Eoghan Murphy, Ireland’s Minister of State for Financial Services, attends the Asian Financial Forum in Hong Kong on Jan 17. Photo: Asia Times
Eoghan Murphy, Ireland’s Minister of State for Financial Services, attends the Asian Financial Forum in Hong Kong on Jan 17. Photo: Asia Times

Dublin, the capital city of Ireland, is seeking to form closer ties with Hong Kong to encourage more collaboration among fintech companies in both English-speaking cities, according to a senior Irish official.

“We are always ready and willing to meet companies in Hong Kong, which are either investing into Ireland or investing into Europe through Ireland, or actually investing in Irish FinTech companies that are here in Asia,” Eoghan Murphy, Ireland’s Minister of State for Financial Services, told Asia Times in an interview during his visit to Hong Kong earlier this week.

“Within a couple of months, we’ll have another new person being here in Hong Kong, who will be acting as a shepherd for Irish fintech companies to build up relationships with Chinese and Hong Kong companies,” he said.

“Hopefully, in future, these companies can invest back into the markets in Ireland. Ireland is a small and open economy. We put innovation on top priority.

“We see a lot of parallel companies in Hong Kong … they are managing their financial services and looking for FinTech and technology for payment. We want to work with them.”

At the moment, the two largest Irish companies, which are located in the Pearl River Delta, are both information technology firms. They are Fexco, a Hong Kong-based online payment company, and PCH, a Shenzhen-based solution provider for manufacturers.

Last June, Liam Casey, founder and chief executive of PCH, said in a media interview that he was going to launch a voluntary redundancy scheme to lay off 1,500 Chinese employees, almost all of its Chinese workforce, due to shrinking margins and changing business interests.

“I noticed that PCH reduced its employment. The company is in the supply chain, providing solutions for multinationals to speed up and improve accuracy of their distribution … its employment tends to fluctuate with the business cycle,” said Paul Kavanagh, Ireland’s Ambassador to China.

Kavanagh said he believes that PCH will continue to have a significant presence in the Guangdong province. Meanwhile, CRH, a cement suppler, and Glen Dimplex, a manufacturer of electric heating and domestic appliances, will continue to invest in China, he added.

Murphy declined to comment on any specific company, but said the bilateral trade and investment relationship between China and Ireland will keep improving.

“All we are seeing every year is more and more investments by Chinese companies in Ireland, and Irish companies in China and Hong Kong. We ourselves are putting more staff into Hong Kong and China because of that growing relationship,” he said. “We aren’t seeing any downturn.”

Sino-Ireland bilateral trade

Last year, China was once again Ireland’s largest trade partner in Asia. Ireland is one of the four European Union member states that has a trade surplus with China. The others are Germany, Austria and Finland.

Ireland’s two-way trade with China could exceeded 12 billion euros (US$12.76 billion) in 2016, compared with 11.1 billion euros a year ago, Kavanagh said. It is likely to hit 14 billion euros in 2017, double the 7 billion euros in 2013, he said.

He said he has confidence to secure access for Irish beef to China’s market this year.

All we are seeing every year is more and more investments by Chinese companies in Ireland, and Irish companies in China and Hong Kong

Irish food and drinks exports to China have trebled in the three years to 2015 and grew by a further 40% in the first three quarters last year.

“Trade relations between Ireland and China are growing faster than any other trading relationship that China has in Europe,” said Murphy. “China is incredibly important. We are increasing our resources in China every year in terms of our diplomats and state agencies.

“We will take advantage of the new market. The Chinese authorities and companies are very excited about our potential in the agri-food sector.”

He said the Irish government has done a lot to ensure a clean pastry environment for the country’s beef industry.

Prepared for Brexit

Theresa May, Prime Minister of the United Kingdom, said on Tuesday that the British government prefers a clean break with the European Union, or a hard Brexit, by quitting its single market. The United Kingdom’s Supreme Court will deliver its ruling on May’s decision on January 24.

“We don’t know the final result of Brexit. We are preparing to enter a negotiation once the UK pulls the article 50 trigger. We have been doing a contingency plan for over a year about the risk of a soft or hard Brexit and its impact on each sector,” Murphy said.

He said Ireland welcomes Hong Kong and Chinese financial service companies, which want to invest into a single market in the European Union, to set up regional headquarters in Dublin amid Brexit.

“We’ve had a very strong offering to financial services companies before the Brexit decision. If you want to have access to a single market, Ireland makes a very good gateway for investors,” he said.

As there might be an opportunity that companies currently operating in the single market through the UK can no longer do so, “we see ourselves as a natural location for them to relocate to and we will look forward to building those relationships,” said Murphy.

Apple taxation ruling

In August 2016, the European Commission ruled that Apple should repay 13 billion euros of tax to Ireland. The Irish government later accused the European Commission of exceeding its powers in the ruling.

“I don’t recognise any potential conflict because taxation law is a sovereign right of each member state. It is clearly stated in the European treaty. What we now have is the competition commissioner ruling on a tax case … and they have made a fundamental mistake,” Murphy said.

Irish tax collectors did not give any special deal to Apple, but just offered a transparent 12.5% tax rate, he said.

“We are going to fight back in the case robustly … at the end of the legal process, we will be proved right. For the meantime, we continue to engage constructively with the competition commission.”

He said the case will not reduce the foreign direct investments into Ireland as the country also provides investors with a young workforce and connectivity to Europe.