"We have had a wait-and-see policy in Belgium in the past, says Mr. Wei, Commercial Attache for Beijing's Belgian embassy. Now with a delegation of 70 companies having just completed a tour of China, there is a feeling that the Belgian attitude is changing.
The mission was the largest of its kind ever to be organised by the Belgian Foreign Trade Bureau, and was led by the king's brother, Prince Albert. Representatives of the country's top industries took part, including sectors that are currently under-represented in China.
The industry still making the most headway in China at the moment, however, is telecommunications, with front runner, Shanghai Bell controlling 50 per cent of the country's telephone exchange production. In second place comes the chemical industry, with pharmaceutical company Xian Pharmaceuticals, the Chinese joint venture of Janssen Pharmaceuticals recently heading the list of top joint ventures, in a survey assessed on the ratio of profitability to total investment. In third place comes the steel sector, especially steel for car production and fourth is machinery, with particular emphasis on textile machinery.
The mission has been interpreted a step in the right direction for introducing new industries and for boosting the traditional ones, but it has also been received with a measure of caution.
"This mission is a very good initiative, put forward by our minister of foreign trade," says M. Casier of Belgium's Generale. Bank. "Belgians are very good initiative takers, but I hope that this time there will also be a real follow up."
Casier also sounds a note of warning for the established industries.
"We should not forget the new possibilities; but we should also focus on the competitors because in our traditional sectors we have more competitors than before. Two examples are the Republic of Korea and Israel, which have recently established diplomatic relations with China. Korea, for instance, is a very strong competitor for Belgium in the metal, electronics and chemical industries. They are very close geographically, and now thatthey have diplomatic relations with China, they do not have to go through Hong Kong. The environment is an important area for Belgium as well. In this sector, we are starting to feel very strongly the competition from Israel, as well as in the chemical industry."
A boost to Belgian interests however, has been at the expense of the French. Recent disputes between the French and Chinese governments has resulted French companies using their Belgian interests to gain contracts.
Another plus for Belgium that has existed for many years, is its position at the hub of the EC. This has in the past ensured that every delegation from China to visit Europe has visited Brussels. "Of course, this was a big advantage," says Casier. "That will change in the future."
Last month's trip to the EC by the Chinese minister of foreign trade and economic cooperation, Madam Wu Yi, has resulted in a number of decisions to change existing practices. One, for example, that will affect Belgium, is the move to focus Chinese missions to Europe more carefully. Instead of the traditionally huge groups that make the journey and that visit a number of countries, the missions will now be substantially smaller and will only visit two or three relevant countries. Although Ministry of Foreign Trade and Economic Cooperation (Moftec) officials will be sent to Brussels to ensure the follow up of these missions, Belgium will not get quite the attention it has done in the past, except on the merit of its top industries.
However, another outcome of Wu's visit has been the move to organise a number of seminars in Brussels with the aim of teaching Chinese companies some western practices, to be organised by the EC and China's CCPIT.
Overall, the Belgian government is particularly supportive of its industries, and China would seem to be a major priority. The cost of the recent mission alone bears witness to this. Belgium's regional splits ensure additional action Prom its various cultural sectors.
"Now all the regions have their own foreign trade offices which are also very active, especially in China," says Casier. The Flemish office has already organised a mission to Guangzhou and the French speakers have one planned for the very near future.
Time will tell if the moves are merely good initiatives.
China Economic Review puts the questions to Mr. Westenburg, director of the Netherlands Council for Trade Promotion (NCH).
How would you describe the increase in trade between Holland and China – steady or dramatic?
It is a reasonable increase because, like the other European countries we have quite a large trade deficit. That amount is also affected by Fokker aeroplanes, for example. If a country delivers a ship or a plane, the figures immediately change. We are quite satisfied – we still have a deficit, but it is not that bad.
What other areas are doing especially well in Dutch industry?
The agro industries, chemicals, telecommunications and those in the field of oil exploration. Philips, for example, is working on its 10th joint venture.
