Investing abroad and trade relationships

© Hollandse Hoogte
Over half of enterprises outside the service sector with an interest in a foreign business in 2014 also maintained a trade relationship with the country where that business was located. Statistics Netherlands (CBS) reports this in its latest edition of the Internationalisation Monitor on export strategies.

In 2014, the percentage share of enterprises both investing in a foreign business or foreign subsidiary and trading with the same country varied between 36 percent (Romania) and 80 percent (China). Investments made in countries with a relatively favourable tax environment, such as Ireland, Luxembourg and Hong Kong, were less often combined with commodity trade.

A total of 30 countries were studied in the context of the link between investments and trade; on average, 53 percent of investing enterprises also maintained a trade relationship. An unknown factor in this study is whether this trade is related to intra-group trade or not. As such, a trade relationship may be seen separately from the business stakes.

In general, enterprises are more likely to combine investments and exports than investments and imports. This is particularly true for Dutch businesses in Singapore, Russia and Australia. For example, a Dutch enterprise may invest in a sales subsidiary located in Russia and sell products from there. Among the 345 enterprises investing in China, the focus of additional trade was more on imports than on exports. This included, for example, investments in local production capacity for production that is partially destined for the Dutch market.

Commodity trade by enterprises investing abroad, non-service-providing industries, 2014
 Imports only (%)Exports only (%)Two-way trade (%)No trade (%)
United States10.915.942.930.3
United Kingdom6.917.235.540.3
Hong Kong17.49.612.560.5

Most enterprises invest in Germany

In 2014, Dutch enterprises active in non-service-providing branches of industry invested mostly in Germany (2,245 enterprises), Belgium (1,679), the United Kingdom (1,010), France (913) and the United States (703). With neighbouring countries Germany and Belgium, there was a commodity trade relationship combined with local investments in around half of the cases. This applied to two-thirds of the cases in the other three countries. For all five destinations, an export relationship is slightly more common than an import relationship. Here as well, two-way trading - both imports and exports - was most common as a trade relationship.

Investing enterprises, non-service-providing industries, 2014
 No trade (number of enterprises)Imports only (number of enterprises)Exports only (number of enterprises)Two-way trade (number of enterprises)
United Kingdom40770174359
United States21577113304