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Chinese investments in Europe have surged in recent years, and have become a critical feature of Europe-China relations. Foreign direct investment (FDI) in the European Union traced back to mainland China hit a record EUR 35 billion in 2016, compared with only EUR 1.6 billion in 2010, according to data gathered by the Rhodium Group. In a historic shift, the flow of Chinese direct investment into Europe has surpassed the declining flows of annual European direct investments into China. As China continues to grow, develop, and integrate into the global economy, its overseas investments expand in quantity and quality, reflecting both the growing sophistication of the Chinese economy and broader Chinese commercial and policy goals.

Why Invest in Europe

The acquisition of technology is often regarded as the most important reason for Chinese companies’ interest in the Netherlands. The high-tech companies came to the Netherlands as greenfield investments rather than mergers or acquisitions and are mainly doing sales for the European market, keeping research and manufacturing functions either in China or in other parts of the world. A combination of considerations has taken Chinese companies to the Netherlands. Some of these more generally compel them to leave China, others attract them more specifically to the Netherlands. We will discuss the most important ones in more detail below.

After years of crisis, the Dutch housing market is finally on the up and has been since 2015. In comparison to other countries, it took some time for it to pick up again.
The combination of falling house prices after 2008, over-crediting (getting a higher mortgage than the house was worth) and an extremely large amount of repayment-free and investment-based mortgages in the market share are partly responsible for this delay.
However, the increase has indeed begun. In many places, especially the big cities such as Amsterdam, The Hague, Utrecht or Haarlem, the house prices are already above the levels they reached during the peak period of 2008.
This can mostly be credited to the renewed confidence in the economy, and in particular the continued low mortgage interest rates. For those looking to sell their house, this is definitely good news. Currently, you can sell your house with ease if it's situated in a sought-after location.
What does this development mean for buyers?
The group of potential buyers is large. Many people choose to buy a house instead of renting one. Especially considering the low mortgage interest rate that you can put into place for a fixed period.

Prices move up and down, but in all the cities there is a positive price trend. That means that if you buy a house and keep it for many years, then its price will be higher than the bought price. But, how many years is needed to keep the house to be sure that it will have a positive balance? The chart below answers the question from historical perspective: 8 years holding always had the positive balance, or 5 years holding always had better balance compared to renting the relevant place.

In March 2019, the average purchase price for an existing re-sale house was 302.845 euros. This is an increase of 7.7 percent compared to the same period in 2018. In January 2019, house prices were also above 300.000 euros on average, coming in at 302.157, however, this figure dipped to 298.717 euros in February 2019.
With house prices now above 300.000 euros, an all-time high has been reached. In May 2018, the price index for existing houses rose, for the first time, above the previous record level of August 2008, amounting to around 284.000 euros on average. If we look back, we see a peak in August 2008, followed by a downward trend, which reached its lowest point in June 2013 and an upward trend from then onwards. In March 2019, prices were 36,1 percent higher than they were in June 2013.
In the first quarter of 2019, house prices increased the most in the province of Flevoland, coming in 11 percent higher than in 2018. House price increases could also be seen in Zeeland, Utrecht and Drenthe. However, in the majority of provinces, the price increase levelled off.

1. World-leading exporter of agri-food products & leading in innovation

The Netherlands is the world's second largest exporter of agricultural products, after the USA. Together with the USA and Spain, the Netherlands is one of the world's three leading producers of vegetables and fruit. It supplies a quarter of the vegetables that are exported from Europe. The Dutch agricultural sector is diverse; it covers a wide range of livestock and plant-cultivation sectors that include, for example, arable and dairy farming, cultivation under glass, tree-growing and pig farming.
The Dutch are forward-looking. This is reflected in the worldwide renowed research and innovation infrastructure of the Netherlands. Wageningen University is the number 1 Agricultural University in the world for the third year in a row according to The National Taiwan Ranking of over 300 universities on scientific and research excellence. Five of the top 26 global agri-food companies have R&D facilities in the Netherlands. Examples of recent private investments; Danone opened a large, new R&D centre in Utrecht in 2013, where it concentrates its European research on clinical nutrition and nutrition for children. In 2013, Heinz opened its new R&D centre for Europe in Nijmegen. Royal FrieslandCampina concentrated its R&D in a new large R&D centre in Wageningen that opened in 2013.

