Luxembourg: China’s Bridge To Europe

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Late last month I was one of three TMF Group representatives that joined a strong delegation from Luxembourg’s financial sector on a three-stop tour of China.

Luxembourg for Finance (LFF) hosted seminars in Beijing, Shanghai and Shenzhen for a keen audience of fund managers and bankers interested to learn more about TMF Group’s International Corporate Structuring and Global Business Services.

Why Luxembourg?

Chinese investors increasingly choose Luxembourg as an entry point to the rest of Europe due to the cross-border financial services expertise, international outlook and the Grand Duchy’s geographical position (bordered by Belgium, Germany and France). At about 2,586 square kilometres (998 sq mi) in size, and with a population of approximately 560,000, Luxembourg may be small but it’s the leading financial centre in the Eurozone (GFCI ranking, March 2015) and the largest investment fund centre in the world after the US. 79 tax treaties exist and another 19 are being created between Luxembourg and other countries.

Luxembourg has become Europe’s leading centre for renminbi investment fund products and Dim Sum bond listings.

• RMB-denominated funds, RMB 296 bn, April 2015
• 61 bonds worth over RMB 36bn, September 2015.

Luxembourg has over 40% market share of Dim Sum bonds in Europe and is the fourth-largest Dim Sum bond-listing centre worldwide. 143 banks from 27 countries (including six of the biggest Chinese banks) have a presence in Luxembourg and there are 4,000 funds. Considered the second best place for asset managers to work, Luxembourg has a stable political environment, above EU average growth rate, friendly regulation and it is known for its tax neutrality in setting up structures. All of this is a big draw card for Chinese investors.

China’s one belt, one road

China's "One Belt, One Road" initiative intends to promote economic cooperation with countries along the proposed Belt and Road routes, of which Europe is key. Right now Chinese investors are focussing their attention on bonds, insurance products and real estate. Advisors are optimistic, and this in itself is a great indication.

Other countries in the EU certainly understand the value of China; the UK is hosting President Xi Jinping for four days this week, while the Dutch King and Queen and the Mayor of Rotterdam will be in China next week, as part of a business delegation. And there are reports the 12-nation Trans Pacific Partnership deal covering 40% of the world’s economy, but not China or Europe, could result in bringing the two even closer together.

TMF Group sees many Chinese clients making use of our Luxembourg services and we expect more to come on board.

Why TMF Group?

This was not our first time participating in a LFF visit to China, and what stands out on these trips is how strong TMF Group’s offering is; we focus on Corporate Services but can add value with our additional services such as Accounting, CoSec, management, Company Registration and Fund Services. TMF Group’s offices on China mainland and Hong Kong provide a local point of contact for clients and our international presence including office in Luxembourg allows you truly global reach.

Hui Gao is Commercial Director on TMF Group’s China desk. Based in Luxembourg, Hui has nine years’ experience in the Luxembourg Trust industry, leading China business development. She is fluent in Mandarin, French and English.