Foreign direct investment and multinationals
Internationalisation and foreign direct investments (FDI) have a clear positive impact on a country’s productivity growth and ultimately its well-being. Countries value foreign investments as they bring in overseas capital and have the potential to make a significant contribution to the economy. The fact that the Netherlands is a stable economic hub makes it attractive to foreign enterprises. As important actors in FDI, multinationals deserve their own chapter of this publication. The chapter begins by examining inward and outward direct investment in and by the Netherlands, before zooming in on multinationals and distinguishing between those under foreign and Dutch control.
8.1Key findings
Globally, there is a clear recovery in direct investment when compared to 2020, the year of the coronavirus outbreak. The Netherlands’ inward and outward direct investments recovered strongly in 2021 but are still below 2019 levels. Nevertheless, the Netherlands retains its important position on the world stage for direct investment. As in previous years, a substantial proportion of the direct investment that enters the Netherlands goes on to find its way overseas; around 65% of direct investment is in Special Purpose Entities (SPEs) and holdings.
Even when SPE money flows are disregarded, in 2021 the Netherlands was still among the top 5 countries for investment received. The US, the UK and Germany are both the most significant direct investors in the Netherlands and the countries where Dutch entities invest the most. Shell’s relocation of its head office to the UK was a significant factor, as this substantially increased direct investment from the UK through investment in elements of the enterprise which remained in the Netherlands.
Multinationals are major players in international investment flows to and from the Netherlands.noot1 In 2020, there were over 24,000 multinationals operating in the country, representing a fall of 2% compared to 2019. Multinationals make up just under 2% of all enterprises in the Dutch business economy (more than 1.3 million enterprises in 2020).noot2 Although the number of multinationals in the Netherlands grew between 2010 and 2020, their share of the business economy remains relatively stable as many non-multinational enterprises were also added. In 2020, almost 60% of multinationals were under foreign control, leaving approximately 40% under Dutch control. The reduction in the number of multinationals in 2020 was entirely due to Dutch-owned multinationals.
Multinationals provided work for over 2.3 million people in the Netherlands in 2020, representing a decrease of 0.5% compared to 2019. They thus accounted for 37% of total employment in the Dutch business economy in that year. In 2020, employment declined most significantly among Dutch multinationals in accommodation and food services, renting/leasing and other business services. The latter branch of industry, which includes activities such as job placement services and temporary employment agencies, is the branch in which Dutch-owned multinationals employ the most people. Foreign multinationals provide the most jobs in the wholesale and retail trade and in manufacturing.
Around 68% of multinationals in the Netherlands are ‘two-way traders’, meaning that they are active in both the import and export of goods and/or services. Multinationals account for between 80% and 85% of the business economy’s goods trade, and more than 90% of its trade in services. Foreign multinationals play a key role in these trade flows, accounting for two-thirds of multinationals’ goods trade and 90% of their trade in services. Multinationals’ trade in goods and services contracted in 2020 amid the coronavirus pandemic. In terms of the goods trade, the import and export value of Dutch-owned multinationals saw a particular decline in manufacturing, specialised business services, energy supply and the wholesale and retail trade. The contraction in the trade in services in 2020 was primarily due to foreign multinationals. On the import side, foreign multinationals active in renting/leasing and other business services and manufacturing reduced their import of services most significantly. The export picture is more varied.
Most foreign multinationals in the Netherlands in 2019 were US-controlled (nearly 3,000 enterprises). Multinationals from the US, the UK, Germany, Belgium and France make up more than 65% of foreign enterprises in the Netherlands. For their part, the largest group of subsidiaries of Dutch multinationals in 2019 were based in Germany (2,900), followed by the US (1,900). Compared to 2018, the number of Dutch subsidiaries grew strongly in Germany (+330) and China (+35). In 2019, Dutch subsidiaries in Germany employed approximately 350,000 people, representing an increase of more than 6% relative to 2018. Dutch enterprises in the US employ approximately 300,000 people, which is 2% more than in 2018. Employment among Dutch subsidiaries decreased in Poland, France and Italy.
8.2Macro-level view of foreign direct investment
This section discusses the direct investment position of the Netherlands based on macro-level figures from the Dutch central bank (De Nederlandsche Bank, DNB) and the OECD. An enterprise receiving direct investments from abroad is an enterprise in which a foreign investor holds at least 10% of the ordinary share capital or the voting rights, or the equivalent thereof. This involves having a controlling interest and substantial influence on the management of the enterprise, for example as a result of a merger, an acquisition, the construction of new facilities, reinvested earnings from overseas activities or loans between different elements of the enterprise.
FDI recovers following COVID-related dip
In 2021, global foreign investment transactions were restored to well above the level seen before the coronavirus pandemic. Globally, the value of these transactions in 2021 rose by 88% relative to 2020, ending 2021 as much as 37% above the pre-coronavirus level. The US and China were by far the most significant destinations for new foreign direct investments: together, these two countries account for 40% of worldwide direct investment transactions in 2021. The US was also the source of almost a quarter of new investments in other countries, with Germany and Japan following far behind (OECD, 2022).noot3 Despite the recovery in 2021, the outlook for 2022 is extremely uncertain as a result of factors such as increased geopolitical tensions.
