Guy Wittich was CEO of the EU Chamber of Commerce in Taiwan until 2009. He now heads the Netherlands Foreign Investment Agency for China. He spoke to CHINA ECONOMIC REVIEW about how and why more and more Chinese companies are using the Netherlands as their gateway into Europe.
Q: What has been the trend for Chinese investment into the Netherlands?
A: We saw 20% growth last year, and hope to see similar growth this year. We have about 260 Chinese companies in the Netherlands now. They use the Netherlands as their gateway into the European market. We’re fortunate to have Europe’s largest port, and we’re also the largest port for Germany, China’s biggest EU trade partner.
Q: Why are they coming to the Netherlands specifically?
A: First and foremost for our strength in logistics and trade facilities. We’ve seen a trend for Chinese companies to set up an office in the Netherlands to make distribution more effective, to strengthen their local relationships and improve on their supply chain and distribution channels. We also see more and more companies using Dutch innovation talent for industrial design, as well as research and development.
Q:What kind of offices are they establishing?
A: We see marketing and sales offices, offices for distribution, and also some warehouses. Increasingly we see companies setting up financial management so if they’re in expansion mode they have different offices in different countries. They have to optimize their organization to properly channel their investments to and from Europe. In that stage you see many companies interested in us for our favorable tax climate.
Q: Favorable in what way?
A: We have one of the lowest corporate tax rates in Europe, of between 20-25%. But also we offer interesting corporate structures, like the co-op, which is particularly suitable for corporate headquarters. If you structure it well, there’s a zero tax on capital dividends. You can also make an advanced tax ruling with the Dutch authorities, and we also have a unique VAT deferment policy. It’s much less cumbersome than if you paid VAT upfront and then later have to claim it back. It also considerably improves your cash flow, because the VAT in Europe is 15-20%.
Q: What do you expect in the future?
A: In the coming years I don’t think we’ll see many large investments. The Chinese are more cautious about investing. They all start small, by setting up modest offices, but if they’re happy and they see a market for their product, they’ll expand their presence. That said, there may be more takeovers – I think Chinese firms could even take over large European multinationals. Everything is possible.