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China’s Software Industry Planning to Win How Ireland can be China’s Ally Market Background Darach McEvoy Director, Cornerstone Europe + USA = 73.5% of World IT Market 2004 Ireland at Center of 73.5% of World IT Market IRELAND China software exports to grow 44% p.a. 2500 2000 1500 1000 500 0 2003 2004 2005 2006 2007 2008 Ireland the World’s No 1 Software Exporter (2002) (OECD/Eurostat 2004) Exports US$ Billions As % of All Exports % of GDP 10,377 9.1 8.5 USA 6,930 0.7 0.1 Germany 5,162 0.7 0.3 Great Britain 4,463 1.1 0.3 Spain 2,483 1.3 0.4 All OECD 42,200 0.7 0.2 All EU 30,646 1.0 0.3 Ireland Where does USA outsource software? (Source: IDC) 1) 2) 3) 4) India Canada Ireland China China must be better than India • • • • • • Technical ability Project management ability Software quality Software development speed English language ability Technical negotiation skills Ireland can be China’s Partner • • • • • • • Only 4 million people 1.5% Chinese! English speaking No natural resources except people Minimal bureaucracy Highly supportive Government Ranked as No.1 Most Global country for last 3 years (AT Kearney) China – Ireland Political Relations • High level of political and government co-operation • Irish Government has an “Asia Strategy” to develop co-operation with China • Visit by Premier Wen Jiabao in May 2004 the latest official visit by both sides Overcome the Problems • • • • • • Geographic distance Time zone distance (also an advantage) Language Culture Business understanding Methodologies 25 Different Languages in Europe Only 14% Use English Ireland is English Speaking • Population 458 million • Ireland is the main localisation centre for Europe • China and Ireland can work together Ireland - Business Position • • • • • Government 100% pro-business Stable government and politics Low business profit tax of 12.5% Access to venture capital Access to R&D funds Major Tax Advantages • 12.5% tax on profits • 32.5% tax credit for R&D • Special tax advantages for operating a HQ • No tax on selling subsidiary company • No tax on patents, licences, etc. Ireland’s Position in IT industry • Bridge for US firms for Europe • Knowledge based economy • Media Lab Europe - European Partner of famous MIT Media Lab in Massachusetts • Government strategy to support – R&D – Sales and marketing Ireland got almost half the FDI of China in 2002! (UNCTAD/WIR/Overview 2003) Ireland is a safe location • Highly regarded member of EU • Politically and financially very stable • Close relations with USA – Family relations – Good political relations – US Immigration in Ireland’s airports – only country in Europe – American Arbitration Association has branch in Ireland Ireland – Closer than China even to West Coast USA From… Beijing Dublin Los Angeles 10,080 km 8,300 km New York 11,000 km 5,100 km London 8,145 km 400 km To… Advantages of Using Ireland • • • • Local face – customers like it Close to the market Opportunities for partnerships Tax advantages Share the Cost - Incubator Center • Dedicated office • Serviced offices (16 locations in Ireland) China must GIVE and TAKE • 3.4 million US jobs to move offshore by 2015 • Politically sensitive • Backlash already against India • Therefore create goodwill • Bring new jobs to Europe and USA • Co-operate in R&D Opportunities for Chinese Firms • Partner for US and European firms in China – Localisation – Sales and support • Software development centers • R&D centers Asia Trade Forum • Irish Exporters Association will support Ireland-China software initiative • Cornerstone can provide the premises and services to help Next steps • • • • • Training and certification Business relationships Exchanges R&D relationships Incubator centre in Ireland Training & Certification Kraken Yu Director, Cornerstone Member of the Council of the Asia Trade Forum Extreme Programming Agent Oriented Software Engineering World ICT Value 2004