahy shared for prospective Irish companies entering the marketplace was to work through local reliable partners. !!Eileen Sharpe, Director of Growth Markets, IDA Ireland, gave an excellent overview of the importance of Asia in Ireland’s FDI agenda. This included an outline of IDA’s network in nine cities across the Asia-Pacific and their resources on the ground. The presentation also featured the key drivers that Asian economies are looking for in their foreign investment

strategies. These included many areas of key expertise for Ireland such as its excellent track record, natural resources, brand acquisition opportunities, technology, the Asian diaspora, market access and ease of doing business. Interestingly, of the Asian countries investing in Ireland, Japan was the top investor with 22 companies, China was next with 15 companies, while Australia, India, Korea combined accounted for 39 companies, while other countries such as Singapore and Malaysia also have investments in Ireland. !

!Breiffini Kennedy, International Markets Manager, Bord Bia (Irish Food Board), presented on the latest innovative campaign by Bord Bia to brand Ireland as a key source of quality produce in growing Asian consumer markets. The presentation cited the 39% combined increase in food exports in the last 4 years, with growth of 137% in Asia from €267m

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5 Tips for Entering the Asian Market

1. Understanding the marketplace

2. Understanding the business culture to build relationships through humility, patience and respect

3. Having a compelling offer or proven product4. Commitment to the market

5. Capability to operate in the marketplace

Track Record Natural Resources, Brand Acquisition Opportunities

Technology Asian Diaspora Market Access Ease of Doing

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Figure 2: 5 tips for entering Asian markets

Figure 3: Key drivers that Asian economies look for in their foreign investment strategies, many of which

Ireland exhibits

in 2009 to €635.2m in 2013. The opportunities for Ireland’s food and drink sector are abundant, with key Asian economies undergoing major shifts in population, urbanisation and a huge increase in middle class consumers. These trends represent a major opportunity for Ireland to position itself as a key source of high quality produce. Geographically, Ireland has a unique advantage as it is 80% grassland, while food quality and safety are among the highest levels in the world. In closing, Breiffini highlighted that, with EU milk quotas due to be lifted in 2015, there is a major opportunity for Ireland to increase its production to satisfy growth in the sector across Asia.!!“Three billion consumers will join the middle class over the next 20 years, this is due in large part to changing lifestyles and shifts in dietary habits”!!

This session provided an invaluable o v e r v i e w o n t h e e f f o r t s a n d infrastructure of Team Ireland in promoting Asia strategies and market opportunities from the perspectives of Irish experts. Interestingly, two key growth markets of tourism and food

exports were illustrated as areas where Ireland is performing exceptionally well and can build upon this success to unlock the vast potential in both these sectors. In addition, the session featured key insights on what Ireland can offer Asian companies and key considerations for Irish companies when entering markets across Asia. !!Asia Strategies & Market Opportunities – Insights from Asian Experts!!Session 2 included presentations from influential figures representing two key countries for Ireland’s engagement in Asia. The presentations detailed the type of market opportunities on offer in Japan, traditionally Ireland’s largest partner in Asia, as well as Vietnam, an emerging market that holds unique opportunities for greater engagement with Ireland.!!H.E Bui Thanh Son, Vice Minister for Foreign Affairs, Vietnam, opened the session with a feature presentation on market opportunities in Vietnam’s fast growing economy. Vice Minister Son outlined the major impact of Foreign Direct Investment for the Vietnamese economy citing the 16,300 investment projects taking place in the country with an investment value of $238 billion. !The Vice Minister detailed some of the short term strategies for the Vietnamese economy, which include valuable restructuring and reform of three key sectors for economic growth: banking, public