Inward and outward investments are also increasing in the Netherlands, after a dip in 2020 (Figure 8.2.1). FDI in the Netherlands fell during that year, which is unsurprising given the global uncertainty caused by the coronavirus pandemic. Many foreign enterprises suspended investment decisions or altered their plans. Total investments in the Netherlands (inward investments) grew by 4% in 2021 over 2020, to €4,709 billion. As in previous years, the Netherlands is among the countries that receive the greatest foreign direct investment. Inward investments are still below levels seen in 2019, but by the end of 2021 the investment position excluding SPEs and holdings had risen above its pre-coronavirus level. Outward investments from the Netherlands in foreign countries grew by 2% compared with 2020, to €5,696 billion, although outward investments in 2021 also failed to achieve 2019 levels.
| Jaar | Excluding SPEs and holding companies | SPEs and holding companies | |
|---|---|---|---|
| Outward | 2021, Outward | 1984 | 3712 |
| Outward | 2020, Outward | 1850 | 3722 |
| Outward | 2019, Outward | 1896 | 4039 |
| Outward | 2018, Outward | 1838 | 3821 |
| Outward | 2017, Outward | 1820 | 3877 |
| Outward | 2016, Outward | 1834 | 3697 |
| Outward | 2015, Outward | 1644 | 3522 |
| Inward | 2021, Inward | 1629 | 3080 |
| Inward | 2020, Inward | 1374 | 3153 |
| Inward | 2019, Inward | 1381 | 3475 |
| Inward | 2018, Inward | 1349 | 3323 |
| Inward | 2017, Inward | 1275 | 3454 |
| Inward | 2016, Inward | 1254 | 3288 |
| Inward | 2015, Inward | 1209 | 3038 |
| Source: DNB | |||
Netherlands still a key conduit country
A great deal of inward FDI goes on to flow out of the Netherlands without adding value to the real economy. This is true both for SPE money flows and for holdings. These entities have few employees, many of them have no physical presence in the Netherlands, and any trading activity they engage in consists mainly of financial services within the enterprise group. For them, the Netherlands serves primarily as a conduit country, alongside other key European conduit countries such as Ireland and Luxembourg.
The Netherlands is a well-established conduit country, partly thanks to the country’s tax system. In 2021, the Netherlands ranked fourth in the Tax Justice Network’s (TJN) Corporate Tax Haven Index. This ranking indicates which countries do the most to help multinationals pay low tax returns, and awards countries a score for their fiscal attractiveness and a separate score for the financial activity of multinationals in a country. Although the Netherlands does not make it into the top 10 for fiscal attractiveness, the country does score highly on the index because a relatively large proportion of worldwide direct investment is made via the Netherlands. The comprehensive treaty network, the participation exemption and (until 2021) the lack of a conditional withholding tax on unearned income abroad in relation to dividends, interest and royalties make it attractive for multinationals to direct their income flows via the Netherlands. In recent years, partly as a result of increased political criticism from both within and outside the country, the Dutch government has taken various measures to make the country less attractive as a fiscal conduit country (Dutch Parliamentary Committee on Conduit Companies, 2021).
SPEs and holdings account for as much as 65% of inward and outward FDI in the Netherlands. The inward investment position of SPEs and holdings fell slightly (by 2%) in 2021 relative to 2020, to €3,080 billion. Inward investment in the other sectors (sectors which are not SPEs or holdings, such as non-financial institutions, financial institutions, government and households) grew by no less than 19%, to €1,629 billion. The outward investment position of SPEs and holdings remained virtually constant in 2021, amounting to €3,712 billion by the end of the year, while the other sectors saw an increase of 7%, to €1,984 billion.
Even leaving aside conduit investments, the Netherlands is a key global player in terms of direct investment. Excluding SPEs,noot4 in keeping with the previous year, the Netherlands is the second-largest country in terms of its outward direct investment position, behind the US. As regards inward investment, the Netherlands ranks fourth, after the US, China and the UK (OECD, 2022). As with SPEs, given that throughput via holdings makes almost no contribution to the Dutch economy, it is not unreasonable to disregard this throughput in the subsequent analysis of the geography of direct investment partners.
Most direct investment received from the US
As in 2020, in 2021 most investment in the Netherlands was made by American enterprises. Around 20% of total inward direct investment in the Netherlands in 2021 came from the US, after adjustment for investments through SPEs and holdings. As Figure 8.2.2 shows, the UK, Germany, Luxembourg and France complete the top 5 list of countries that invest in the Netherlands. Luxembourg’s sustained position as one of the Netherlands’ key investment partners is due to the fact that the ranking focuses on which country is registered as the source of investment. However, there is often a disparity between the direct source of an investment and the country where an enterprise’s head office is registered. Like the Netherlands, Luxembourg acts as an important conduit country and owes its position in the top 5 to its role as a key ‘intermediary’ between the original owner and the Dutch-owned enterprise in which an investment is made (Hagendoorn, 2020). France’s striking rise up the rankings is due to enterprises in the motor vehicle industry and the information and communication sector.
