Learn more about doing successful business in The Netherlands. This page has information about The Netherlands’ economy, history and even some useful Dutch phrases. Expand your international business expertise with Lingo24’s International Business Knowledge Base.
Facts and figures
The country known officially as the Netherlands, and often unofficially as Holland, is situated in Western Europe, bounded by Belgium to the south, Germany to the east and with a coastline on the north and west which stretches for 451 km along the North Sea. It is a fairly small country, extending to 41,526 sq. kilometers (around half the size of Scotland), and much of the land is no more than 30 m/100 ft above sea level – with the exception of a small area in the southern province of Limburg which rises above 300 m/1,000 ft. Around half of the Netherlands, i.e. much of the two provinces North and South Holland, plus the offshore islands in the mouth of the Scheldt and the West Frisian Islands, lies at – or even below – sea level, having been reclaimed from the sea over many years. Indeed the Dutch have a saying that “God created the world, but the Dutch created Holland.” They did this by building dikes around swampy or flooded land and then pumping the water out, originally by means of windmills, but today using electric pumps. The water drainage system which has effectively “created” almost a fifth of the Netherlands, has inevitably left its mark in the shape of a landscape characterized by canals, dams, dikes and sluices.
The climate of the Netherlands can best be described as marine and temperate, with cool summers and mild winters. Various factors, such as the country’s proximity to the sea, its low elevation and the many slow-moving rivers and canals, mean that the climate generally remains fairly uniform across the whole country. However, as in most countries in northwest Europe, the weather can be variable from day to day throughout all the seasons. The average temperature range in the coastal region is 1° to 5°C in January and 14° to 21°C in July. Inland the temperature can drop to -1°C in winter and rise to 22°C during the summer months.
The Netherlands is not blessed with many natural resources – natural gas being the one exception – nor is the land particularly rich in the agricultural sense. Yet against all the odds, the Dutch have succeeded in making their country one of the wealthiest in the world – helped, no doubt, by their North Sea location and the agricultural and industrial benefits of having several rivers flow through the country. These geographical advantages, together with the inherent “can do” attitude of the Dutch people, have established the Netherlands as a great trading nation. Moreover, the country boasts a highly developed welfare system which ensures that its citizens share in their homeland’s prosperity. The high standard of living in the Netherlands is a source of great pride to the Dutch people. Compared with most Western-European countries, the costs of living, housing, education and cultural activities are lower.
Tourists flock to the Netherlands every year, drawn by a variety of attractions: the bulb fields of North and South Holland, the fascinating coastal areas offering water sports and welcoming beaches, canals and rivers further inland and thousands of kilometers of cycle track – on flat ground! But the tourists don’t just visit the rural areas, for the Netherlands’ towns and cities also hold many delights for foreign visitors.
Some 90% of the people live in cities and indeed almost half live and work in one of Europe’s largest agglomerations, The Randstad. This heavily populated area includes the Netherlands’ four largest cities (see below) plus others such as Almere, Delft, Dordrecht, Gouda, Haarlem, Hilversum, Leiden and Zoetermeer.
Amsterdam: population 743,653 – the country’s capital city and principal economic and cultural centre.
Rotterdam: population 587,627 – the second city of the Netherlands, situated on the Maas River in the south west, in Zuid-Holland (South Holland) Province. Rotterdam is Europe’s largest port and is also home to the commodity exchange for petroleum operators.
The Hague (Gravenhage or Den Haag in Dutch): population 475,586 – the seat of government of the Netherlands.
Utrecht: population 281,055 – a transport and services hub
Amsterdam is the largest city in the Netherlands and is the official capital. It is located in Noord-Holland (North Holland) Province, near The Hague, and is the country’s cultural, commercial and financial centre, being home to numerous banking and insurance services plus the country’s main stock exchange. The city is remarkably flat and is divided by approx. 160 canals into 90 islands, which are in turn joined together by over 1,000 bridges. Amsterdam is a highly popular tourist destination, famed not only for the aforementioned canals, but also for its many historic buildings, its world-class museums, and – last but not least – its tolerant social attitudes.
Population: in 2005 the population of the Netherlands was 16,407,491 – with an overall population density calculated at 483 persons per sq km (1,252 per sq mile). This makes the Netherlands one of the most densely populated countries in the world, and unsurprisingly the nation is heavily urbanised. As regards ethnic groups, 83% of the population are Dutch and 17% are other nationalities (9% being people of non-Western origin, mainly Turks, Moroccans, Antilleans, Surinamese and Indonesians).
Language: Dutch is the main official language of the Netherlands, being spoken throughout the whole country. However, in the province of Friesland, the first language of a large percentage of the population (some 500,000) is Frisian, another Germanic language. The Netherlands has many immigrant workers who use their native language along with Dutch. Many Dutch people have excellent English language skills, and this is particularly the case in the field of education.
Main religion: Roman Catholic 31% (concentrated in the south of the country), Protestant 21%, Muslim 4.4%, other 3.6%, unaffiliated 40%.
Currency: the Netherlands was one of the original 12 EU States to move over to the Euro. Euro-denominated coins and bills went into circulation on January 1, 2002, and the guilder – the country’s former national currency (and one of the most stable currencies in the world) – simultaneously ceased to be legal tender.