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Figure 4: Shares of Middle Class Consumption, 2000-2050

i nves tmen t , and s ta te owned enterprises. Medium term strategies focused on investment in both physical infrastructure and human capital through education. !The presentation provided some key details on the advantage of Vietnam for potential investors, a country of over 90 million people with key access to the ASEAN market of over 600 million citizens, with a rapidly rising consumer class. Ireland-Vietnam two-way trade is in excess of $1 billion with six Irish investment projects underway in Vietnam to the value of $6.25 million. Vice Minister Son encouraged both sides to bui ld on this modest engagement and increase connectivity, using international platforms such as the Asia-Europe Meeting (ASEM) and the potential of the EU Vietnam Free Trade Agreement to increase cooperation. !!Jun Arima, Director-General, Japan External Trade Organisation (JETRO) – London, introduced the key aspects of Abenomics to delegates detailing the three arrows - fiscal stimulus, monetary easing and structural reforms - to return Japan to the path o f s u s t a i n a b l e g r o w t h . T h e presentation outlined some of the advantages of Japan in terms of global competitiveness in the fields of education, infrastructure, business sophist icat ion and Intel lectual Property Rights protection.!!

“ Mr. Arima discussed some of the key oppor tun i t ies fo r investment in Japan, paying particular attention to renewable energy and health sectors (specifically pharma and medical devices), the Olympics, and also the opportunities of the EU-Japan Economic Partnership Agreement (EPA). “!!

In addition, the presentation detailed how to succeed in Japanese markets, citing the importance of understanding the business culture, utilising the support of Japan’s government agencies such as JETRO and the Ministry of Economics, Trade and Investment (METI), building sustainable partnerships, main ta in ing pat ience in negot ia t ions, maintaining a regular presence and, finally, demonstrating commitment to the market.!!The session included valuable insights from key figures in Japan and Vietnam, two key markets with incredible potential for a multitude of Irish companies. The sessions detai led the connectivity between Ireland and each country, listed the key opportunities to build the relationship and also listed key aspects of doing business and entering the market. !!Overcoming Challenges to Break the Asian Market – What Companies Need to Know to Succeed !!Session 3 featured the presentation of independent economic research commissioned by Asia Matters and presented by Marc Coleman, Economics Editor, Newstalk. The research, “Unlocking Asia’s trade potential for Ireland”, looks in depth at the opportunities for Ireland in key established and emerging markets across Asia. It detailed the economic shifts taking place across Asia and how Ireland can benefit. The research provided a solid basis for the excellent panelists in this session to share their own experiences and success stories in breaking Asian markets. !!

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Figure 6: Asia’s population is now rapidly converging with western levels of urbanisation.

Source: World Bank (World Development Indicators) 2014

Marc Coleman’s presentat ion detailed the great convergence story taking place in emerging Asian economies across Asia, Ireland’s unique position to unlock Asia’s potential, a country by country analysis of key partners, some of the risks that need to be overcome, and some of the key conclusions and strategies going forward. !!Asia is undergoing a major shift, as key economic indicators point t o w a r d s f u r t h e r g r o w t h a n d demographic shifts benefiting many emerging economies with high savings rates. It is estimated that one billion new middle-income consumers from across Asia will join the global economy by 2025. The presentation outlined some key examples of recent growth across Asia, these included Indian airline passengers doubling between 2006 and 2011, and the rapid growth of the e-tail market in China in the same period, which is currently worth $210 billion and continues to expand to new markets across Asia, changing the face of retail in the region.!!

Chinese consumption as a share of growth will continue to increase, while 310 million of China’s 1.4 billion citizens are set to urbanise over the next ten years. This, combined with the increase of middle-income consumers, holds many opportunities for Ireland’s exports, with food and agribusiness highlighted as a key sector for growth in China. In India, optimism is high following the voting into power of Modi on a pro-business and reform-driven agenda. !!The macro-economic potential is huge across both established and emerging markets in Asia and Ireland needs to be aware of how to unlock this potential. The presentation encouraged delegates to develop strategies to target the specific countries given the diversity of Asian markets and the common mistake of assuming a one-size-fits-all strategy for the region. !!Shinichi Hayashida, Chairman, SMBC Aviation Capital, shared his unique experience as the head of SMBC’s partnership in Ireland in the Aviation Finance sector. Mr. Hayashida discussed the great opportunity in Aviation Finance that SMBC identified in Ireland, given its core expertise in the sector. On doing business in Japan, Mr. Hayashida shared some great insights for delegates, encouraging them to open regular communication channels with junior level management as a key to success in Japan.

