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SPOTLIGHT • BENELUX


HEAVY INDUSTRY: Chinese construction machinery maker Zoomlion set up its EU headquarters in Belgium


biggest economy, pass through Rotter- dam, according to Guy Wittich, execu- tive director for China at the Netherlands Foreign Investment Agency. “You could see Holland as one big logistics hub, par- ticularly for Germany,” he said. In 2010, Chinese FDI in the Neth-


erlands totaled US$65 million, a 188% year-on-year increase, according to MOFCOM. And in the past year and a half, Wittich said investment has jumped exponentially. Investments in Western Europe have


often also triggered investment in Ben- elux – often in the Netherlands, which now hosts 332 companies. “It's a logical step to set up your business where your goods are entering the European Union. Tat's why we are capturing so many of these European distribution centers,” Wittich said. Construction machinery makers


LiuGong and Zoomlion exemplify how Chinese companies have used Europe's production and logistics resources while


The vast majority of inflow from China – about 97% – was headed toward Luxembourg's financial sector


also targeting the domestic consumer market. LiuGang’s primary market, as well as its innovation center, is in Germany, and the company purchased manufacturing plants in Eastern Europe earlier this year. However, LiuGong chose the Dutch city of Almere for its European headquarters. Zoomlion has followed a similar pattern, setting up its headquarters in Belgium. Although they remain overshadowed


by Luxembourg's ultra-low tax regime, Belgium and the Netherlands are home to some of the EU's most competitive tax


preferences. Companies based in the Netherlands


are allowed to remit profits from global operations into the country tax free, compared to standard withholding taxes of 15% elsewhere in Europe. Te policy has attracted companies such as Huawei, which has relocated its financial opera- tions to the Netherlands. “If you're a large company like Hua-


wei, you can save literally millions of euros on this kind of tax,” Wittich said of the withholding tax policy.


Slower, smaller Belgium


Competing with the Netherlands has been a challenge for Belgium. Although its tax policy is on par with the Nether- lands, Belgium's logistics capacity and domestic market are smaller. Te country attracted US$45.3 million in Chinese FDI in 2010, less than the Netherlands or Luxembourg. Recognition is Belgium’s primary challenge. Te country is far less


China Economic Review • November 2012 43


Imaginechina


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