| United States | United Kingdom | Germany | Luxembourg | France | |
|---|---|---|---|---|---|
| 2015 | 2 | 4 | 3 | 1 | 8 |
| 2016 | 1 | 4 | 3 | 2 | 10 |
| 2017 | 4 | 1 | 3 | 2 | 9 |
| 2018 | 4 | 2 | 1 | 3 | 8 |
| 2019 | 2 | 4 | 1 | 3 | 5 |
| 2020 | 1 | 4 | 2 | 3 | 6 |
| 2021 | 1 | 2 | 3 | 4 | 5 |
| United Kingdom | United States | Germany | Switzerland | Brazil | |
|---|---|---|---|---|---|
| 2015 | 2 | 1 | 4 | 3 | 5 |
| 2016 | 2 | 1 | 5 | 3 | 4 |
| 2017 | 1 | 2 | 4 | 3 | 5 |
| 2018 | 3 | 1 | 5 | 2 | 4 |
| 2019 | 1 | 2 | 4 | 3 | 5 |
| 2020 | 2 | 1 | 3 | 4 | 5 |
| 2021 | 1 | 2 | 3 | 4 | 5 |
The UK and the US have consistently vied for the position of most significant recipient of Dutch investment in recent years, as can be seen in Figure 8.2.3. In 2021, these two countries together accounted for almost 30% of Dutch outward direct investment, adjusted for SPEs and holdings. The continued inclusion of Brazil in the top 5 is primarily attributable to enterprises operating in the petroleum industry.
UK increasingly attractive as an investment partner
Partly thanks to the relocation of Shell’s head office, the UK climbed to second place among inward investment partners. Shell’s relocation from the Netherlands to the UK on 31 December 2021 triggered an increase in inward investment in the Netherlands, as the elements of the multinational that are still registered in the Netherlands are now under foreign ownership. At the time of relocation, the market value of the entity then known as Royal Dutch Shell was approximately €150 billion. Another originally Dutch multinational, Unilever, had already relocated to the UK in 2020.
Strong increase in share of equity participations
A study of the share of equity participations in investment can yield an indication of patterns of investment activity. Investments can be subdivided into equity participations (including reinvestments) and mutual debts. Equity participations are a good gauge of new investments, such as the creation of a business, a merger or an acquisition. As debt flows are often driven by fiscal objectives or multinationals’ short-term financing needs, they are less effective as a gauge of the contribution of direct investment to economic growth (Hemmerlé, 2021).
In 2021, the equity participations in inward investment increased to well above the level seen before the coronavirus pandemic (Figure 8.2.4). Equity participations are in general less volatile than loans, making them a better indicator of structural direct investment. The significant increase in participations is partly due to the relocation of Shell’s head office to the UK. Debts are slightly higher than before the coronavirus crisis. The greater investment on the expenditure side of the issue is also primarily due to increased equity participations.
| Jaar | Equity | Debt instruments | |
|---|---|---|---|
| Outward | 2021, Outward | 1400 | 584 |
| Outward | 2020, Outward | 1289 | 560 |
| Outward | 2019, Outward | 1336 | 560 |
| Outward | 2018, Outward | 1305 | 533 |
| Outward | 2017, Outward | 1304 | 515 |
| Outward | 2016, Outward | 1333 | 500 |
| Outward | 2015, Outward | 1184 | 460 |
| Inward | 2021, Inward | 1225 | 404 |
| Inward | 2020, Inward | 989 | 385 |
| Inward | 2019, Inward | 960 | 421 |
| Inward | 2018, Inward | 931 | 418 |
| Inward | 2017, Inward | 894 | 381 |
| Inward | 2016, Inward | 873 | 381 |
| Inward | 2015, Inward | 808 | 401 |
| Source: DNB | |||
8.3Multinationals in the Netherlands
This section focuses on multinationals in the Netherlands, which are the key players behind international investment flows and international trade. How many multinationals are there in the Dutch business economy? How many are under foreign control? How important are these enterprises to employment in the Dutch business economy and to the international trade in goods and services? These and other questions will be answered using Inward and Outward Foreign Affiliates Statistics for the 2010–2020 period.
A multinational is an enterprise with ultimate control over enterprises in two or more countries. Multinationals are very important to the Dutch economy, not least in terms of total value added and employment. These enterprises also make a relatively significant contribution to technological innovations (CBS, 2018a). Finally, multinationals serve as important gateways to international markets and link the domestic value chain with the global value chain (Cadestin et al., 2019; CBS, 2018b). In a globalised, digital world, a quintessential trading nation such as the Netherlands is relatively dependent on the international economy and multinationals for its well-being.
23% more multinationals attracted to the Netherlands over 10 years
The first step is to identify the development in the number of multinationals for the 2010–2020 period (Figure 8.3.1). Relative to 2010, this number has grown by almost 23%. 24,345 multinationals were operating in the Dutch business economy in 2020, representing around 1.8% of the total. Despite the growth in the number of multinationals, their share in the business economy has remained virtually the same year on year, as the number of non-multinationals (in particular independent entrepreneurs and self-employed people) has also grown. This group of enterprises and entrepreneurs grew by 44% in the 2010–2020 period.
