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Netherlands PHOTO

Dutch entrepreneurs optimistic about Chinese business climate

This week, BenCham presented the key findings of the Sino Benelux Business Survey at the Embassy of the Kingdom of the Netherlands in Beijing. Every year, BenCham investigate the business climate for Benelux businesses in China. “It is great to see that Benelux businesses are performing very well and are expecting to profit even further from the current business climate. Many are actually outperforming the local market,” said Mr. Bas Pulles, Deputy Head of Mission of the Netherlands Embassy in Beijing.

Favorable Business Climate

Dutch and Benelux businesses are optimistic about doing business in China. A majority experiences the business climate as favourable. 89% of Dutch companies realized equal or increased profits according to the survey. The success of Dutch companies may be due to their competitive position in the market, which according to businesses is thanks to their high product quality and good management. Expectations for the business results in 2018 are overall very positive.

Economic Slowdown

The Chinese economy has entered a new phase after its years of high-speed GDP growth. The aim of the government is to stimulate qualitative rather than quantitative growth by focusing on domestic consumption. So far, the effects of the Chinese economic slowdown on Benelux businesses appear limited. More than half of the businesses do not expect any impact.

“Even though we expected the economic slowdown to severely impact businesses, it seems we are already transforming towards ‘the new normal’ and the impact is limited. We believe this is mainly because many Benelux businesses are active in sectors which are booming because of economic trends such as urbanization, made in China 2025 or the rise of the middle classes,” said Mr. Roland Reiland, Deputy Head of Mission of the Luxembourg Embassy in Beijing.

Rising Salary & Regulatory Costs

Businesses experienced positive results, based on higher turnovers, better use of technology and increased efficiency. However there were also negative drivers. There is an increasing financial burden because of rising salary and regulatory costs, which makes that some businesses are considering leaving China. Also, the unlevelled playing field is making things increasingly difficult for Benelux businesses: many businesses feel local competitors receive preferential treatment. Moreover competition from other foreign owned (and Chinese) companies is growing. Also, more so than last year, businesses perceive the government regulations as restrictive.

“It is an interesting paradox really: many businesses are profiting in the current business climate but at the same time we see an increasing number of businesses contemplating to leave the Chinese market,” said Mr. Karel van Hecke, Deputy Head of Mission and Head of the Economic Department of the Belgium Embassy in Beijing. “A possible explanation may be that businesses who came here many years ago purely for cheap production are now struggling, but more recent entrants to the market are thriving,” mentioned Mr. Raoul Schweicher of Moore Stephens Advisory.

Belt & Road Initiative

For the first time the BenCham questionnaires and the Sino-Dutch survey were merged. When the 2016 edition of the Sino Benelux Business Survey was presented, little was known about the impact of the Belt and Road Initiative. Right now, more details on projects are available. However, only 16% of Dutch respondents has come across opportunities arising from BRI, and a vast majority 81% feels they don’t have enough information about BRI to profit from it.

“Let us not forget that many projects are currently being branded as a BRI-project. This makes it difficult for entrepreneurs to discover what BRI actually entails. For instance, we are already seeing some impact on for instance the logistics sector, with air routes being used much more frequently. This is due to BRI-projects, but not directly linked. It’s important that local authorities start defining BRI projects more clearly so that we can actually gain insight into the opportunities,” said Mr. Van Hecke.

Mr. Pulles added: “Because so many projects are branded as a BRI-project, businesses are very unsure of concrete opportunities. Right now, we notice most opportunities are within really specific projects for very specific parts or subprojects, for instance in the field of technology or ports. As embassies, we need to share more information on BRI and work on translating high-level BRI projects into such concrete opportunities.”

Awards Cerem PHOTO

Awards Spotlight: Best Best-Practice in Financial Advisory

The best examples of excellence within the international finance industry will come into focus on 4 October at the 19th annual International Fund & Product Awards, which is held at the Merchant Taylors Hall, London.

In recognition of the extraordinary talent in the industry, the Award for Best Best-Practice in Financial Advisory/Wealth Management is now receiving entries.

This category is intended to recognise wealth management/financial advisory firms located in and/or operating in any region of the world, which have not only adopted best practices on behalf of their clients, but have gone the extra mile to put in place practices that serve as a beacon for others looking to improve their own businesses. This perennially popular award will be presented to 8 regional winners from which an overall category winner will be selected:

– North America
– Latin America
– Europe
– Middle East
– Africa
– Asia
– Australasia
– United Kingdom

To cast your nominations, DO NOT DELAY: for further information and the full list of this year’s categories, please visit www.ifpawards.net

The deadline for entries is 22 June.

