Strategically located between Europe’s two biggest continental economies, and sitting across the English Channel from the United Kingdom (UK), the Netherlands has long been a commercial gateway to the European market.

The UK has traditionally played this role for Australian companies with European interests, though signs pointing toward a “hard” rather than “soft” Brexit – meaning a departure from the European Union’s (EU) single market – mean Australian companies may need to find an alternative one.

The Netherlands is perfectly placed to take up this mantle. “Many investors that come to the Netherlands, come for the European market,” says Netherlands Foreign Investment Agency (NFIA)’s Commissioner Mr Jeroen Nijland.

He notes several reasons for this, including both hard factors – like the Netherland’s excellent infrastructure physically and digitally linking it with the rest of the continent – and soft factors, like the country’s multilingual workforce and business-oriented approach to both commerce and government.

“If you add it all up, geographical position, infrastructure like airports and seaports, the attitudes of business and government – I think this is a convincing list for many investors,” Mr Nijland says. Digging deeper uncovers further inducements for Australian businesses eyeing a European gateway, such as a positive fiscal climate and the tech-savvy nature of the Dutch people.

Connected, stable and multilingual The Netherlands is the most connected economy in the world, according to global logistics firm DHL’s annual rankings. Its central location, bordering Germany and Belgium, and a stone’s throw from the UK and France, places nearly 170 million customers within a 500km radius of the country. Stability is an increasing concern for foreign investors, and the Netherlands is politically stable.

“We always end up with coalition governments,” Mr Nijland points out. “That means whatever happens at the ballot boxes, policy swings are always quite moderate, lending a certain predictability to Dutch politics.”

“Investors take a long-term horizon view in their decision making”, he rightly notes. “Go-to-market decisions involve millions or billions of dollars, and for that matter, predictability is very important.”

Adding to this attractive geography and stable politics, the welleducated, multilingual and pragmatic Dutch workforce is the icing on the cake. Around 90% of Dutch are English-speaking, besting all their continental European counterparts and contributing to the ease of doing business and communication in the country.

This pragmatism and business orientation extends to government policies and institutions as well.

“When it comes to using the Netherlands as a hub for the European market, customs authorities are for example very important,” Mr Nijland notes. “Dutch customs authorities are very business-minded and very cooperative. This is the feedback we get from businesses themselves, but this also shows up when customs organisations around the world are compared – the Netherlands always ranks at the top.”

The sum of these soft strengths makes the Netherlands an ideal location in which to base a regional headquarters, or to base continental sales and marketing functions. These are two of the top three activities attracted to the Netherlands from abroad, according to Mr Nijland.

“Headquarter functions come to our country for many reasons, including our workforce, our infrastructure connecting the Netherlands to the rest of the world, and taxation factors,” he notes. The latter include the Netherlands’ network of taxation treaties to avoid double taxation, as well as the lack of withholding tax on royalties and interest.

World-class physical and digital infrastructure A strategic location is of course only half the battle. To capitalise on its geography, the Netherlands offers Australian companies world-leading infrastructure. This includes not just road, rail and air links, but digital
infrastructure as well.

The country ranks fourth in the world on The World Bank’s latest logistics performance index, ahead of other global logistics hubs like Singapore, Hong Kong and the UAE. Foreign investors are already taking advantage of these infrastructure strengths. “It shows,” Mr Nijland says, “because we have more than 900 distribution centres of North American and Asian companies in our small country; that’s a huge number.”

The Netherlands’ port infrastructure has been ranked best in the world for a number of years by the World Economic Forum (WEF). Its air transport infrastructure ranks fourth in the world, as do its roads, while its railroads rank seventh globally in the WEF’s latest Global Competiveness Report. Digital infrastructure figures into this equation as well.

“We have a lot of data centres and IT attracting inward investment, and this is about the distribution of data,” Mr Nijland says. “The Amsterdam Internet Exchange is one of the biggest in the world, and most of the cables connecting Europe with the rest of the world enter via the Netherlands.”

Room to grow the Australia-Netherlands relationship The Netherlands is a top-twenty trading partner for Australia, but only just. This leaves plenty of room to grow the relationship, especially given the many advantages the

Netherlands can offer Australian companies we have outlined here.

While our goods trading relationship is fairly balanced, in that we import as much as we export, in terms of services Australia exports only around one-third of what we import from the Netherlands.

Our relationship can grow on both sides of the ledger by harnessing existing and emerging strengths to access opportunity in each other’s countries. This includes leveraging Australia’s already strong reputation in the Netherlands.

“Australian companies are perceived very well in the Netherlands as highquality producers,” Mr Nijland says. “I think the image of Australia is quite good, but it’s just that we need to know more about the possibilities and potential of each other’s countries.”

In growth areas for the future, Mr Nijland points to emerging areas of innovation like fintech and data security, as well as others like e-commerce, where we can leverage mutual strengths to allow Australian companies to grow and penetrate the European market through the Netherlands.

Holland2-
“I think agri-food is an outstanding example of investments that are related to the expertise and knowledge that we have, Mr Nijland says. “We have a number of research institutes focused on this, as well as on similar sectors.”

“From Australia, where I see the potential to do more are in the IT, life sciences and health spheres, to name just a few,” Mr Nijland notes. We delve a bit deeper into the Netherland’s strengths as a start-up and innovation hub, as well as the model approach the country takes to making expatriates feel comfortable, elsewhere in this issue.

Suffice it to say that this small country of 17 million people punches well above its weight on the world stage. It offers attractive incentives for virtually any Australian company eyeing opportunity in the Netherlands as a destination market itself, or as a wider gateway to Europe.

‘Australian companies are perceived very well in the Netherlands as high-quality producers’

The NFIA can be your first stop to exploring opportunities in Europe. Australian
companies are encouraged to contact Adeline Tan, Country Manager, at tan@
nfia-singapore.com for more information or assistance with tapping opportunity
in the Netherlands. The Dutch Consulate in Sydney provides a host of other services;
do visit www.hollandhubaustralia.com.au for an overview.

Author: Niels Strazdins, Head of Research at the Export Council of Australia on pages 10-13 of Autumn 2017 International Business Today. 

Download Autumn 2017 International Business Today e-magazine

 

 

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