16.01.2019

The Netherlands – an ideal test market in the EU

With a trading history dating back to Hanseatic times, the relationship between Estonia and the Netherlands has always been firm and appreciated. It is therefore no surprise that many people in trade qualify the cultural differences between the two countries as less of an obstacle than those between the Netherlands and the Dutch speaking part of Belgium.

With a population of over 13 times that of Estonia, the Netherlands is a substantial market. And the Dutch openness to innovation and other cultures, as well as its open economy as a trading nation make it an ideal test market for new goods and services. The four major cities (Amsterdam, Rotterdam, The Hague and Utrecht), concentrated in the West of the country, provide a unique test environment with short physical distances and a population that has excellent language skills: virtually everyone in the Netherlands has a good command of the English language. Having said that, the Dutch are known for being tough negotiators, not only in selling but also in purchasing!

Other factors to consider

The Netherlands is a key centre within the global business network, with an advanced infrastructure geared towards the transportation of goods, people, and electronic data. Its core distribution points include Rotterdam, Europe’s largest port, and Amsterdam’s Schiphol Airport, the fourth largest airport in Europe.

Over 170 million consumers (roughly one-third of the population of the expanded European Union of 28 member states) reside within a 500 km radius of Rotterdam. The Netherlands has capitalized on its location and advanced economy to become one of the top dozen trading countries in the world.

More than 60 percent of the Netherlands’ GDP is generated by foreign trade in goods and services.
The Netherlands is the seventeenth largest economy in the world and the fifth largest in the European Monetary Union (the Eurozone), with a gross domestic product (GDP) of €725 billion (2017 figures).

Economic Update

After a late recovery from the crisis, the Netherlands showed above-average growth for the EU of 2.6% in 2018. Due to a number of external factors in the world economy, growth for 2019 is not expected to exceed a still firm 2.2%. Labour participation and unemployment are back at pre-crisis levels and for 2019 the Dutch economy is expected to outperform the majority of EU countries, including Germany.

Although inflation is expected to increase by 0.8% to 2.4% in 2019, as a result of cuts in income tax purchasing power will increase by 1.6%, despite an increase in the already low VAT rate for non-luxury goods from 6% to 9% as per 01/01/2019.

The labour market is increasingly tight and is expected to reach a level as low as 3.6% of the working population in 2019. Vacancies can now only be filled by new people entering the labour market – which still is the case with a current 1.5% growth in the working population. Nevertheless, despite the absence of significant growth in salary levels up to now, wages in collective labour agreements are expected to rise by 2.8% in 2019.

Pockets of opportunity

E-Governance

The Dutch government (and related professionals) are on the one hand very impressed by Estonia, on the other very divided and undecided. Estonia gets a good press and recognition for its approach to e-governance in general and e-ID in particular. Many delegations from the Netherlands visit Estonia regularly.

Housing

With an annual demand for 75,000 homes there is a huge need for housing in the Netherlands (both social housing and as well as mid-sector). This offers great potential to companies that have a track record in exporting modular houses, but possibly also for tiny house producers offering smart niche solutions with substantial differentiation.

E-Health

The Netherlands is in need of smart solutions in the area of e-health. Working solutions are often fragmented regionally and at the pilot stage. Nevertheless, after initial reluctance about electronic patient files, Dutch policy makers have recently asserted that electronic data transfer among care providers is now a top priority solution for implementation.

Maritime

Although yacht building is at an extremely low level, there are still good opportunities in shipbuilding. Both in specials (particularly in dredging and wind parks) where Estonia doesn’t have great capability, but also quite a few government tenders coming up for replacement of civil government vessels; this quarter, two 70 metre multi-purpose vessels will be tendered.

Cyber Security

Estonia has a great reputation in the Netherlands due to the NATO Cyber Centre, but also because Dutch companies are already doing business in Estonia (such as Fox IT). The Dutch cluster called The Hague Security Delta is very active internationally. Very recently the Dutch government awarded a contract to Guardtime to develop a blockchain cyber security solution for the Dutch government and the Dutch Judicial Information Service.

Logistics

Although there is probably little value to be added by Estonian providers of trucking and shipping,
last mile delivery (and related warehousing and fulfilment activities) is a distinct growth market in the Netherlands as a result of an ever-increasing growth in online purchases. This translates into opportunities for companies such as Cleveron and Starship but also for IT companies that have developed proven software solutions for parcel, transaction and payment handling.

How EAS can assist

If your proposal has sufficient differentiating potential, EAS would be most happy to assist in finding suitable business partners for you in the Netherlands by means of our Export Partner Search service. In order to assess whether this is appropriate for you, we’d be most happy to get on the phone with you. A fixed amount of our time spent on what we refer to as pre-consulting is free of charge. Just drop us a line or give us a call to make our acquaintance. We look forward to hearing from you!

Thijs de Neeve
Export Advisor Benelux
E thijs.deneeve@eas.ee
T +31 85 877 1960
M +31 652 450 890

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