Last year’s International Fund & Product Awards took place at the Four Seasons Hotel Park Lane.

For any questions regarding the awards, please contact Christopher Copper-Ind at [email protected] or telephone +44 (0)20 3892 7910.

Click here to view the online version of our magazine’s supplement edition, featuring highlights of the event and a list of all of the winners of last year’s awards.

Maritime Trade PHOTO

The calm before the storm in International Trade?

A narrowing in the trade deficit in back-to-back months means good things for Q2 GDP, but this report is not yet capturing the extent of the steel and aluminum tariffs and survey data about trade is signaling a warning.

Trade Poised to Boost Second Quarter GDP

As the second quarter began, the U.S. trade deficit narrowed as exports increased 0.3 percent while imports declined 0.2 percent in April. After having widened for six consecutive months and now having narrowed in back-to-back months, trade is positioned to be additive to GDP in the second quarter, perhaps substantially so.

Our latest forecast published earlier today (prior to this morning’s trade report) looks for trade to add seven tenths of a percentage point to headline GDP in the second quarter. If that is indeed the contribution from net exports, it would mark the biggest quarterly boost to GDP from trade in more than four years.

Given the preoccupation that financial markets have had with tariffs and the potential for a broader trade war, might the flattering trade numbers be a salve for worried markets that there is nothing to fear in protectionist trade policies? Not so fast, keep in mind that this data is only through April and the broader extension of tariffs to our NAFTA trading partners and Europe was not effective until June. So the only impact observable for those countries in today’s report (and next month’s as well) would be to the extent that those countries scaled back in anticipation of eventual tariffs.

It is also useful to remember that international trade figures evolve with long lead times and a glacial pace. It takes a long time to build trust, relationships and global payment infrastructure between trading partners, and it remains to be seen if those bonds can be broken down more quickly. On that basis, it is unclear how long the shadow of tariffs will be cast on trade dynamics in coming years.

Steel and Aluminum Imports

If there is a storm coming, this might be the calm before it. Imports of iron and steel mill products increased $228 million in April alone and have increased more in the first four months of 2018 than they did in the same period of 2017. Meanwhile imports of bauxite and aluminum increased $44 million in the month. In the first four months of the year, the United States has imported better than half a billion dollars (or roughly 20 percent) more in bauxite and aluminum products than it did during the same period in 2017.

Softening in the Soft Data

U.S. manufacturers still report expansion in both exports and imports, but not to as broad an extent as they were just a few months ago. In the past three months, the ISM imports component has slipped 6.4 points, the largest slowing over a 3-month period since 2014, and the ISM exports component has come down 7.2 points, the biggest 3-month slowdown for this series since 2012.

Freshfields PHOTO

Freshfields to create 100 new jobs in Berlin as they up recruitment

Freshfields is to create a new legal support and technology development hub in Berlin, in a move that could lead to the creation of 100 new roles.

The planned hub will be based in Freshfields’ existing Berlin office and, according to the firm, will not result in any job losses.

About 60 of the new roles will be legal support positions, with the remainder expected to be fintech or legal tech jobs. The hub is expected to serve the whole of continental Europe.

Freshfields currently has six partners and some 130 staff in Berlin.

The planned new support hub in Berlin comes after the magic circle firm opened a back-office and legal support centre in Manchester in 2015, which now houses about 700 staff.

This number is set to expand as Freshfields prepares to hire in its first qualified lawyers in Manchester, as well as launching a new local apprenticeship route to qualification as a solicitor.

It plans to hire 10-15 associates into the office – which will represent its first local hires of qualified lawyers – as well as offer apprenticeships to some of the existing legal support assistants currently based in the office. It currently has about 60 legal support assistants in Manchester.

Freshfields previously considered launching a low-cost base in Canada but later scrapped this plan, with Legal Week also previously reporting that it was considering opening such a base in Asia-Pacific.

In 2015, the firm made 30 Duesseldorf IT support staff redundant after announcing plans to merge the office with Cologne.

Meanwhile, at the start of last year Freshfields offered voluntary redundancy to all of its London secretarial staff, amid a push by the firm to overhaul its business to increase efficiency.