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US$ Revenues (US$ Trillions) 2017-2017 Growth RatesAsia Pacific is the

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Figure 6: Asia Pacific has become the largest retail market in the world

Source: SP eCommerce

The business culture in Japan is for bottom-up decision-making, and business loyalty is valued, therefore staff are highly networked across the organisation and sector. !!Mr. Hayashida also pointed out that understanding Japanese partners’ strategies and corporate culture is essential to building a relationship. He advised Irish businesses to go to Japan and meet face to face with potential partners to develop trust and avoid ambiguity. He urged delegates to have patience, ensure one fully understands the business processes, and finally, not to be afraid to push for decisions.!!Dr. Pat Ivory, Head of International Relations, Ibec, opened by discussing the central role of exports in driving economic recovery in Ireland. He went on to highlight some of the t rends ac ross As ia tha t ho ld opportunities for greater Ireland-Asia trade and investment, referencing the significant network of EU FTAs across Asia as well as key reforms taking place under new leadership in China, Japan and India - key markets for Ireland. Dr. Ivory shared some useful insights on sectors that are driving Irish exports and where potential lies, d e t a i l i n g t h a t o v e r 5 0 % o f International traded services (I.T., Business & Financial services) are comprised of exports. Further to this, aviation services is an area where Ireland can unlock the demand in the sector across Asia. Dr. Ivory ended his remarks by detailing Ibec’s latest initiative, “An Ireland that works”, which calls for a reduction of the tax burden, better government, enhanced entrepreneurship and an extension of Ireland’s global reach. !!Hugh Kelly, Chairman, Asia Trade Forum, made a valuable intervention, advising delegates on four key learnings from his experience of

dealing with Asia. He encouraged delegates dealing with Asia to prepare, prove, persist and finally to have patience. !Prepare – it is essential that you get to know Asia, both the business and cul tura l environments of the country in which you are operating. !Prove – it is important that your products or services are proven and are desired in the market, you will need to demonstrate your value from the outset. !Persist – relationships matter across Asia, so visit regularly, as business relationships cannot be developed remotely. !Patience – you will need to budget (time and resources) to be patient and commit fully or you will lose out.!

!Sean O’ Reilly, Deputy Managing Director, Huawei Ireland shared his valuable experience of working with Huawei and the role he played in bringing what is now one of the global leaders in telecommunications and mobile technologies to Ireland. Huawei, marking its

tenth year in Ireland in 2014, began life from humble roots. Sean provided very useful insights on how to succeed in partnerships in China from his unique experiences. Firstly, China is a majorly diverse market, it is vital to know whether there is a need for your product. !!!Localization is key – having an Irish person on the ground and getting local resources in China helps you to unlock the cultural nuance to do better business. Dealing with China is a long game, so be prepared to have the resources and time to show your commitment.

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Prepare - get to know Asia Prove - your product or service Persist - build relationships locally Patience - with time & resources

” T h e c o n c e p t o f g u a n x i (connections/ networks) is a very important cultural trait that should not be overlooked, citing the Chinese phrase: “First we become friends, then we discuss business.” !!

David Coughlan, President and Managing Director, Havok, discussed the experience of Havok in entering the Asian market and shared some insights from their successes in Asia. Havok have operations in Tokyo, Seoul and Shanghai, accounting for 25% of their revenue, with their office in Tokyo being their first and primary source of their Asian operations. Havok, a lead ing prov ider o f interactive software and digital media c rea to r fo r v ideo games and entertainment content, entered the Japanese market, following extensive work to bu i l d c red ib i l i t y and partnerships in the country. Mr. Coughlan advised delegates to avoid a one-size-fits-all strategy for Asia, given the diversity and cultural nuances in each market. Japan, in particular, requires the highest quality products and preparation – price is less of an issue, quality is. Havok learned early on that Japan would be the biggest test of its products in the world and that making it there would be indicative of their market leading quality.!!!

“ One aspect of entering the market in Asia, which Havok learned most from was simply talking to people doing business in the region - networking with the trailblazers on the ground. Building a level of understanding is essential and learning from the lessons of others is key in Asian markets. ”!

