The Netherlands: an attractive location for international companies
The Netherlands is one of the most attractive countries for international companies seeking to establish offices in Europe. This conclusion is the outcome of a study conducted every two years by KPMG to assess operating expenses in fourteen emerging and developed economies. The study assessed 26 types of operating expenses. Of all the mature markets included in the study, the Netherlands was the second-least expensive country in terms of operating expenses, after Great Britain. The Netherlands is currently rated the most attractive business location in the Eurozone, and even outranks Japan and the United States. Of all emerging countries included in the study, China was cheapest, followed by India and Mexico.
As one would expect, the emerging economies included in the study all offered cheaper business locations than the developed markets. Companies that opt to establish offices in an emerging market will save around 20% in comparison with a location in the US. Of all the developed economies included in the study, Japan and Australia were the most expensive business locations. Brazil was the most expensive of all emerging markets.
In global terms, China and India offer the cheapest locations for companies seeking to set up new offices abroad. The costs of setting up operations here are lower than in any other country included in the study. Wages are especially low in comparison with other countries. This is especially relevant in the Chinese manufacturing industry and the Indian services sector.
KPMG assessed both the costs of starting up a business and the operational costs over a period of 10 years. Amongst other aspects, each sector was assessed in terms of energy, transportation, telecommunication and labour expenses and tax costs.
“Wage costs remain the most important cost item”, concludes Elbert Waller, International Affairs Executive at KPMG. Waller: “For companies operating in the manufacturing sector in established markets, wage costs represent approximately 55% of overall costs. This figure stands at 85% in the service industry. Overall wage costs are lowest in Great Britain, Canada and Italy. In the emerging markets, these percentages are set at 30% and 65%, with India, China and Mexico heading the league of cheapest countries.
Transportation costs are also a key factor. Manufacturing sector companies face transportation costs ranging from 6 to 22%. India, Japan and China offer the lowest transportation costs in Asia, with France and the Netherlands outcompeting their European counterparts.”
Of all the established countries, the Netherlands remains the most attractive location for companies specialising in research & development. Waller: “The Netherlands is almost 13% cheaper than the United States. Amongst other factors, the Netherlands attributes this ranking to the low cost of office facilities and tax incentives.
However, there is serious competition from emerging countries such as India, China and Mexico. These companies are over 40% cheaper than the United States as a business location for companies in the research & development sector. The Netherlands’ strong overall position is mainly attributable to our homogenous cost structure. Our excellent score on the cost comparison ranking is an important signal to international companies, an increasing number of which are selecting new locations on the basis of cost due to the current economic climate.”