The size of the Irish market means it is often necessary to sell to a wider market, writes Caroline Madden
HE'S KNOWN in business circles as Mr China. The supply chain company he founded in Cork in 1996 is now Ireland's biggest exporter out of China. And last year he won the Ernst Young Entrepreneur of the Year Award.
Who is he? Liam Casey, chief executive of PCH International, and the subject of this week's case study on www.eoy.tv.
PCH offers a gateway to the Far East for western companies in the consumer electronic space. Although the company's head office remains in Cork, its operational headquarters are based in the heart of "the factory of the world" - Shenzhen in southern China.
PCH acts as a link between low-cost Chinese suppliers and manufacturers and global consumer electronics players, including three of the top five PC manufacturers in the world.
In the case study, Casey describes China as one of the most creative, innovative, entrepreneurial places in the world, and admires the nation's "can-do attitude".
He is not alone in spotting the potential of collaborating with China and establishing an international business structure. More and more Irish entrepreneurs are thinking global, albeit on a considerably smaller scale.
Take Cush n Shade, for example, as featured on the BBC venture capital programme, Dragons' Den.
The company's product - an innovative portable sunshade - is made in China, its logistics are carried out by a company based in Belgium, and its headquarters are in the Dublin suburb of Kimmage.
Its products are sold around the world, mainly through direct sales generated by the internet and indirect sales through international agents and distributors. Attendance at overseas trade shows has also proved useful in driving sales.
When adopting this type of global business model, one issue that must be considered is the protection of the company's product by means of a worldwide patent.
"I spent a fortune on patenting," recalls Joan Bree, founder of Cush n Shade.
"You really have to be very sure of your product and be aware that patenting is very expensive. Be sure you get the right professional advice," she advises.
"The year after the preliminary [patent] application goes like a flash and everything is then up for grabs if you are not fully protected."
Bree also made sure to choose a Chinese manufacturing company which operates to Fairtrade standards, meaning that its workers have good wages and conditions.
Eibhlin Curley, assistant chief executive of Dublin City Enterprise Board (which is launching Dublin City Enterprise Week on November 17th) says that many Irish companies, such as Cush n Shade, have no choice but to set up a global structure from day one.
To be able to deliver products at a competitive price, businesses have to consider outsourcing manufacturing to a cheaper location and, because of the relatively small size of the Irish market, it is often necessary to sell to a global market.
"Unless a business can go global or trade internationally, it's going to be very limited in the size of market that it can reach," says Curley.
In the fashion industry, for example, clothes and jewellery designers are extremely limited in the number of Irish outlets through which they can distribute their products. "Boutiques want to have exclusive deals," she says.
So a designer who wishes to sell in Kilkenny, for example, will only be able to sell their label through one boutique there, as that boutique will demand an exclusive deal. "They don't want the other five boutiques in the city offering labels that they have," says Curley.
Therefore, if designers limit themselves to the domestic market, they may struggle to build up the scale needed to survive.
Businesses that did not have to bother looking overseas during the boom times because of strong local demand are now feeling the pressure to become more proactive and start seeking opportunities further afield.
Also, if an entrepreneur is hoping to attract investment, they need to be able to show how they plan to ramp up the business and deliver an attractive return on investment, and this will generally involve a global proposition.
Sometimes entrepreneurs feel overwhelmed by the challenges involved in cracking global markets, but according to Curley the biggest barrier is often psychological. "You're out of your comfort zone," she says, "but it's definitely worth the reward."
The Irish Times Business Education Series
The Business Education Series provides second-level students with an insight into key business issues. It is published every Friday in the Business This Week supplement and is also available on www.irishtimes.com/business/education/.
It is intended to complement a series of 12 visual case studies available on the Ernst Young Entrepreneur of the Year programme's new online business education channel, www.eoy.tv. Teacher support notes are also available here. Students can watch the clips at home in their own time or in the classroom with their teacher.
The case studies have been developed in collaboration with the Business Studies Teachers' Association. Each case study is directly related to the Leaving Certificate business course, and links to the curriculum are outlined here each week.
PCH - global thinking
This week's case study ties in with the following areas of the Leaving Certificate business studies curriculum:
Unit 7: The international trading environment - Liam Casey identified a business opportunity and developed it into a successful global business.
Links modules: Casey displays some of the key skills and characteristics of a successful entrepreneur, eg innovation, creativity, realism and decisiveness.