2. Holland's mild climate, flat and fertile soil and favorable geographical location at the heart of Europe

Next to the geographical expertise, infrastructure, the food processing industry, commerce and logistics are all on an extremely high level in the Netherlands.

3. Success in renewing the agricultural production chains

For decades, Dutch agriculture has succeeded in maintaining its lead over international competitors by continually investing in the renewal of agricultural production chains. Farmers and growers are full partners in the agricultural production chain. Their primary task is to produce food, flowers and plants with an optimum price/quality radio using innovative, socially responsible and sustainable methods.

4. Supporting the Global alliance for Food security

By 2050 we will need to feed a world population of 9 billion people. Continuation of the current production levels will lead to a food shortage of 70%. The alliance will adopt an approach developed in the Netherlands: Climate Smart Agriculture. The intention of the alliance is to expand and intensify the projects carried out by small farmers, horticultural growers and fishermen, and to continue to guarantee food safety through targeted public-private partnerships.

5. Caring for environmental protection and sustainability

Despite tight profit margins, agricultural businesses have invested substantially in environmental protection and implemented improvements in animal welfare. The agri-business is one of the driving forces behind the Dutch economy. At the same time, it poses challenges to the environment. In recent decades, farms became larger in scale and production became more intensive. As a result, fertilizers and manure made more impact on the countryside. Farming had to become more sustainable. Today, the Dutch agricultural sector is strongly focused on sustainability: it is a source of healthy, safe food that is produced with respect for the landscape and the environment.

To get you oriented with doing business in the Netherlands, the following information contains a broad variety of useful facts, figures and observations about Dutch export and import.

Export in the Netherlands

The Netherlands has traditionally always had an open economy and the level of trade with other countries is very significant. According to research carried out by the Netherlands Bureau for Economic Policy Analysis, the Netherlands earns some 33% of its income from the export of goods and services.

Fifth-largest exporter of goods

As the fifth-largest exporter of goods in the world, the Netherlands occupies a prominent position when it comes to world trade. In 2015, the Netherlands exported goods worth a total of almost US$ 668 billion, which is about 3.5% of the world’s total exports.

Significant exporter of commercial services

The Netherlands is also a significant exporter of commercial services: exports of commercial services amounted to US$ 189 billion (€ 138 billion) in 2014, which placed the country sixth in the world rankings.

• The Netherlands is the second-largest exporter of agricultural products worldwide, after the United States.

• The role of the Netherlands as a key distribution location is also indicated by the volume of import and export activities. Almost 79% of Dutch exports remain within Europe, especially Western Europe. Germany is easily the Netherlands’ most significant trading partner, followed by Belgium, the United Kingdom and France.

Import in the Netherlands

As well as being a major exporter, the Netherlands also imports large quantities of goods: US$ 507 billion in 2015. With about 3.1% share of the global total, the country is the eight-largest importer of goods in the world. The Netherlands is also a significant importer of commercial services - imports of commercial services amounted to US$ 157 billion (€ 118 billion) in 2014, which placed the Netherlands seventh in the world rankings.

Import partners

In 2015, 17.2% of all imports into the Netherlands originated in Germany. Almost half of all products purchased by the Netherlands in Germany were related to chemical products and machinery. Of all of the cars imported into the Netherlands, more than 90% came from Europe, particularly Belgium, France and Germany. China (9.1% of total imports of goods) and Belgium (9.8%) were respectively second and third Dutch import partner. In 2015 the value of Dutch imports (of goods) was US$ 507 billion

The Netherlands is your partner in agriculture and food.

The agriculture sector comprises all economic activity relating to food, from production to marketing and distribution.

The Netherlands is the second-largest exporter of agricultural products in the world, after the United States. It is known for its flowers, cheese, tomatoes, vegetables and beer.

