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Why Chinese Tech Companies Are Setting Base in Ireland

31st July '24

In today’s digital age, the tech sector is booming, and countries looking to grow their economy are taking the necessary measures to provide a suitable business environment for tech companies. So, what distinguishes Ireland? Ireland has a pro-business and pro-enterprise economy. Tech companies based in Ireland are assured of certainty, stability, and clarity. Over recent years, China has become a trailblazer when it comes to digitisation and sustainable technologies. With technological advances constantly emerging in China, Ireland can serve Chinese tech companies as the gateway into the international market.

Thanks to Ireland's pro-business environment, skilled workforce, and access to the European market, Chinese technology companies have been increasingly establishing operations there. Here’s how Ireland attracts Chinese tech companies:

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Pro-Business Environment

The business-friendly policies of Ireland foster a favourable environment for foreign investment. Ireland has a well-established reputation for having a clear, stable, and supportive regulatory framework that doesn’t discriminate or impose exorbitant levies on foreign companies. This factor offers a welcoming business environment that is appealing to Chinese tech firms. These conditions vary from those of other European nations with less favourable tax regimes or more complex regulatory environments.

Corporate Tax Rate

The industrial policy of Ireland heavily depends on external investment, as numerous technology and pharmaceutical corporations have established their centre of operations in the country. Why is this? These companies are attracted to the country's 12.5% corporate tax rate. The low corporate tax rate is a massive draw for Chinese tech firms seeking to optimise profitability. Ireland's ability to draw foreign direct investment, particularly from the technology and biotech sectors, is frequently attributed to this tax advantage, making it more appealing than numerous other European nations that impose higher tax burdens.

Gateway to Europe

Ireland is a tiny, open country with an outward-facing economy, which the Irish government offers to tech companies in China as the ‘entryway to Europe’ for investment and trade. This economic doctrine is supported and incentivised by a relatively low corporate tax rate. Ireland promotes itself as "the gateway to Europe," capitalising on its membership in the European Union to provide Chinese enterprises access to the broader European market. This strategic positioning is further bolstered by the close relationships between Irish business agencies and Chinese firms, which enable a more seamless entry into European markets compared to other countries without robust bilateral relationships.

Digital Transformation and Sustainability

Sustainability and digital transformation are the main areas undergoing evolution and changes in Ireland. Regardless of the type of business you may have, be it small, large, multinational, or high-tech, chances are that they will be affected by digital transformation. When it comes to green economy and sustainability, companies in Ireland have to evaluate themselves and take appropriate measures to be more sustainable and efficient in their investments, in addition to using renewable sources and alternative materials. There’s a new enterprise base and an entire emerging market founded on the latest advancements needed for sustainable businesses. Chinese firms have taken the lead in both these sectors.

Ireland has identified digital transformation and sustainability as critical areas for future development and potential investment. This focus aligns with China's technological advancements, particularly in these sectors. Ireland positions itself as a valuable collaborator for Chinese firms seeking to expand globally by prioritising collaboration in sustainable and digital technologies.

Skilled Workforce

Ireland has a youthful, English-speaking, and highly-educated workforce that is appealing to foreign tech companies, including China. The country churns out a considerable number of graduates specialising in fields such as business, computer science, and engineering. The availability of a tech-savvy workforce is appealing to Chinese tech firms, given the tremendous amount of computing knowledge needed to run operations 24/7.

Strong Historical Ties

The strategic partnership between China and Ireland for mutually beneficial cooperation celebrated its tenth anniversary in 2022. Also, China and Ireland's economic and business cooperation spans over four decades. This presents a chance to build on that relationship and focus on sustainability, as there are technologies in China that need to be looked at across international markets. Ireland is the ideal place for Chinese firms to consider if they want to break into those markets.

Some of the ways Ireland can benefit from having Chinese tech Investments include:

Economic Diversification

By embracing Chinese technology companies, Ireland aims to broaden its economy beyond conventional sectors such as agriculture and pharmaceuticals. This diversification is essential to reduce dependence on key industries and enhance economic resilience. Also, stronger relationships with China may facilitate the entry of Irish companies into the Chinese market.

Jobs

Chinese technology investments are anticipated to create numerous employment opportunities in Ireland. For example, WuXi Biologics is constructing facilities that will generate numerous jobs. With a youthful workforce, Ireland can retain its talent and build the local economy.

Access to Advanced Technologies

Ireland is looking to capitalise on China's innovations in sustainable technologies and digital transformation. Partnering with Chinese companies provides Ireland with a unique opportunity to leverage the transfer of tech know-how, which improves Ireland’s aptitude in the tech sector. This is especially relevant as Ireland concentrates on green technologies and sustainability.

Increased Foreign Direct Investment (FDI)

Appealing to Chinese tech firms is part of Ireland's bigger strategy to increase foreign direct investment. Increased Chinese investment in the country can boost Ireland's economic development and stability.

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Positioning as a Global Tech Hub

By cultivating an environment that is advantageous to Chinese technology companies, Ireland aims to establish itself as a premier technology centre in Europe. This has the potential to attract further investments from other global technology companies, thereby further solidifying Ireland's status as a tech hub.

Growth In Chinese Tech Investment in Ireland

In 2019, there was a reported 56% increase in Chinese investment in Ireland. This growth is accredited to several acquisitions and mergers, which underscores the growing confidence of Chinese tech companies in the Irish market. Ireland's strategic positioning as a gateway to Europe, focus on technology and sustainability, strong historical ties with China, and pro-business environment make it a more attractive option for Chinese tech companies.

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