HK's European double strengthens partnership
Luxembourg's status as a leading financial centre and a gateway for trade and investment in Europe will have immediate resonance for anyone familiar with Hong Kong's particular strengths and place in the commercial world.
In positioning, expertise and ambitions, there are clear resemblances. And, with companies in Luxembourg now making a concerted push to raise their profile and increase business dealings in China, this will undoubtedly create many new opportunities for partnership and co-operation.
'The relationship with Hong Kong has been built on financial services and investment funds,' says Nicolas Mackel, Luxembourg's consul general in Shanghai. 'But we now see more law firms, commercial enterprises and representative offices setting up in Hong Kong and looking to develop their interests on the mainland.'
A well-structured double taxation agreement has spurred the handling of Hong Kong investment funds through Luxembourg, which helps the country to rank second worldwide, behind only the United States, in that specialist area of finance. There are plans for this proven expertise and branding to attract further outward investment from the mainland via Hong Kong and for qualified companies to launch renminbi funds.
'For that, there are still a few regulatory hurdles to clear,' Mackel says. 'But China is getting very interested in the Luxembourg market and what it can offer.'
In other sectors, ties and trade prospects are similarly impressive. Steel giant Arcelor Mittal, headquartered in Luxembourg , has two mainland joint ventures for iron ore production. Hi-tech component companies are supplying China's car industry with electronic sensors for air bags and safety belts. Specialist manufacturer Paul Wurth is installing blast furnaces for the mainland's steel industry. And Cargolux, one of the world's largest cargo-only airlines, recently launched flights to and from Chongqing, complementing mainland services from Beijing, Xiamen and Shanghai.
'Basically, they are flying in technological parts for China's factories and flying out consumer goods for worldwide markets,' says Mackel, who doubles as executive director of his country's trade and investment office in China.
The reliability of Cargolux services has also played a big part in establishing Luxembourg as a logistics hub in Europe. The central location, network of transport connections, speed of handling and understanding of customer needs have all contributed.
'Many companies in China have discovered Luxembourg as a gateway into Europe and as a trading or business hub,' Mackel says. As examples, he cites SAIC Motors and telecom equipment supplier Huawei Technologies, along with Industrial and Commercial Bank of China, which has had its European headquarters in Luxembourg since the mid-1990s.
The Belgium-Luxembourg Chamber of Commerce in Hong Kong has seen a jump in membership and inquiries over the past two years. Established in 1992, the chamber offers comparative newcomers, such as Banque Degroof and law firm Arendt & Medernach, a platform to make contacts and discuss common interests in Hong Kong. It also aims to reinforce the message by highlighting Luxembourg's soft skills and exports, not just its pre-eminence as a centre for banking and investment.
'With a skilled, multilingual labour force, the country is also a breeding ground for innovation and technology,' says chamber general manager Queeny Fong. 'In the last few years, it has emerged as a hub for logistics, ICT and automotive components. The presence of this industry-related expertise and the favourable investment climate are the two main factors that will drive trade and other business between Luxembourg and Hong Kong.'
The expanding activities of companies such as Maritime Construction Services duly confirm that view. The Luxembourg-based firm specialises in vessel leasing, financing, construction, crewing and laying pipes offshore.
'The firm has a good record of co-operation with Chinese companies and banks to develop, prepare, build and manage offshore projects,' says director Valery Kornienko. 'The reputation of Luxembourg [also] gives people confidence in us. With technological potential, experience and know-how we can be more effective or more competitive in the Asian market.'