The Dutch horticulture sector has an extensive logistics network. Vegetables harvested in the Netherlands can be sold in New York the very same day.

The Dutch food sector has developed smart storage and packaging technologies that keep food fresh longer.

The Netherlands wants to reduce the use of antibiotics in food production in order to combat antimicrobial resistance in humans and animals.

The Netherlands shares its expertise in food production with developing countries. It is committed to a free market with safe, sustainably produced food.

Research and innovation are vital to Dutch agriculture and horticulture. Dutch agri-food companies and knowledge institutions do innovative work in many areas, including sustainability and nutrition.

Both the Netherlands and China find themselves in an important phase of development, in which there is more and more concern for animal welfare, food safety and food security. Since the Chinese government puts the development of food supply and agriculture as high priority, the Netherlands and China can work together on the agricultural products distribution, knowledge and technology in this field.

The government of the Netherlands believes that healthy, safe food begins with sustainable agriculture and a concern for animal welfare. In this regard the Dutch and Chinese consumers share a concern for food safety and food security. Consumers need to have confidence that what they eat will not be harmful to their health. Moreover, there should be enough safe food available for everyone.

Changes in society have a large impact on the agricultural sector. The growing population and the rise in prosperity are changing consumer patterns, making raw materials scarcer and putting more pressure on the environment. This requires new ideas about the role agriculture plays in society. Agricultural production for sustainable and nutritious food for all consumers asks for changes. The government of the Netherlands attaches great value to sustainable production, careful use of insecticides and pesticides, and high standards for animal welfare.

Vandrie Group, through its subsidiary Ekro, is set to export veal products to China.

Ekro has become the first European veal slaughterhouse to receive approval to export veal products to China. The deal stroke with the Chinese authorities is the result of a 17-year negotiations process. The company announced that it will be able to export only boneless veal at first.

“Many people have worked very hard to achieve this. The Dutch embassy and its agricultural attachés in China, the NVWA and the Chief Veterinary Officer (CVO) all deserve considerable praise. I am also very happy with the help that we have received from the Dutch meat association Centrale Organisatie voor de Vleessector (COV). It is an excellent result that could only be achieved through the professional, collective efforts and close cooperation with the Chinese institutions,” Henny Swinkels, Director of Corporate Affairs, said.

The Chinese government had authorized the Netherlands Food and Consumer Product Safety Authority (NVWA) to perform the final required inspection at one veal producing company.

“With our quality system Safety Guard, we provide unique guarantees for the Dutch veal products that we deliver, such as quality, tracking & tracing and food safety. Chinese consumers find these elements very important. It is now up to us to familiarise the market with the product.

The export value of Dutch infant milk powder to China has increased a whopping 50 fold in the last 10 years. This is calculated by the Dutch statistics bureau CBS.

The combined share of China in the Dutch export value of baby milk powder increased from 10% in 2005 to 67% in 2015. Almost the entire growth has taken place since 2008, the year that the milk powder scandal in China occurred. Since then, many Chinese people don't trust their own manufacturers any longer and buy infant milk powder from other countries.

Netherlands is main supplier

Netherlands is currently the main supplier of infant milk powder to China. Since June 2015, China is the most important direct destination for infant milk powder from the Netherlands. This is the first time since March 2013. Also a large part of the exports to Hong Kong eventually ends up in China.

Bain & Company

Online retail in China continues to grow significantly, for both global imports and domestic food items. Since 2010, the number of Chinese online shoppers has nearly tripled, coming in at 410 million, according to research from Boston Consulting Group.

Private online consumption is projected to surge by 20 percent annually over the next five years, compared with 6 percent annual growth in offline retail sales. This means that e-commerce will account for 42 percent of growth in private consumption. By then, China’s online consumer market will have grown to $1.6 trillion annually.How Fresh Produce Suppliers Can Brand to Reach Chinese Consumers in the World of E-Commerce

Mobile e-commerce currently accounts for 51 percent of all online sales in China and will grow even faster. The global average is 35 percent. Chinese households buy 15 percent of their small appliances, 16 percent of their apparel and household sundries, and 19 percent of their skincare and cosmetic products through mobile devices.