What are the main problems for Dutch companies when investing in China?
If you want to set up a joint venture, or really want to do business with China, you have to open an office there, and be present there. That is quite an investment for a Dutch company. For small and medium sized companies, it is quite difficult. They have to use trading houses.
To do business with China, a company has to do his homework, it has to create a department within the organisation which collects information about China, it has to free one manager who is focused on China. He must travel quite a lot to China, and he must not be changed, because the Chinese do business with a person not a company. And if you open an office, you have to put an expert there, and that is of course, quite expensive.
There is enormous growth in the provinces – in Fujian, Guangdong, Zhejiang, Jiangsu, Shandong. The main problem for Dutch companies – and European companies in general – is that it is very difficult to go into the provinces. In the old days, you did business with Beijing, maybe with Shanghai and Guangzhou, and that covered the provinces as well, but now most provinces are quite independent and have a lot of money to spend. That means you have to have contacts there as well or you have to use a general office.
How much does the Netherlands do to help your companies?
The problem is that, like other governments, ours is on a very low budget, and the only thing we have is an embassy in Beijing and that is it. That is why the Chamber of Rotterdam for instance, opened an office in Shanghai a few years ago and last year the Chamber of Commerce in Amsterdam opened an office in Guangzhou. The government realises the potential, but does not have the budget or it.
How aware of China as a market are Dutch companies?
The big companies have had their contacts for years already. Small companies have to make their priorities, they have to choose. They can not do China and another country as well. They have to make one priority and then go for it. It probably
7ntakes 4, 5 or 6 years before you have a good joint venture, and to make a profit it will take another three or four years.
Is the Netherlands importing a lot more Chinese goods now?
That is a difficult question because we do not know that much. We know a lot of companies who, for example, import a lot of electronics and textiles from Hong Kong, and I think most of that comes from China. We have different figures – from China and from Hong Kong. In a way you could add them together because essentially the goods are made there.
How closely does the Netherlands work with other EC countries?
We are working very closely now with other European companies, especially on the exchange of information. We know the problems they have, and the problems are similar.
Nicolas Schmit of the Office of International Economic Relations, Ministry of Foreign Trade Relations in Luxembourg, rounds up the current trade situation between his country and China.
In this anniversary year – we celebrate the centenary of Sino-Luxembourgian cooperation in the field of metallurgy by an exhibition in Wuhan – the relationship between the Grand Duchy of Luxembourg and the People's Republic of China has known a tremendous boost in the economic sector.
Regular trade flows have grown back to the levels reached in the mid and late eighties, but more importantly an ever-increasing number of Luxembourg companies operate directly in China or have gone into joint ventures.
Although our traditional operators in the steel sector still account for the major part of the exchanges, promising developments have been achieved by small and medium-sized companies in a variety of fields. Moreover, a Chinese bank and an insurance company have set up business in Luxembourg and closer cooperation is envisaged by the Luxembourg stock exchange. To round off the picture, Luxembourg expects its all-cargo airline to start scheduled flights to China in the near future.
The recent visit by the Chinese Minister for Trade and Economic Cooperation, Mrs. Wu Yi, to Luxembourg further reinforced the bonds of cooperation between our two countries.
* Belgium has signed an agreement with China to provide the mainland with US$7.6m worth of loans this year. The deal brought the Belgian loan total to US$106 since 1980. Robert Urbain, the Belgian minister of Foreign Trade and European Affairs, also announced that Belgium was ready to provide China with nearly US$1bn worth of export credit this year to promote Belgian investment in China.
* The Belgian Sunfire Europe Co has signed a contract with the China National Metals and Minerals Import and Export Corporation to export US$2m worth of large-screen display boards to China for use by the People s Daily.
* Janssen Pharmaceutical of Belgium plans to double its manufacturing capacity in China over the next two to three years to meet the increasing demand for western medicine. The company is to increase production to 2m packs of preparations annually. The company is likely to pick Xian for a likely second plant.
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