Great expectations in the lowlands

Taxes are high and unions are tough, but belgium still has a lot to offer foreign businesses

Belgium is in the top five countries in Europe for attracting foreign investment, with 169 projects launched last year, 10.5 percent more than the previous year.

The United States remains the major investor in Belgium, but interest from Chinese companies is rapidly rising.

However, setting up a business and employing staff in the country is far from plain sailing.

A recent survey by the World Bank shows that the costs and paid-in minimum capital for launching a business in Belgium are higher than in most OECD countries.

That is one reason why Group S in Brussels, a payroll provider, now operates a Chinese-speaking division to make life easier for Chinese enterprises that are considering setting up operations in the country.

Since its launch, the "China Desk" has helped major companies, such as the Bank of China and the Industrial and Commercial Bank of China, deal with the many legal and aspects involved in operating in Belgium.

Much of the Chinese interest is focused on Antwerp, whose port is benefiting from the Chinese influx. No less than 16 Chinese companies have launched operations in the port city in recent times, including China Ocean Shipping Company, which has taken a 20 percent stake in the Antwerp Gateway container terminal.

Foxconn, one of the world's biggest contract electronics makers, is among those believed to be considering opening up in Belgium. Another possible new entry could be Beijing-based Aigo, the consumer electronics company with a 2,000-strong workforce.

At present, the number employed by Chinese firms in Belgium is relatively low - about a dozen at the Bank of China and 10 at ICBC, for instance. Even so, it is widely expected that these figures will steadily rise in the coming year, with Group S detecting increasing demand for its services from Chinese clients.

"In response to the growing number of inquiries about Chinese enterprises, we set up a division for our Chinese clients. It has already proved to be a great success," says Zhang Jinbao, from Xi'an, who runs Group S' China Desk.

Depending on who you talk to, advice for anyone thinking of starting a business in Belgium ranges from: "Don't bother, it isn't worth it" to "Go for it." Everyone, though, agrees on one thing: get professional support.

"That is where we step in", adds Thibaut Hugues, who runs the Group S international division.

"We can deal with the A-Z for a Chinese firm setting up here. Everything from requiring work permits to a thorough understanding of the local taxation requirements can be complicated and cumbersome.

"It is not easy either for foreigners to follow up on ever-changing social laws in this country. An error in implementation of social legislation can be very costly. We even have a case of a respected embassy that failed to do so, and as a consequence faced heavy fines from the Belgian authorities."

Payroll management services for Chinese clients include dissemination of documents in Mandarin, salary simulations and specific advice on issues such as the posting of workers, work permits and expatriate status.

So what is the allure of starting a business in Brussels for the Chinese? Is it an entrepreneur-innovator friendly city?

"The main appeal is that it's a multicultural, multilingual country where many international organizations, such as NATO and the EU, are based," says Zhang, 29, who arrived in Brussels six years ago to study human resources at university and is now a Group S international payroll administrator.

"It has excellent transport connections and a high quality workforce."

Belgium had a reputation in the business community for cumbersome and overbearing red tape but, Zhang says, "Things are improving for the would-be Chinese businesses. This was evidenced by a recent World Bank survey showing that the time needed to start a business here (three days) is much shorter than in the OECD zone (13 days).

"Belgium has also simplified start-up procedures. The time you need to complete the administrative formalities to set up your own business has been slashed from 56 days to just three."

Favorable current exchange rates are another incentive for Chinese-based enterprises to come to Belgium.

Zhang's company, which has a 1,000-strong workforce and handles more than 450,000 pay slips a month for more than 80,000 customers, works closely with three other Belgian organizations - the Belgian-Chinese Chamber of Commerce; Flanders Investment & Trade, which oversees the activities of Flemish companies in China; and AWEX, the Walloon foreign trade and investment agency, which has an office in Wuhan in central China.

Their job is to attract Chinese and other investment to Belgium. At the height of the financial crash in 2009, that was a tough ask, but, says Zhang, Chinese companies are increasingly considering having a presence in the Belgian market.

One of their big challenges is taxation.

"Belgium is a high-tax country, and that can make it quite expensive to run a business here, mostly because of the high labor costs," Zhang says. "We hear from some overseas clients that this is a major concern. You might be surprised at how little potential investors from China, and elsewhere, know about the Belgian system."

But there are ways to help cut such costs.

"For example, if I pay someone a gross monthly salary of 2,000 euros, out of this they will pay 13 per cent in social security and up to 38 per cent in tax. But I, as an employer, must contribute to the social security payments so, in real terms, the salary is quite a bit higher, more like 2,700 euros.

"In order to make the salaries more attractive to my employees, I can add certain extra legal benefits that are not taxed, such as vouchers, car expenses, pension and medical insurances. This is the Belgian way of doing business."

A survey by the World Bank this year on doing business ranked Belgium number 33, two places down from last year. The country also does less well in the main category, "Starting a Business", ranked 44, eight places lower than last year.

Interestingly, when it comes to European companies wishing to trade and invest in China, access to critical business information is the main issue.

The more than 700 inquiries received by the EU's SME Center in Beijing, which helps European companies with China-related questions, indicate that small and medium-sized companies find difficulties in the most fundamental aspects of gaining access to the Chinese market - from understanding whether there is a market for a product, finding a reliable partner and carrying out due diligence, conforming to the necessary technical requirements for export, to setting up a business in China.

When it comes to predicting what may happen in the next five to 10 years regarding foreign investment in Belgium, Zhang is certain more Chinese companies will invest in this often underrated country.

"We had a delegation in Shanghai and Wuhan last year and the message I got then, and now, from my Chinese business contacts is that the domestic market in China has overheated and they are increasingly looking to invest in Europe, including Belgium. This includes individual business men and women as well as the large conglomerates."

Other obstacles, such as language and the strong trade unions in Belgium, remain, although arguably the biggest challenge, Zhang says, is the work-life balance. In China, he argues, the balance is more likely to tip in favor of work than in Belgium.

"One of the most frequent questions I get asked by Chinese business men and women is: Is it difficult to manage an employee in Belgium? I don't think it is, but that is the perception."

Starting a new business is always fraught with risk, and even more so in a foreign country, but Zhang says: "I firmly believe this country is rapidly becoming more business friendly for the would-be Chinese investor. You only have to look at the very large number of French businesses seeking to start operations here."

For China Daily

(China Daily Africa Weekly 11/08/2013 page19)