Beer, chocolate and a gateway to Europe

What's your destination of choice when investing in Europe? The Belgian Embassy to China recently asked business leaders this question in a survey covering four major Chinese cities.

Most respondents said Britain, France or Germany. None chose Belgium.

Bernard Pierre, Belgian Ambassador to China, said his country is known for its world-class beer and chocolate, but is also an ideal venue for doing business in Europe - and one that many Chinese businesses have yet to discover.

"Why come to Belgium? Because geographically it's in the center of Europe," said Pierre.

About twice the size of Beijing, the country lies at the very heart of an area spanning from Liverpool (United Kingdom) to Genoa (Italy), where 60 percent of Europe's purchasing power and 30 percent of EU consumers are concentrated.

This location makes it an ideal test-bed for new products and services, according to Pierre. "From there, all the important industrial and financial centers in Europe are reachable within an hour and a half. For example, London is 45 minutes by plane," said Pierre.

"For investors who intend to go global, Belgium is the ideal gateway to the European market."

Investing in Belgium, the "capital of Europe" where the European Commission lies, could help Chinese industries get their voice heard, the ambassador said.

"In 2006, Europe started an anti-dumping procedure against imports of Chinese shoes. The decision to impose those duties was made on a vote by its 25 members. Thirteen countries were in favor of it and 12 against, so the anti-dumping measures were approved," he said.

The 16.5 percent anti-dumping tax dealt a blow to Chinese shoe exports. In the first month after that, shoes exported to the EU from the city of Wenzhou, Zhejiang, one of the largest shoe manufacturing bases in China, dropped by half compared to the corresponding period of 2005.

"If the shoe federation of China had had a representative office in Brussels before the vote took place, they would have been able to communicate with some of the 25 member countries," said Pierre. "It would have been very possible to avoid the anti-dumping sanctions."

"So if the Chinese industry wants to get the best possible treatment, the best possible outcome, they have to be present where the decisions are taken."

Brussels is not only where EU decisions are made, but also the host to about 120 inter-governmental organizations including the North Atlantic Treaty Organization and about 1,400 non-government organizations.

Although its population is only a little more than 1 million, Brussels is second to New York in size of diplomatic corps and to Washington DC in the number of resident journalists, said Pierre.

Multinationals are fully aware of the benefits of networking with top officials. As a result, more than 1,300 foreign companies have set up headquarters, service centers or business subsidiaries in or around Brussels.

Many major multinationals have established their European headquarters in Belgium, including Coca-Cola, Ericsson, Caterpillar, UPS and Toyota.

The country is attractive to investors for its comparatively low real estate and living costs, well-educated workforce, favorable tax policies and status as the logistics hub of Europe.

The ambassador believes that the environment is even more enticing for Chinese investors. The Belgian government has approved eight preferential policies to support Chinese companies, including double taxation prevention and investment protection.

"I have seen an increasing flow of Chinese companies wanting to invest in Belgium," he said.

"For example, COSCO (China Ocean Shipping Company) is already in Belgium, as well as Hisense."

Chinese investors are zeroing in on the luxury industry in Belgium, he said. A famous Belgian cosmetics company was bought by a Chinese company, while the tourism sector has also seen Chinese investment thanks to direct flights linking Beijing and Brussels.

As one of the world's most open economies, Belgium has no restrictions on foreign investment in local companies. Due to the lack of natural resources, many industries there are not well fragmented, so new players may not face the same level of competition as in other areas, said Pierre.

"If you come here, it will be your market," he said.

But he did not encourage manufacturing companies to invest in Belgium. He said the country is the destination of choice for European headquarters, logistics centers and research labs.

"Many Chinese people just think of Belgium as beer, chocolate, diamonds and the 'little boy'," said Pierre.

"That's perhaps because Chinese have only just started to travel."

(China Daily 12/25/2007 page15)