While the coronavirus pandemic is making travelling difficult at the moment, Luxembourg is looking for alternative ways of supporting international business with key partners. This first digital trade mission to China was, according to H.E. Mrs Yang Xiaorong, Chinese ambassador to Luxembourg, an example of “innovative thinking to promote investment and trade between Luxembourg and China”.
Trade mission building partnerships
The People’s Republic of China and Luxembourg are strong trading partners and have much in common as pioneers of innovation and leaders in the high-tech and digital arenas. Both countries are excellent platforms for companies that are seeking to establish or intensify their business activities in Europe and Asia, respectively. “We believe in a strong relationship with China based on reciprocity and trust,” emphasised Chamber of Commerce Chairman Luc Frieden at the first webinar of the mission. “We welcome Chinese investors to Luxembourg and hope that more Luxembourg companies will discover the opportunities in China. It is extremely important that both countries remain open, but this can only happen if it is a win-win situation.”
We need to work on mutually beneficial partnerships and launch joint projects that can grow.
Cooperation is key. “The old ways, when you just opened a shop on a new market and started working, are becoming rarer,” Vincent Hieff, Consul General and Executive Director of LTIO Shanghai, pointed out. “We need to work on mutually beneficial partnerships and launch joint projects that can grow.”
Digital bridges
Digitalisation was the central theme of the virtual mission, which offered opportunities to meet key decision makers and make contacts with leading business representatives. The webinars organised focused on topics such as understanding digital China, the digital economy and e-commerce opportunities. “In order to collaborate we need to find a common point of reference that we could build on,” said David Foy, Head of International Business Development – Digital Economy at Luxinnovation who moderated the digital economy webinar. “Digitalisation is for sure such a point.”
Digitalisation has, for long time, been a priority in both countries, and became essential to keep life moving when COVID-19 radically changed everyday life. Rather than initiating completely new developments, the pandemic mainly speeded up trends which were already ongoing. “We have identified five market acceleration trends linked to the pandemic,” said Susan Yang, China insight specialist at consultancy group White Caviar. “A high number of individuals and staff started to do ‘social selling’ using their personal network on social media, livestreaming became much more common to promote products to new target groups, and many companies started with transaction-driven portfolio planning and innovation based on the analysis of big data. We also saw wet markets being converted to digital marketplaces, and digital brand launches by companies who enter new markets without any physical presence.”
In order to collaborate we need to find a common point of reference that we could build on.
According to Ms Yang, connectivity, contactless operations and the availability of apps and digital platforms are key to make this work. “Even small townships have access to high-speed internet in China, and affordable smartphones have made it possible for almost everyone to be connected.” Mr Foy confirmed from the Luxembourg perspective: “During the lockdown last spring, Luxembourg internet providers experienced an increase in traffic of 30-50% spread out all over the country as people began working from home. Without the massive investment in fibre to the home done over the past few years, this would never had been possible.”
Carlo Duprel, Head of Industry Partnerships and Technology Transfer Office at the University of Luxembourg’s Interdisciplinary Centre for Security, Reliability and Trust, highlighted the strong focus on cybersecurity, automation and artificial intelligence among Luxembourg companies during the crisis as well as the increased use of e-commerce. “Regulators were also quick to react to the situation, for example by adapting necessary rules to make it possible for staff working in Luxembourg’s extensive financial sector to work from home.”
Future opportunities
Asia represents the world’s largest e-commerce marketplace, with retail-enabling solutions available through large players such as Alibaba and Tencent. Although EU companies are not yet technologically ready for the diversity of platforms and channels, opportunities are immense. However, speakers at the e-commerce webinar emphasised that a long-term approach is needed in order to succeed. A strong local presence and partners that can help overcome cultural, linguistic and regulatory barriers, are also important on both the Asian and the European market.
In Luxembourg, we benefit from support from an understanding local regulator, and from our strong partnerships with local banks.
“When we came to Europe, we needed to find an open-minded and friendly environment with a focus on fintech. Luxembourg was on top of the list,” said Aaron Xu, Head of FI at Ping Pong. The fintech company established its European office in Luxembourg in 2016 as a base for launching its cross-border e-commerce payment solution on the EU market. “Going global is a no-brainer for e-commerce businesses, but the real question is about how to bridge the gap between global ambitions and local conditions. In Luxembourg, we benefit from support from an understanding local regulator which granted us a payment institution licence in 2017, and from our strong partnerships with local banks. The key is to think globally and act locally.”
The e-mission was one part of the ongoing efforts to facilitate market access and investment for companies from both countries. “This is not a one-shot initiative,” underlined Mr Frieden. “As soon as the pandemic is over, we will travel to China and invite Chinese companies to come here to further explore what Luxembourg has to offer.”