Foreign multinationals opt for the Netherlands in record numbers
CBS distinguishes between Dutch and foreign-owned multinationals. A Dutch multinational is an enterprise under Dutch control with subsidiaries (majority stakes) abroad. A foreign multinational is a subsidiary based in the Netherlands that is ultimately controlled from abroad. Even in internationally challenging times, the Netherlands is still an attractive proposition for foreign enterprises: nearly 60% of multinationals were foreign-owned in 2020 (Figure 8.3.1). Foreign multinationals account for a substantial share of the Netherlands’ output, innovation-related expenditure and international trade (CBS, 2018). Interestingly, the increase in the number of multinationals between 2010 and 2020 was primarily caused by the significant rise in the number of foreign multinationals (nearly 70%). The number of foreign multinationals was higher in 2020 than it had ever been, while the number of Dutch-owned multinationals saw a slight decrease in that year. Between 2010 and 2020, the number of Dutch-owned multinationals fell by approximately 13%.noot5
| Jaar | Foreign-owned multinationals | Dutch-owned multinationals |
|---|---|---|
| 2010 | 8580 | 11265 |
| 2011 | 10520 | 10335 |
| 2012 | 10845 | 9865 |
| 2013 | 11970 | 9570 |
| 2014 | 12340 | 9770 |
| 2015 | 12615 | 9665 |
| 2016 | 13145 | 9775 |
| 2017 | 13940 | 9890 |
| 2018 | 14155 | 9800 |
| 2019* | 14475 | 10315 |
| 2020* | 14525 | 9820 |
There are various reasons for foreign enterprises to establish themselves in the Netherlands. For example, the country enjoys a very favourable location in Europe, a highly developed logistical and data infrastructure, a relatively highly educated population and a favourable fiscal business climate. Brexit also offers a potential explanation for the further increase in the enterprise population under foreign control in the Netherlands. In this post-Brexit era, many enterprises in the UK are experiencing issues such as an extra administrative burden, customs procedures, VAT declarations, longer delivery times and delays in access to the European market. Opening an office in the European Union, for example in the Netherlands, is one way to reduce this red tape, whether the issues are due to European Union permits or an enterprise’s continuing need to attract European talent (see, for example, Dutch government, 2020). Since the Brexit referendum in 2016, nearly 220 British enterprises have opted to open a subsidiary in the Netherlands (Dutch government, 2021).
Nearly 4 in 10 persons in employment work for multinationals
In 2020, approximately 37% of persons in employment in the Dutch business economy – 2.3 million people – were employed by a multinational enterprise. This share remained practically unchanged throughout the 2010–2020 period. In terms of absolute numbers, the group of people employed by multinationals increased by 405,000 relative to 2010. Figure 8.3.2 shows that this increase is mainly visible among foreign multinationals.
| Jaar | Foreign-owned multinationals | Dutch-owned multinationals |
|---|---|---|
| 2010 | 819 | 1084 |
| 2011 | 854 | 1052 |
| 2012 | 857 | 1153 |
| 2013 | 872 | 1149 |
| 2014 | 868 | 1208 |
| 2015 | 918 | 1245 |
| 2016 | 965 | 1286 |
| 2017 | 1017 | 1324 |
| 2018 | 1055 | 1377 |
| 2019* | 1096 | 1277 |
| 2020* | 1092 | 1216 |
Contraction in employment particularly affects existing enterprises
2020 saw a contraction in employment within Dutch-owned multinationals; Figure 8.3.3 gives a decomposition of this contraction. The greatest reduction affected accommodation and food services, the real estate sector and renting/leasing and other business services (e.g. cleaning enterprises, job placement services and travel agencies), industries which were relatively severely impacted by the coronavirus crisis. The majority of the contraction in employment among Dutch-owned multinationals was accounted for by autonomous contraction (intensive margin) – contraction in the workforce of existing enterprises – and to a lesser extent by acquisition of Dutch-owned enterprises by a foreign-owned enterprise or due to enterprise death (extensive margin). Foreign multinationals saw a smaller reduction in the number of persons in employment in 2020. In their case, the number of employed persons fell due to autonomous contraction and enterprise deaths, but this was largely compensated for by growth in employment among new foreign multinationals and acquisitions of Dutch enterprises by foreign enterprises.
| Growth/contraction at existing enterprises | Enterprise deaths | Acquisitions | Incorporations | Other changes | |
|---|---|---|---|---|---|
| Foreign-owned multinationals | -26 | -10 | 13 | 18 | 1 |
| Dutch-owned multinationals | -52 | -9 | -4 | 1 | 2 |
In 2020, all Dutch multinationals combined employed around 124,000 more people (rounded to 1.2 million) than did foreign multinationals (1.1 million). Looking at the average number of employed persons per type of business, the median Dutch multinational had around 18 permanent employees and on average 122 employed persons. The median foreign multinational had 7 permanent employees and an average of 74 employed persons. In 2020, each non-multinational business had an average of 3 employed persons and a median of 1. This shows that average employment among multinationals is skewed upwards by a few very big employers. The median multinational has more modest employment figures.
In which industries do multinationals primarily operate?
The majority of the multinationals in Netherlands are active in the wholesale and retail trade, followed by specialised business services and manufacturing. As Figure 8.3.4 shows, the distribution of multinationals by sector differs significantly from the distribution in the Dutch business economy as a whole (multinationals plus non-multinationals). Approximately 30% of enterprises in the total Dutch business economy operate in the specialised business services sector, compared with 16% and 19% of foreign and Dutch-owned multinationals, respectively.
