New Opportunities for Dutch SMEs as Netherlands PM visits China, Joins AIIB

April 1, 2015 Posted by China Briefing Reading Time: 4 minutes

The Netherlands has decided to join the Asian Infrastructure Investment Bank (AIIB), an international financial institution proposed by China to rival existing institutions like the World Bank, the IMF and the Asian Development Bank.

Prime Minister Mark Rutte announced the intention of the Dutch government during his official visit to China from March 24 to 29. The Prime Minister, accompanied by the Minister for the Environment, visited Shanghai, Shenzhen and attended the Annual Conference of the Boao Forum in Hainan.

The Netherlands has been China’s second largest trading partner within the EU for eleven consecutive years, the third largest EU investor in China, as well as the third largest recipient of Chinese investment in the EU. Globally speaking, the Netherlands is China’s tenth most important trading partner. In 2014, trade between the two nations totaled €44 billion.

To find out what drives the strong business activity between China and the Netherlands, we spoke to Mr Fred Sengers, a Dutch expert on China.

As the Dutch city of Rotterdam is the largest port in Europe, a large share of Chinese exports to Europe find their way into the Netherlands. Mr Sengers explains that this somewhat distorts the picture, as many goods flowing into the country are mostly in transit to other Europeans countries.

Investments by major Dutch multinationals make up a substantial share of the investments into China. Important industries include consumer goods (Unilever, Philips) and chemicals (DSM, AkzoNobel), who have moved large parts of their production operations to China.

Outside of the major multinationals however, Dutch interest in China is only recently picking up. Mr Sengers points out that while traditionally the Netherlands has been a very outward focused and internationally oriented country, recent political instability have turned the nation’s attention inward. Due to frequent government reshuffles, local media and government have been too preoccupied to focus on China’s rising position in the world, and how this might benefit the Netherlands economically.

That said, the Prime Minister’s recent visit and ascendance to the AIIB offer promising opportunities to Dutch companies, for both major multinationals as well as SMEs.

Two key issues discussed during Prime Minister Rutte’s visit were food safety and environmental protection. Both are important concerns of the Chinese government, and fields in which Dutch companies boast a high level of expertise. For this reason, the Dutch Minister of the Environment attended the visit as well, and made a separate trip to Beijing.

The strengthening ties between China and the Netherlands may bring forth new business for Dutch companies in the areas of waste management, agriculture, and water and soil purification. With China’s urbanization rapidly picking up speed, a host of Dutch engineering and architecture firms have also made their way into China.

As the AIIB aims to finance infrastructure projects within China and throughout Asia to give shape to the emerging New Silk Road, Dutch companies stand to play a major role in areas such as dredging and port management.

Outbound investment from China mainly consists of high-tech companies and acquisition by Chinese firms. Huawei recently opened its European distribution center in the southern Netherlands, and the Shenzhen-based drone manufacturer DJI recently opened its European HQ in the Netherlands as well.

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