Plug into the smart grid
Doing business in a foreign environment requires local knowledge and expertise to identify opportunities. The presentation “Why Luxembourg? A unique location to expand your business,” published by the American Chamber of Commerce in Luxembourg and PwC Luxembourg, is undoubtedly an asset to discover all the opportunities Luxembourg can offer as a hub to develop businesses in Europe. In an interview with LFF, Laurent Probst, Partner, Innovation and R&D Leader at PwC, spoke about Luxembourg’s assets, its weaknesses and the country’s low level of national debt.
Why is Europe so essential for international companies?
The size and quality of Europe’s market attract many companies from Asia, the US and South America. Europe has a strategic market of more than 500 million consumers. The second reason is that Europe is very good at adopting new technologies due to its high quality research and its highly skilled workforce of 1.3 million researchers and scientists.
For non-EU companies entering the European market with a new technology, it can serve as a kind of accelerator to demonstrate the quality of its technology and test its impact on customers. Furthermore, Europe’s regulatory framework is more open to the high-tech industries than of other countries, such as the US, for instance.
What are the general advantages of doing business in Luxembourg?
Luxembourg is situated in the heart of Europe. It can provide quick access to major European markets (such as France, Belgium and Germany). For companies with new technologies, there is a regulatory drive that brings them to Luxembourg. The country can provide a strong large-scale demonstration case for new technologies. Take smart grid, for instance: you need authorisation by a telecom regulator to get a frequency.
If a US company tries to get one in the UK or in France, it can take up to two years to get it. Luxembourg can react much more quickly by putting the business, the service provider and the regulator together. All in all, Luxembourg has a business-oriented government with long-standing experience in attracting international companies.
Are foreign investors aware of these advantages?
Not necessarily. In the field of financial services like asset management, Luxembourg is well known by all professionals. However, when it comes to new technologies like smart grid, e-commerce or mobile technologies, Luxembourg is not well known.
Entrepreneurs from the US have told us, when visiting Luxembourg, that we have been under-communicating our strengths. But I must say that for these new technologies it is difficult to communicate the benefits on paper only. It is certainly easier to demonstrate their benefits by putting into place new test cases and pilot projects.
What are the country’s weaknesses?
We certainly have weaknesses related to the size of the country. But traditional weaknesses can be turned into innovative approaches. The lack of educational infrastructure and qualified engineers are two examples. Projects such as building new schools must be on local decision makers’ agendas in order to attract foreigners and their families. Speaking of engineers, I think we have enough quality schools in the Greater Region. The problem is more a matter of coordination.
We have to align the educational agenda with companies’ requirements. Defining and communicating new pilot projects in the fields of life sciences or the smart grid is the best way to brand Luxembourg to entrepreneurs and companies. This will present the country as one that makes things happen. Fortunately, Luxembourg is a country where action prevails over endless discussions.
Is Luxembourg an attractive place to live and work for high net worth individuals and their families?
There is still a weakness in terms of branding and recognition. Luxembourg is still not considered as a place to live by many Europeans. We probably need to promote key events and elements of cultural life. The way we communicate our assets is not reflecting their quality. The good news is that Luxembourg has very strong features to promote, like the fact that our capital is the safest in the world.
In these times of debt crisis in Europe, does Luxembourg become more attractive to investors due to its low level of national debt?
It certainly helps, because foreign investors see that Luxembourg has been managed more responsibly than many other countries. In these times of crisis it is very important for entrepreneurs to get quick access to authorities, which is certainly the case in Luxembourg with its rapid decision making process. Business people are impressed with how easily they can meet with the minister, which would be unthinkable in most other countries.
In the area of new technologies, this aspect is even more important because radical shifts are frequent and common, so it is vital to design the business framework around these new technologies. Furthermore, in many countries governments don’t trust companies and vice versa. In Luxembourg there is more mutual trust.
What are the challenges the Luxembourg financial centre faces today?
The biggest challenge is to really understand the market demands for the next five years. We have to be able to regulate new activities like e-money and e-payments in a smart way. Monitoring customers’ privacy is another aspect that has to be increasingly considered. We have seen that with services such as Facebook this has clearly become an issue.
A second aspect will be how to integrate the new technologies into the financialcentre. Right now, financial services are not innovative in terms of integration. There is a lot of IT, but it needs to be integrated and Luxembourg has to be ready for that radical shift.
The third challenge is attracting more highly qualified people to Luxembourg. The last challenge is to strengthen the link between the financial centre and the “real economy”. With the arrival of new venture capital companies, Luxembourg has to be one of the key places when it comes to financing the European economy.
Luxembourg has to demonstrate true ambitions through the communication of concrete large scale demonstrations in new emerging industries to reinforce the image of the country.