Many foreign multinationals are active in the wholesale and retail sector (Figure 8.3.4): 38% of foreign multinationals, compared with 30% of Dutch-owned multinationals in the sector. They account for approximately one-fifth of all enterprises in the total Dutch business economy. This relatively greater activity in this sector among foreign multinationals is due to the Netherlands’ comparatively high volume of wholesalers with a foreign parent enterprise or an overseas subsidiary, which in turn is a result of the nature of wholesalers’ and retail traders’ activities in the Netherlands. These enterprises form an indispensable link between domestic and foreign suppliers and buyers, provide support services and thereby connect many sectors within the Netherlands and overseas. The wholesale trade is a clear example of an industry that facilitates other industries to source and sell their goods and services outside the Netherlands (Wong, 2019; Notten & Wong, 2019). Large foreign industrial enterprises, such as Japanese car manufacturers with a European logistics centre in the Netherlands, are also often regarded as wholesalers (Van den Berg & Mounir, 2019).
| Type bedrijf | Manufacturing | Wholesale and retail trade | Transportation and storage | Information and communication | Specialised business services | Renting/leasing and other business services | Other sectors |
|---|---|---|---|---|---|---|---|
| Foreign-owned multinationals | 13.9 | 37.8 | 6.5 | 12.3 | 16.2 | 5.2 | 8.1 |
| Dutch-owned multinationals | 17.2 | 30.4 | 6.2 | 9.6 | 18.5 | 6.4 | 11.7 |
| Total Dutch business economy | 5.6 | 20.4 | 4.1 | 8.2 | 30.3 | 6.9 | 24.5 |
Multinationals in the wholesale and retail trade provide jobs to 663,000 people
Figure 8.3.5 shows that the wholesale and retail trade is the largest employer in the Dutch business economy. The same is true for employment among multinationals: approximately 30% of all people on the payroll of foreign multinationals in 2020 worked in the wholesale and retail trade, compared with 28% in the case of Dutch multinationals. With a share of 22%, this industry is the second-largest employer within the group of foreign multinationals. For employees of Dutch-owned multinationals, the comparable industry is renting/leasing and other business services: almost a quarter of these employees work in this sector, which includes temporary employment agencies and job placement services. Taking a multi-year view, the most significant increase in the number of employed persons among foreign multinationals has taken place in the information and communication sector. Interestingly, despite specialised business services being one of the larger sectors in terms of number of multinationals in 2020, this sector encompassed relatively few permanent employees: 7% of employees on the payroll of foreign multinationals and 9% employed by Dutch-owned multinationals.
| Type bedrijf | Manufacturing | Wholesale and retail trade | Transportation and storage | Information and communication | Specialised business services | Renting/leasing and other business services | Other sectors |
|---|---|---|---|---|---|---|---|
| Foreign-owned multinationals | 21.6 | 30.0 | 10.7 | 9.4 | 7.2 | 12.4 | 8.6 |
| Dutch-owned multinationals | 15.7 | 27.5 | 9.3 | 5.1 | 8.8 | 24.0 | 9.5 |
| Total Dutch business economy | 13.0 | 26.0 | 6.9 | 5.9 | 13.3 | 16.5 | 18.5 |
Almost 2,900 American multinationals operating in the Netherlands
The top 10 countries of origin for foreign multinationals have changed little over time. Most foreign multinationals in the Dutch business economy are still under US, German, UK, Belgian or French control (Figure 8.3.6), with these five countries of origin making up more than 65% of all foreign-owned enterprises in the Netherlands. With some 2,900 enterprises under American control, the US is still our main investment partner in terms of the number of multinationals operating in the Netherlands, representing over 21% of all enterprises under foreign control. Germany takes a distant second place, with 2,200 German enterprises in the Netherlands. Relative to prior years, there has been an increase in the number of British enterprises in Netherlands. This may have occurred in advance of Brexit, with entrepreneurs seeing this as a way to maintain a presence in the European Union (Netherlands Broadcasting Corporation, 2021).
More Danish multinationals opted for the Netherlands in 2020
In 2020, Denmark joined the top 10 countries of origin for multinationals, taking Italy’s place (Figure 8.3.6). As Denmark is a relatively small country, many entrepreneurs see a cross-border move as a logical step towards scaling up and expanding their enterprises. The number of Chinese multinationals in the Netherlands declined by 45 enterprises between 2018 and 2020, whereas the enterprise population with a Swiss parent enterprise grew. As a result, these two countries switched places in the top 10.noot6
| Land | Number |
|---|---|
| United States | 2865 |
| Germany | 2205 |
| United Kingdom | 1495 |
| Belgium | 1430 |
| France | 875 |
| Japan | 575 |
| Switzerland | 520 |
| China | 510 |
| Sweden | 430 |
| Denmark | 320 |
Some 236,000 people worked for enterprises with a parent in a country bordering the Netherlands in 2020. German and Belgian multinationals provided employment for 10,000 (+6%) and 23,000 (+59%) more people, respectively, in 2020 compared to 2018. As in 2018, the US was the largest foreign employer in the Dutch business economy in 2020, while British multinationals provided around 10,000 fewer jobs in 2020 in comparison with 2018.
9 out of 10 multinationals operate in international markets
The two groups (multinational versus non-multinational) differ in the extent to which they do or do not trade internationally (Figure 8.3.7). Whereas 29% of non-multinationals did business abroad in 2020, this percentage was 88% and 92% for Dutch and foreign multinationals, respectively. By definition, multinationals have an international connection in their parent or subsidiary. This provides them with greater knowledge of and contacts in overseas markets than non-multinationals have access to. Multinationals in manufacturing are more likely than average to import/export goods and/or services: just 4% of industrial multinationals did not trade outside the borders of the Netherlands in 2020.
| Multinationalstatus | International trade | No international trade |
|---|---|---|
| Dutch-owned multinationals | 92.2 | 7.8 |
| Foreign-owned multinationals | 87.9 | 12.1 |
| Non-multinationals | 28.7 | 71.3 |
Over two-thirds of multinationals active in both imports and exports
In Chapter 5 of this publication, we subdivided the group of internationally trading enterprises into enterprises which exclusively import, those which exclusively export, and two-way traders (enterprises which both import and export).noot7 If we look at multinationals, we see that 68% both export and import. The share of two-way multinational traders is above average in manufacturing and in the wholesale and retail trade: 86% of industrial multinationals both import and export goods and/or services. The same figure for multinational wholesale and retail traders is 77%. More than half of all multinationals operating in specialised business services can be classified as two-way traders.
