The Netherlands Gate To EU Trade

GRAND RAPIDS — For American companies interested in establishing operations abroad, the Netherlands can serve as a gateway to Europe.

“What most companies find is that the Netherlands provides an international entry into the European markets, so it has this hub function for centralized European activities,” said Yvonne Herkemij, area director of the Netherlands Foreign Investment Agency’s (NFIA) Chicago office.

Herkemij, a native of the Netherlands, will be keynote speaker at the West Michigan World Trade Association meeting tomorrow at 5.30 p.m. at The BOB.

NFIA, a division of the Dutch Ministry of Economic Affairs, provides free information, insight and assistance to corporate investors who want to establish or expand operations in the Netherlands.

The agency helps American companies locate and hook up with Dutch business partners, networks and service suppliers.

Partnerships have become popular, Herkemij said, and setting them up is one of NFIA’s functions.

“We help companies find the right business partners to be successful,” she said.

Most companies don’t come to the Netherlands just to serve the Dutch market because it’s a relatively small market.

She noted that 64 percent of all U.S. companies bring their goods first through the Netherlands to serve the European market.The primary target markets for companies establishing operations there are typically the U.K., Germany and France.

Herkemij said the Netherlands is a very good first entry for companies that want to set up a centralized logistics system.

About 50 Michigan companies do business in the Netherlands. A couple of the more notable companies operating there are Amway (Alticor Inc.), X-Rite, Whirlpool and Steelcase.

About 40 percent of the Michigan-based companies Herkemij works with come to her mainly for help in setting up centralized logistics. The logistics industry is well developed in the Netherlands, whereas in America a lot of companies are accustomed to handling logistics themselves.

“In the Netherlands, 70 percent of logistics operations get outsourced to third-party logistics providers,” Herkemij observed.

“It’s a very streamlined, well developed industry, and that stems from the 17th century. We’ve always been traders and international travelers, so this is a piece of history that has grown into a great industry.”

Corporate customers fill out a questionnaire that identifies who they are and what their needs are and NFIA’s sister organization, the Holland International Distribution Council, then matches those requirements with the capabilities of the logistics providers in the network.

As Herkemij noted, consolidation and cost cutting have become issues for a lot of companies.

“That may mean that the Netherlands is a perfect fit for them because what we’re good at is centralized operations. Mercedes Benz and DaimlerChrysler, for example, have their European call centers in the Netherlands.”

The companies cover all of Europe with a single central location in the Netherlands, saving the cost of having to operate centers on a country-by-country basis. Similar cost savings can be had in logistics, with one logistic operation in the Netherlands rather than several throughout Europe.

There’s also a lot of talk about centralizing financial operations as well, Herkemij said.

“What companies find is a combination of business factors that make it easy to operate. One of the reasons the country is neutral is that we have a great financial sector and a well-educated labor force, and those factors fold into those centralization issues that larger companies have.”

The Netherlands gets very good grades for its business-friendly tax environment, its financial sector and its macro- and micro-economic environment, Herkemij said.

The West Michigan culture is very similar to the Dutch culture because of its Dutch heritage, she pointed out. She believes that gives West Michigan companies an edge in the Netherlands. Having something in common makes doing business a lot easier.

“In business, when you hire an employee, you hire somebody for what they know and for who they are. The same holds true, I think, when you choose a location. Having a joint heritage, the likeness in culture is more so, therefore the chances of succeeding are greater. We immediately have a bond.”

About 50 companies in Michigan presently have operations in the Netherlands.

NFIA has assisted hundreds of American companies in starting or expanding operations in the Netherlands, representing a collective American investment of more than $37 billion in that country.

More than 1,850 of 6,700 foreign companies in the Netherlands are from North America.

Herkemij pointed out that the country’s corporate tax system allows companies to obtain a tax ruling from Dutch officials.

Unlike the United States and Germany, she explained, companies interested in the effective corporate tax rate — which averages around 20 percent — can go directly to Dutch tax authorities and get certainty about what to expect, in writing.

Although labor in the Netherlands is cheaper than the United States, she said it’s not a low-cost manufacturing country like China or the Czech Republic, for example, where companies go to set up large manufacturing plants and take advantage of cheap labor.

The Netherlands, on the other hand, has a great service industry, she said. In fact, two-thirds of its GDP comes from the service industry.

If it’s low skilled labor and lots of it that a company wants, then the Netherlands is probably not the right place for that company.

“If it’s high skilled labor and needing less square footage, then we are probably the right partner,” Herkemij said.

The Economist Intelligence Unit (EIU) has ranked the Netherlands the No. 1 place to do business for the last several years, Herkemij noted.

EIU assesses political, economic and business conditions in almost 200 countries and provides impartial analysis on worldwide market trends and business strategies.           

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