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Conclusions !!Concluding remarks for the summit were provided by Alan Dukes, Chairman, Asia Matters and Professor Brian Norton, President, Dublin Institute of Technology (DIT). !!Alan Dukes thanked the speakers for sharing their rich and illuminating experience and expertise. He brought attention to the wider scope of EU FTAs across Asia that help Irish business to unlock Asian markets. He encouraged delegates to treat Asian markets with a high degree of sensitivity and understanding in terms of business, social and cultural environments. In addition, he summarized how any entry strategies in Asia need to account for the diversity of Asian markets that require varying levels of patience and commitment. He brought attention to the incredible reforms taking place in Vietnam and Japan that were highlighted by speakers.!!Professor Norton focused on the great support network and work of the Irish state agencies across Asia. He went on to elaborate on the role of education and future stakeholders in Ireland’s engagement with Asia. New graduates need to have an empathy and understanding of the region as the world becomes increasingly well networked. He went on to discuss the role of DIT in linking Ireland to Asia, with bilateral relations with Chinese, Japanese and Singaporean institutions. In addition to this, there are students attending programmes in DIT from across Asia, with a permanent office in China to increase its connections in China. He ended by encourag ing a l l I r i sh stakeholders to be aware of Ireland’s image abroad and play their role in building a positive understanding. ! !!!!

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Key Points to build !Ireland-Asia Trade and Investment!

!The value of government agencies – Irish state agencies and their respective counterparts in Asia have the resources and expertise, and are committed to supporting mutually beneficial trade and investment between Ireland and key partners across Asia. !!Tourism – the rise in numbers of Asian tourists visiting Western Europe is transforming the sector. Enabling them to travel to Ireland will require greater access – be it air connectivity, visa processing or the use of local financial services (e.g. Union Pay).!!Food and Drink – major shifts are taking place across Asia, such as urbanisation and the rapid rise in the number of consumers. This holds great potential for Ireland’s high quality produce entering the market and finding these new consumers. !!Country Focus: Japan – Abenomics is slowly transforming the economy opening opportunities for trade and investment. Economic realties have seen potential for investment in renewable energy, pharmaceuticals and medical devices, while the EU-Japan Economic Partnership Agreement will open doors for two-way trade and investment.!!Country Focus: Vietnam – key reforms to assist business relations are underway, as Vietnam invests in its infrastructure, human capital and business environment. Opportunities exist to build on the modest Vietnam Ireland trade and investment, while the EU Vietnam FTA will accelerate access to the country’s markets. !!Learn from the Trailblazers – when looking to break into Asian markets, some key learnings need to be considered. Understanding each market place and the business/ cultural landscape is essential, a one-size-fits-all strategy will fail. Enter with a proven product, many Asian markets value quality over price. Commitment is required - this includes having patience and having resources (human and financial). Localisation is essential, have a presence on the ground and, if not, visit often.

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Asia Matters Contacts!!Martin Murray!

Executive Director,!Asia Matters!

E: martin.murray@asiamatters.biz!T: +353 87 268 8805!!

Rónán Lenihan !Director of Operations and Development,!

Asia Matters!E: ronan.lenihan@asiamatters.biz!

T +353 87 799 2913!!Stephanie FitzGerald-Smith!

Deputy Director of Marketing and Communications, !Asia Matters,!

E: stephanie@asiamatters.biz!T: +353 87 771 4317!!

This document is a summary of the discussions from the “Asia Ireland Trade and Investment Summit”. The insights shared by speakers at the event are summarised in this report in good faith and accurately reflect the key topics, quotes, facts, figures and charts presented during the conference. This is not investment advice or an offer or solicitation to sell or purchase any financial instruments shares or products. The author and partners to this publication expressly disclaim all liability to any person or corporation in respect of any losses or other claims, whether direct, indirect, incidental, and consequential or otherwise arising in relation to the use of this report as the basis for any investment or other decision or in connection with any advice given to third parties.!!

Special thanks to !!Alan Dukes, Chairman, Asia Matters!

Tom Hardiman, Chairman, Chester Beatty Library!Members of the Asia Business Week Dublin Advisory Group !

Dublin City Council !Dublin Institute of Technology!

All Associate Partners!

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