Brands are important to Chinese consumers for ensuring safety and quality, and smaller brands can compete

He Chunlei, CEO of Tmall Fresh of Alibaba Group, noted during PMA’s Fresh Connections China 2017, Chinese consumers tend to spend more on higher-priced products and value brands that deliver safe, reliable, and quality foods. E-commerce permits brands easier access to consumers without the usual barriers of distribution challenges, and as a result Tmall Fresh allows even small brands to compete in the marketplace and reach a massive audience.

Smaller brands now find themselves on equal footing with large brands, unrestricted by many barriers to entry and route-to-market obstacles they often encounter in the offline world, according to Bain & Company. As a result, they’re growing quickly online, and leveraging lower-cost channels, like product reviews, for communication and branding. This has served as a wake-up call for bigger brands, who are watching advances in sales and influence among smaller brands. Regional and pure-play online brands grew by 74 percent, and lesser-known brands grew by 69 percent— surpassing the 53 percent gains made by top brands. Top brands still dominate in highly standardized categories like consumer electronics, where they control a 70 percent share of online sales. However, smaller brands claim a higher share in more personalized categories.

How fresh produce suppliers can begin to build brands for the Chinese market

At PMA Fresh Connections China, George Liu, CEO of Frutacloud, explained that compared to the traditional way of shopping preferred by the old generation, which focuses more on the appearance of goods and buying on impulse, the younger generation of online shoppers are able to make their choices based on an array of information, which means it is critical for brands to get their message across to consumers, such as creative stories about brand history, the uniqueness of their products, and even the brand’s Chinese name and logo design.

Leverage social media and key opinion leaders to develop your e-brand

Social media is an important key in the development of a brand. It’s sometimes easiest, and cheapest, way to broadcast messages to the large group of people.

New ways of marketing, such as WeChat campaigns and live broadcasting of KOLs (key opinion leaders), have become more popular in China, Liu said, adding that it is quite easy for audiences to watch broadcasts on their cellphones, making it an effective marketing method to get an audiences’ attention.

Among the biggest changes in China e-commerce is the emergence of the new model of co-creation between brands and consumers, according to Bain & Company. Online shoppers want a greater sense of participation, achievement and affiliation through their consumption. On the one hand, they actively engage in writing and reading product reviews. According to iResearch, more than 70% of consumers give comments or scores after shopping online and as many as 90% of consumers read product reviews before shopping. On the other hand, online purchasing is no longer anonymous, as it often is with offline purchases. The entire e-commerce process—from researching a product to browsing to commenting to selection to purchase—is recorded to track consumers’ shopping behavior across categories, time and platforms. It all helps sellers paint a full picture of an individual consumer, creating the opportunity for in-depth, individualized and invaluable consumer insights.

While it is true that online is quickly penetrating across categories, starting from apparel and baby products to FMCGs or even fresh groceries, for most of the categories, consumers still do much of their buying in physical retail stores. In fact, Chinese consumers are true omnichannel shoppers. According to our research, for example, 16 percent of Chinese households use both online and physical retail channels to purchase packaged foods and beverages, while 28 percent do so to buy skincare products and 39 percent do so for apparel, according to Bain & Company.

Consumers still like to go out and shop, but the role of the offline physical store is evolving. The main focus of offline shopping now is less about buying products, and more about enjoying the overall experiences, having fun with friends and families and interacting with the brands and products (e.g., trying out new models, etc.).

Huang Ying, Category Manager of Fresh Fruit & Vegetables, City Super Shanghai Ltd., said during PMA’s Fresh Connections China 2017 that branding is also crucial in China’s small and specialty retail stores.

“As a specialty supermarket, City Super brings in only the best products from around the world, and focuses on differentiated goods and services that help our accurately targeted consumers enjoy a creative shopping experience and improve living standards,” Huang said.