Luxembourg is a European hub for Chinese investors who plan to invest in Europe. Reciprocally, many European investors choose Luxembourg to structure their investments in China. Chinese investors have been boosting their investments and economic interest in Europe those last 15 years. Grand-duchy of Luxembourg have been welcoming key Chinese institutional players. Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, China Merchants Bank, Bank of Communications and China Everbright decided to setup their Europe flagships in Luxembourg. BIL and Hauck & Aufhäuser are now owned by Chinese stakeholders.
Luxembourg, the Gateway to Europe for Chinese investors
Situated in the heart of Europe, Luxembourg is the perfect gateway to the European market with more than 500 million consumers. Due to its political and social stability, skilled and multilingual workforce, outstanding connectivity to markets, favorable legal environment, and desirable tax climate, Luxembourg offers a unique range of assets and opportunities for doing business in Europe. The Luxembourg government has always pursued a proactive economic development policy, making it possible for Luxembourg to become a global financial center and establish itself as a top business location.
This article showcases what Luxembourg has to offer investors from the Great Republic of China.
Luxembourg offers an attractive business environment for Chinese investors
Chinese-based investors who want to invest in Europe find Luxembourg business friendly. Luxembourg’s economic policies are based on the strengths of private initiative and visionary spirit. A free market approach gives businesses wide freedom of action, and the Luxembourg government vigorously encourages investment and innovation through a legal and regulatory framework designed to promote business creation and economic development. Luxembourg’s fiscal climate is among the best in Europe with the lowest VAT rate, moderate corporate income tax, and a desirable personal income tax.
High productivity
The stability of the Luxembourg market is for a large part due to the competencies and the hard-working mentality of its people. Cross-border thinking, mobility and the sophisticated nature of its workforce, of whom one-third commutes each day from the three neighboring countries, contribute to the high productivity of the Grand Duchy.
Social and political stability
Social conflicts can generally be avoided thanks to customary consultation between the social partners and the government, known as the Luxembourg model. This is just one of the reasons why there has barely been a strike over the last century. Coalition governments have generally contributed to political durability and continuity of economic policies.
Research, Development, and Innovation
Research, development, and innovation are key characteristics in guaranteeing the competitiveness and success of today’s modern industries. Luxembourg is well aware of these challenges and accordingly, the government has set up a research-driven university, as well as Public Research Centres which are working in close alliance with universities just across the border in Belgium, France and Germany, and their missions are to improve and foster R&D activities in Luxembourg, to promote technical and scientific cooperation as well as technology transfer between the public and private sector and to facilitate the development of new economic activities.
An international financial center
Those last 10 years, more and more Chinese asset managers chose Luxembourg as the domicile for their investment funds to make European investments, even when they use their Hong Kong companies.
Luxembourg plays a complex key role in the world financial system. Its fund administration sector is the second largest on the planet due to its pre-eminent role in the European market, services which are also proving successful in Asia, the middle east and South America. Private banking is the other major pillar of the financial industry as it is the biggest in the eurozone and is ranked sixth in the world. In total, its finance provides directly around a quarter of the country’s national wealth.
This success can be attributed to a combination of factors. The country has fabricated a reserve of expertise and its small size gives it an outward-looking mentality, which is augmented by the multilingual and multicultural workforce. It operates against the backdrop of a stable political and social environment, aided by firm but sensitively-applied regulation. Laws are drawn up in consultation with the industry, with all parties eager to offer strong investor protection and robust action against money laundering. Financial firms are therefore able to benefit from a range of flexible and sophisticated investment vehicles.
Luxembourg is also a popular center for corporate finance, with numerous multinational groups establishing their head offices in the country. The stock exchange also has a significant niche role, specializing in the listing of bonds, with over 3,500 issuers from over 100 countries present. A special effort is presently being made in terms of Islamic finance.
Logistics
Luxembourg’s international airport is the 5th largest freight airport in Europe and the home base of Cargolux, Europe’s dominating all-cargo airfreight carrier. The global network of Cargolux and other Cargo airlines offer various daily destinations to all continents making Luxembourg a valid global distribution platform. With its advanced and well-equipped air freight handling facilities, LuxairCargo offers secure, efficient and rapid ground handling making Luxembourg one of Europe’s most efficient airfreight hubs.
In addition, an important number of qualified players, i.e. handling agents, forwarding agents and logistics services providers, give quality service allowing just-in-time access to all European countries.
Luxembourg has the highest GDP per capita in the world and the second highest labor productivity. Unemployment is low, and the country is notable for its political stability and long-term policy approach.
Ready to dive into the Luxembourg-rich economy? – Reach out to your Damalion expert now and let us be the straight and comfortable bridge for your investments from China to Europe. Our Luxembourg-China desk will help you setup your Luxembourg companies, structure your financing needs, get strategy consulting services, identify potential companies you may need to invest.
