China’s Expansion Plan

Entitled the world’s second largest economy, China has shown her importance in the international arena with a double-digit GDP growth, as well as accelerated overseas direct investment (ODI). As announced by the Ministry of Commerce, China’s ODI soared up to $60bn in 2010, compared to that of $20.5bn in 2009. It is reported that by the end of 2009 Chinese investors had set up 13,000 overseas enterprises, with a total net asset value of $246bn., ranking the 15th in the world and the 3rd among developing economies. 

Throughout the expansion, Merger and Acquisition (M&A) is a common strategy for Chinese investors to enter and get accustomed to foreign business environment. From the first to the third quarter of 2010, the European share of the total value of Chinese outbound M&A activities increased from 19% to 38%, i.e. from $1.71bn to $3.15bn. Since the European economy is recovering, it’s reasonable to believe that there will be more Chinese investments flowing into the EU through cross border M&A activities.

Why the Netherlands?

The Netherlands have been enjoying the fame of “the gateway to Europe” for centuries. Next to having the largest port of Europe, the Netherlands is also known for the excellent infrastructure, the stable political environment and high quality of the labor force. Moreover, the fact that the corporate tax imposed to foreign companies in the Netherlands is the lowest in Europe, and third lowest in the world, makes the country a perfect destination to realize a company’s international growth ambition.

What are the challenges?

For Chinese companies and investors, the Netherlands is an excellent destination with numerous business potentials. Nevertheless, some challenges might arise in the investing process of a foreign environment, for the following reasons:

• Lack of knowledge of local business practices
• Lack of experience with international investment processes
• Unfamiliar with local legislation
• Limited access to local business network
• Limited access to local and international capital market