Huawei
Last May, Irish Minister Dara Calleary helped Huawei celebrate 20 years of operation in the country.
The Irish economy is attracting more and more Chinese investment, but does this come at a cost in terms of reputation?
In 2020, 25 Chinese companies operated in the Republic of Ireland. That year, that number had risen to 40.
For some, this new influx of yuan into the country offers Ireland an opportunity to reduce its reliance on the European base role of US tech giants such as Apple and Alphabet. And that creates additional jobs.
But for a growing number of critics, the fact that Ireland is home to Chinese companies links the country to allegations of human rights abuses made against some of these companies. These include the Chinese clothing company Shein, which has had its European headquarters in Dublin since May 2023.
Shein has long been attacked for the way the workers who make its clothing are treated. And earlier this year, it had to admit that it found child labor in its supply chain.
The Irish government also finds itself in the delicate diplomatic position of attracting many of the Chinese companies that the United States has sanctioned.
Two concrete examples: the telecommunications company Huawei and the pharmaceutical company WuXi Biologics.
In May, Ireland's Minister of State for Trade Promotion, Dara Calleary, welcomed a report celebrating Huawei's contribution of €800 million ($889 million; £668 million) per year to the Irish economy. The company has three research and development centers in Ireland.
This is the same Huawei whose telecommunications network equipment the United States has banned since 2022 for national security reasons. The UK has moved in the same direction, ordering phone networks to remove Huawei components. And mobile phone networks in many Western countries, including Ireland, no longer offer Huawei handsets.
At the same time, WuXi has invested more than a billion euros since 2018 in a facility in Dundalk, near the border with Northern Ireland.
Earlier this month, the US House of Representatives passed a bill to restrict the ability of US companies to work with WuXi, again citing national security concerns. The bill must now go to the US Senate.
WuXi
WuXi has a large facility in Dundalk, near the border with Northern Ireland.
The Irish Industrial Development Authority is the government agency whose mandate is to attract foreign investment to the country. It has three offices in China and says it wants to “promote Ireland as a gateway to Europe for Chinese investors”.
Another Chinese company with its European headquarters in Ireland is social media video app TikTok, which is owned by Beijing-based parent company ByteDance. And the parent company of Chinese online retailer Temu moved its global headquarters from China to Ireland last year.
Among the most prominent critics of Ireland's rolling out of a “green carpet” for Chinese companies is Barry Andrews, one of Ireland's members of the European Parliament. “Human rights and environmental violations should not be allowed into Ireland's pockets,” the Fianna Fáil MEP said.
It cites a US Congressional report from last year, which said there was “an extremely high risk that Temu's supply chains would be contaminated by forced labor.”
Temu told the inquiry she had a “zero tolerance policy” towards the practice.
“One person's bargain is another person's backbreaking labor for poverty wages,” adds Andrews, whose party is part of Ireland's current coalition government.
Critics also say there are substantial differences between US tech companies operating in Ireland and Chinese companies – for example in terms of openness.
For example, Huawei and WuXi declined the opportunity to be interviewed for this article. Shein provided a spokesperson who was only willing to speak off the record and then did not respond to follow-up questions.
Some leading economists question whether Ireland really needs the few thousand jobs provided by Chinese companies.
“The Irish economy has been operating at near full employment for almost a decade,” says Dan O’Brien, chief economist at the Irish Institute of International and European Affairs.
Irish unemployment stood at 4.3% in August 2024, just above its all-time low of 3.90% in October 2020. Economists generally consider an unemployment rate of around 4 to 5 % represents full employment.
Getty Images
Huawei is very present in Ireland but the main Irish telephone networks no longer offer its handsets
Mr O'Brien also highlights the fact that a fifth of Irish private sector employment is directly or indirectly attributable to foreign direct investment (FDI), according to official figures. He says it's too high.
It is so high because Ireland has one of the lowest corporate tax rates in Europe, at 12.5%. This is the tax that all but the largest companies must pay on their profits. For comparison, the UK rate is 25%.
Mr O'Brien says Ireland's level of FDI was already too high without the added Chinese investment. “Given that we are already too dependent on FDI in a world threatened by deglobalization, we do not need another major source of FDI besides that of the United States. »
He adds that EU rules should be “actively used to discourage Chinese FDI” in Ireland.
The Irish government told the BBC it “supports the EU's common approach to China on de-risking… (but) the government has made it clear that de-risking does not mean decoupling.
Irish Minister for Enterprise, Trade and Employment, Peter Burke, added: “In a time of continued global uncertainty, Ireland provides a stable and supportive environment for business. Multinational companies, including Chinese companies, recognize these opportunities.
Given how dependent the Irish economy is on FDI, some economists say Chinese investments in Ireland can be seen as a welcome insurance policy in case some U.S. companies pull out.
“There is enormous pressure on American technology companies to redomicile and reinvest in the United States,” says Constantin Gurdgiev, an economist at Trinity College Dublin and the University of Northern Colorado.
Meanwhile, other European countries, such as Poland, Estonia, Slovakia and Malta, have managed to attract US investment, placing Ireland facing new competition from countries where housing is less expensive and where there is less rain.
Dr Gurdgiev also highlights “the ever-looming threat of global corporate tax reforms”, which is further eroding Ireland’s low corporate tax. The country has already signed up to the rules of the Organization for Economic Co-operation and Development and therefore introduced a 15% corporate tax rate this year for companies with annual turnover above 750 million euros ($835 million; £625 million).
And earlier this month, the European Court of Justice ruled that Apple must pay Ireland €13 billion in unpaid taxes. This followed the European Commission accusing Ireland of granting illegal tax benefits to Apple.
Dublin has always opposed the need for the tax to be paid, but said it would respect the decision.
Dr Gurdgiev adds that Ireland is acting “with a certain strategic foresight” in courting Beijing. And that even as Dublin welcomes companies like Huawei, he says the strength and influence of the Irish diaspora in the US means Washington will turn a blind eye.
He argues that this is why the American authorities have demonstrated a “largely lax approach in the fight against the tax optimization projects that Dublin has developed over the decades”.
Additionally, he claims that Ireland provides the US, EU and China with useful “neutral ground” on which US and Chinese tech companies can operate.
Dr Gurdgiev adds that by placing itself in such a position, Ireland is playing a “dangerous geopolitical game” for a small economy.
However, he believes that the United States' diplomatic proximity to the United States should make its position “relatively secure.”
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