Multinationals account for over 80% of goods imports
Multinationals are responsible for a significant proportion of the international trade in goods and services in the Dutch business economy. As Figure 8.3.8 shows, between 80% and 85% of the import and export value of goods is accounted for by multinationals, with non-multinationals conducting the remaining 15% to 20%. In 2020 the share of multinationals in import value declined slightly to 81%, which rounds to a value of €245 billion. In 2018, this share was 84%. Foreign multinationals are the biggest players in imports. In 2020, foreign multinationals imported goods with a value of €164.5 billion, representing over two-thirds of all multinational imports. Dutch-owned multinationals experienced the most significant contraction in imports relative to 2019, at –€16.7 billion (–17%), compared to –€14.8 billion (–8%) for foreign multinationals. Non-multinationals’ import value increased slightly in 2020.
| Jaar | Dutch-owned multinationals | Foreign-owned multinationals | Non-multinationals | |
|---|---|---|---|---|
| Import value | 2015, Import value | 74.9 | 152.9 | 47.8 |
| Import value | 2018, Import value | 95.1 | 175.7 | 53.4 |
| Import value | 2019*, Import value | 97.5 | 179.3 | 56.7 |
| Import value | 2020*, Import value | 80.8 | 164.5 | 58.4 |
| Export value | 2015, Export value | 97.1 | 151.2 | 46 |
| Export value | 2018, Export value | 110.4 | 177.9 | 50.5 |
| Export value | 2019*, Export value | 115.9 | 181.2 | 53.2 |
| Export value | 2020*, Export value | 104.5 | 175.5 | 53.5 |
Dutch-owned multinationals’ import value contracts in all industries
Figure 8.3.9 explains the contraction or growth in the import value of goods by the Dutch business economy in 2020. The contraction in foreign multinationals’ import value is primarily accounted for by foreign multinationals operating in manufacturing (–€9.4 billion), especially as foreign enterprises in the petroleum and chemical industry, the motor vehicle and trailer industry and the repair and installation of machinery reduced their imports. Foreign multinationals in the wholesale and retail trade also imported significantly less (–€4.6 billion); this contraction in imports was fairly evenly spread across the wholesale and retail trade and the motor vehicle trade, which includes many large foreign motor vehicle producers. Foreign enterprises active in transportation and storage also imported significantly less in 2020 than in the previous year (–€3,2 billion), whereas foreign multinationals in specialised business services were able to grow their imports in 2020 relative to 2019 (+€2.5 billion). Goods imports by Dutch-owned multinationals contracted across the board in 2020, but the contraction was especially acute in manufacturing (primarily the petroleum industry), specialised business services, energy supply and the wholesale and retail trade (primarily the wholesale trade). Import growth for non-multinationals was particularly concentrated in the wholesale and retail trade (especially the wholesale trade).
| Dutch-owned multinationals | Foreign-owned multinationals | Non-multinationals | |
|---|---|---|---|
| Manufacturing | -5.8 | -9.4 | -1.2 |
| Energy supply | -3.8 | -0.2 | 0 |
| Wholesale and retail trade | -2.3 | -4.4 | 2.4 |
| Transportation and storage | -0.2 | -3.2 | 0.1 |
| Specialised business services | -4.4 | 2.5 | -0.1 |
| Other sectors |
-0.2 | -0.2 | 0.4 |
Multinationals account for 84% of export value
The export value of goods followed a similar pattern to that of imports, as can be seen in Figure 8.3.8. Foreign multinationals have consistently accounted for just over half of goods exports for several years. In 2020 they generated around €5.7 billion in export value (–3%) relative to the previous year. The export value of Dutch-owned multinationals declined from €115.9 billion in 2019 to €104.5 billion in 2020 (–10%). Non-multinationals accounted for around 15% to 16% of the total goods exported by the business economy, and these exports grew slightly in 2020 relative to 2019, adding €300 million. In total, private-sector goods exports fell by €17 billion (–15%).
Biggest contraction in export value seen in manufacturing
Figure 8.3.10 explains the contraction and growth in goods exports from 2019 to 2020. By far the most significant contraction in exports was experienced by enterprises active in manufacturing, which transported €12.8 billion less than in 2019. €7.2 billion of that amount was due to a contraction in goods exports by foreign multinationals (especially in the chemical and machinery industry, the motor vehicle and trailer industry, other transport equipment and basic metals). Dutch-owned multinationals’ exports also fell in 2020, by €3.8 billion, particularly in the petroleum industry. The reduction in exports in the energy supply sector was almost entirely due to Dutch-owned multinationals. As with imports, the growth in exports by non-multinationals was concentrated in the wholesale and retail trade. Interestingly, enterprises in the specialised business services sector experienced the opposite development: foreign multinationals achieved slight growth in exports, while Dutch-owned multinationals actually saw a small contraction.
