China’s Software Industry

Planning to Win

How Ireland can be China’s Ally

Market Background

Darach McEvoy

Director, Cornerstone

Europe + USA = 73.5% ofWorld IT Market 2004

Ireland at Center of 73.5% of World IT Market

IRELAND

China software exports to grow 44% p.a.

0

500

1000

1500

2000

2500

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

Ireland 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

Where does USA outsource software?

(Source: IDC)

1) India

2) Canada

3) Ireland

4) 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 EuropeOnly 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…

To…

Beijing Dublin

Los Angeles 10,080 km 8,300 km

New York 11,000 km 5,100 km

London 8,145 km 400 km

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