| Dutch-owned multinationals | Foreign-owned multinationals | Non-multinationals | |
|---|---|---|---|
| Manufacturing | -3.8 | -7.2 | -1.8 |
| Energy supply | -2.7 | 0 | 0 |
| Wholesale and retail trade | -2.7 | -0.6 | 1.5 |
| Transportation and storage | 0.5 | -0.1 | 0.3 |
| Specialised business services | -2.3 | 2.2 | 0.1 |
| Other sectors | -0.3 | 0 | 0.4 |
Foreign multinationals account for 85% of enterprises’ service import reduction
Multinationals play an even bigger role in the import and export of services in the business economynoot8 than in the goods trade (Figure 8.3.11). On average, more than 90% of both imports and exports of services in recent years can be attributed to multinationals, with foreign multinationals again playing the biggest role. At €106.2 billion, foreign multinationals imported the most services in 2020, ahead of the €32.9 billion imported by Dutch-owned multinationals and €10.3 billion by non-multinationals. Foreign multinationals also reduced their imports most significantly in that year (–€7.5 billion), while Dutch and non-multinational imports each declined by less than €1 billion. As a result, around 85% of the reduction in imports of services is accounted for by foreign multinationals.
| Jaar | Dutch-owned multinationals | Foreign-owned multinationals | Non-multinationals | |
|---|---|---|---|---|
| Import value | 2015, Import value | 25.0 | 81.0 | 8.9 |
| Import value | 2018, Import value | 29.4 | 113.5 | 11.1 |
| Import value | 2019*, Import value | 33.7 | 113.8 | 10.9 |
| Import value | 2020*, Import value | 32.9 | 106.2 | 10.3 |
| Export value | 2015, Export value | 37.5 | 70.7 | 12.9 |
| Export value | 2018, Export value | 35.1 | 102.5 | 14.8 |
| Export value | 2019*, Export value | 41.3 | 111.9 | 13.7 |
| Export value | 2020*, Export value | 39.3 | 107.8 | 13.1 |
Renting/leasing and business services most affected by contraction in service imports
As Figure 8.3.12 shows, the contraction in the import value of services of foreign multinationals is primarily accounted for by enterprises engaged in renting/leasing and other business services, followed by foreign enterprises active in manufacturing. The former industry includes enterprises operating in job placement services such as temporary employment agencies, lease enterprises, travel agencies and enterprises offering cleaning and facility management services: enterprises whose service imports may have been particularly severely impacted by the coronavirus crisis. Dutch multinationals active in specialised business services and renting/leasing and other business services saw the greatest reduction in imports in this group. The specialised business services industry includes enterprises operating in legal services, architects and engineers, holdings and management consultancies, advertising and market research and industrial design. This reduction may also be associated with restructuring programmes implemented by large multinationals in anticipation of changes to fiscal legislation on interest and royalties (Poulissen et al., 2022). Additional information on this is provided in the ‘Restructuring of money and service flows by multinationals’ section of Chapter 4 of this publication.
| Dutch-owned multinationals | Foreign-owned multinationals | Non-multinationals | |
|---|---|---|---|
| Manufacturing | 0.3 | -2.7 | 0 |
| Wholesale and retail trade | 0.3 | -0.4 | 0.1 |
| Transportation and storage | -0.1 | 0.3 | 0 |
| Information and communication | 0.2 | 0.3 | 0.1 |
| Specialised business services | -0.9 | -0.5 | 0.2 |
| Renting/leasing and other business services | -0.6 | -3.8 | -0.7 |
| Other sectors | 0 | -0.6 | -0.1 |
Foreign multinationals experience greatest contraction in service exports
Foreign multinationals were also responsible for the most significant contraction in exports of services in 2020 (Figure 8.3.13), as they accounted for around €4.1 billion of the €6.7 billion contraction in service exports. Nevertheless, this group of enterprises is still responsible for the bulk of the export value. In 2020 their total was €107.8 billion, representing roughly two-thirds of the Dutch business economy’s exports of services. The contraction in exports of services by foreign multinationals was concentrated in renting/leasing and other business services and in transportation and storage, but it was eased by service export growth in the information and communication sector. Enterprises in this sector include enterprises that facilitate online payments, which profited from a significant rise in online shopping during the coronavirus crisis.
| Dutch-owned multinationals | Foreign-owned multinationals | Non-multinationals | |
|---|---|---|---|
| Manufacturing | -0.4 | -0.1 | 0 |
| Wholesale and retail trade | 0.4 | 0.3 | 0 |
| Transportation and storage | -0.3 | -3.2 | 0 |
| Information and communication | 0 | 5.9 | 0 |
| Specialised business services | -1.9 | -1.1 | 0.1 |
| Renting/leasing and other business services | -0.3 | -6 | -0.6 |
| Other sectors | 0.5 | 0.1 | 0 |
8.4Dutch multinational activity abroad
This section focuses on the countries in which Dutch multinationals primarily operate, measured according to the number of their subsidiaries and the number of jobs they create overseas. We have identified trends where possible. The background information and figures in this chapter can be found in the dataset accompanying Chapter 8, which can be accessed through the home page of this publication.
Increase in numbers of overseas Dutch subsidiaries
As in 2019, Dutch enterprises’ foreign subsidiaries were primarily located in Germany (Figure 8.4.1). In 2019, for example, around 2,900 subsidiaries of Dutch multinationals were operating in Germany. Compared to 2018, the number of Dutch subsidiaries in Germany grew strongly, increasing by around 330.
Dutch-owned multinationals are well represented in the US, too, by 1,900 subsidiaries. France completes the top 3 with more than 1,000 Dutch subsidiaries, over 75 more than in 2018. The number of Dutch subsidiaries in China also rose, from 660 in 2018 to 695 in 2019. However, the number of subsidiaries of Dutch enterprises in Italy and Poland declined by 25 and 115, respectively. Figures for the number of Dutch enterprises in the UK – the third-largest destination country in 2017 – are currently unavailable for 2018 and 2019.
| 2019 | 2018 | |
|---|---|---|
| Germany | 2913 | 2584 |
| United States | 1890 | 1865 |
| France | 1049 | 973 |
| China | 695 | 660 |
| Italy | 503 | 526 |
| Poland | 445 | 558 |
| Singapore | 385 | 385 |
| Australia | 270 | 275 |
| Canada | 270 | 255 |
| India | 260 | 240 |
| 1) In the figures for Germany, Italy and Poland, there is a trend break in the number of Dutch subsidiaries as of 2018. As a result, the figures are comparable with 2019, but to a lesser extent with previous years. | ||
Dutch subsidiaries employ 6% more people in Germany
In 2019, Dutch subsidiaries employed almost 350,000 people in Germany (Figure 8.4.2), representing growth of more than 6% relative to 2018. As in 2018, in 2019 Dutch multinationals in Germany were the largest employers among all Dutch multinationals outside the Netherlands, even though the actual number of employed persons had been even higher in 2017 when just under 360,000 Germans worked for Dutch-controlled enterprises.
After Germany, the most people work for Dutch subsidiaries in the US: almost 300,000 in 2019. This reflects a 2% increase over 2018, when 293,000 people in the US worked for Dutch enterprises. We see a significant fall in employment at Dutch enterprises in Poland (–10%), France (–14%) and Italy (–20%), as well as in the number of people working for Dutch-controlled enterprises in Belgium and Brazil. The same figure in China increased by 8%. In 2019, Dutch-owned enterprises in countries outside the top 10 (Australia, Canada, Morocco and Tunisia) either stagnated or experienced regular contractions in employment.
| Land | 2019 | 2018 |
|---|---|---|
| Germany | 349 | 327 |
| United States | 299 | 293 |
| Poland | 173 | 193 |
| France | 166 | 193 |
| Belgium | 84 | 86 |
| Italy | 81 | 101 |
| China | 77 | 71 |
| Brazil | 47 | 48 |
| India | 39 | 34 |
| Mexico | 37 | 37 |
| 1) In the figures for Germany, Italy and Poland, there is a trend break in the number of Dutch subsidiaries as of 2018. As a result, the figures are comparable with 2019, but to a lesser extent with previous years. | ||
8.5References
References
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Cadestin, C., Backer, De, K., Miroudot, S., Moussiegt, L., Rigo, D., & Ye, M. (2019). Multinational enterprises in domestic value chains.
CBS (2018a). Multinationals en niet-multinationals in de Nederlandse economie, 2010–2016. Statistics Netherlands: The Hague/Heerlen/Bonaire.
CBS (2018b). Multinationals account for 30 percent of economy. Statistics Netherlands: The Hague/Heerlen/Bonaire.
Hagendoorn, E. (2020). VS nog belangrijker dan gedacht voor directe investeringen in Nederland. Economisch Statistische Berichten, ESB 105 4786, 276–277.
Hemmerlé, Y. (2021). Buitenlandse directe investeringen vallen in Nederland sterk terug. Economisch Statistische Berichten.
IMF (2020). Coordinated Direct Investment Survey (CDIS).
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Poulissen, D., Rooyakkers, J. & Smit, R. (2022). De internationale dienstenhandel in woelige tijden. In J. Rooyakkers & D. Herbers (Eds.). Internationalisation Monitor 2022, second quarter: International trade in services, developments and barriers. Statistics Netherlands: The Hague/Heerlen/Bonaire.
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Noten
A multinational is defined as an enterprise that is under foreign control or that has subsidiaries abroad. Subsidiaries are defined as enterprises in other countries in which an enterprise based in the Netherlands, under Dutch control, has a majority interest. See Glossary.
The Dutch business economy includes enterprises with a Standard Industrial Classification (SIC) in sections B-N plus division S95, with the exception of enterprises in the financial sector (K); agriculture (A); healthcare (Q); public administration (O); education (P); health and welfare (Q); culture, sports and recreation (R); other services (S, not including S95); households (T) and extraterritorial organisations (U). This classification is referred to internationally as ‘non-financial business economy’.
Where reference is made to the OECD (2022), the figures and rankings relate to the OECD’s directional figures. The positions in the rest of this chapter are based on DNB’s figures for assets/liabilities.
The OECD figures only disregard the SPEs (SPEs, Special Purpose Vehicles). The data regarding holdings are not available for other countries. Excluding holdings, the Netherlands is expected to be one of the most significant countries for inward and outward investment.
Relative to earlier editions of Dutch Trade in Facts and Figures, the total number of Dutch-owned multinationals in each year is approximately 20% lower than previously reported, as a new method was used this year which allows CBS to make this delineation with greater precision.
This comparison is based on 2018 and not 2019, due to a break in series in the 2019 reporting year that has not yet been compensated for.
In defining the types of international traders, no minimum threshold was used to filter out small traders. Importers (exporters) trade in goods and/or services; a two-way trader is active in both importing and exporting goods and/or services.
This relates to the import and export of services by the Dutch business economy. It excludes services such as travel (as travel relates to people) and services provided or commissioned by financial sector enterprises, the government, healthcare, education and agriculture.