The Netherlands’ economy
The Netherlands has an advanced, prosperous, outward-looking economy, and enjoys a reputation for having stable industrial relations, moderate inflation and a fairly even income distribution. There is a long tradition of negotiation, still epitomised today in frequent contact between trade unions, employers’ organisations and government, as well as regular discussions between employers and employees. Government intervention has historically been minimalist. The workforce in the Netherlands is highly educated, flexible and extremely motivated – and is, of course, one of the most multilingual in the world!
The Netherlands provides businesses with a perfect strategic location from which to serve and service markets within the EU, plus central and Eastern Europe, the Middle East and Africa. Heavily dependent on foreign trade (over half of their GDP comes from international trade), the Netherlands is one of the world’s ten leading exporting nations – no mean feat for a country of this size. Moreover, the accession of ten new members States to the EU on 1st May 2004 was a welcome development for the Dutch, who had already seen their exports to these countries grow by 17% in the years leading up to the enlargement. However, around 65% of Dutch exports still head to just five countries: Germany, France, Belgium, the UK and the US.
More than half of all Dutch imports and exports are made up of food, chemical products and machinery, the latter being mostly computers and computer parts. Many Dutch imports, including computers, are destined for countries other than the Netherlands, and are simply re-exported after arrival in the Netherlands, with little or no processing. This procedure is typical of the country’s role as a hub of transport and distribution – indeed every year tens of millions of tonnes of Asian and North American imports arrive at Rotterdam or Amsterdam for subsequent distribution throughout Europe. The Netherlands role as a European gateway is further strengthened by Amsterdam’s Schiphol Airport, the fourth largest airport in Europe for both passenger and goods traffic. The majority of Dutch transport companies are based either near Schiphol or at Rotterdam.
Services have veritably mushroomed over the last few years and have rapidly become the Netherlands’ largest economic sector, accounting for up to 70% of GDP. The largest service industry is trade, followed by transport, telecommunications, construction, banking and insurance, and other financial services. For example, there are two major banks – ABN AMRO and ING – both of which operate worldwide and serve Dutch and non-Dutch businesses as well as governments.
At present, the information and communications technology (ICT) sector seems best positioned for growth, especially in conjunction with innovation. ICT will almost undoubtedly bring productivity benefits for all sectors, as by linking businesses in networks, it enables them to benefit from each other’s investments. The Netherlands is also considered to be one of the most “switched on” countries when it comes to electronic commerce, communications and outsourcing – and is viewed as an ideal base for companies wishing to take full advantage of modern technology.
The manufacturing sector in the Netherlands is fairly small (around 15% of value added) but it is nonetheless highly diverse, including manufacturing of electrical consumer goods, processed food, beverages, tobacco products and metal products.
Mining and energy
Owing to the characteristic flatness of the Netherlands, for many years the Dutch were reliant on windmills and peat for energy, before starting to work their way through the country’s steadily decreasing coal supplies. After the Second World War, the requirement for petroleum and natural gas grew considerably and these had to be imported; indeed during this period Rotterdam became known as a leading centre for receiving and refining petroleum. Then, in the 1950s and 1960s, large reserves of natural gas were discovered in Groningen Province. This development made possible the closure of the last domestic coal mine in 1973, and rapidly the Netherlands established itself as one of the world’s leading exporters of natural gas. Drilling companies operate in gas and oil fields both on and off-shore along the Netherlands’ North Sea coast, and the port of Rotterdam provides a critical link in Western Europe’s supply chain as vessels arrive regularly bearing large quantities of crude oil for refining. No surprise then that several large refineries and transhipment companies are based in Rotterdam. The Netherlands is also home to four major steel construction companies who design and build chemical factories, oil refineries and offshore installations, not to mention numerous companies producing associated specialist equipment. And on the research front, there are even Dutch research institutes which have laboratories where offshore conditions can be simulated.
The Netherlands’ complementary characteristics of excellent knowledge combined with a strong industrial structure in the chemical and food sectors, makes the country a perfect base for many life science companies. Indeed, with the presence of companies like DSM, Akzo Nobel and Unilever, the Netherlands can claim to be home to some of the top talents in the life sciences field. There are in excess of 400 companies active in the Netherlands in this sector, meaning that the country is one of the frontrunners in the EU. The Dutch government’s long-term commitment, dating back almost 30 years, has ensured continuous progress in life sciences research and development.
Despite being faced with poor soils and unfavourable weather conditions, Dutch farmers (4% of the workforce) have achieved considerable success by focusing their attentions on profitable crops, livestock breeding and dairy farming, not to mention the flower and vegetable growing for which they are famed the world over. Their shared use of high-tech machinery, administered through agricultural co-operatives, together with the judicious application of fertilisers has enabled Dutch farmers to attain some of the highest yields per hectare in the world. On the livestock front, both beef and pork are important agricultural exports. Overall Dutch farmers rank third in the world by value of agricultural exports.
The openness of the Dutch economy is just one of the reasons which has made the Netherlands extremely popular with foreign companies. The government’s favourable tax treatment for profits made by multinationals has done much to encourage foreign direct investment (FDI). Royal Dutch/Shell (oil), Unilever (food), Philips (electronics) and Heineken (brewing) are just some of the multinationals which have a solid presence in the Netherlands, and other foreign companies have also been attracted in recent years – such as Polaroid, Dow Chemical, Nissan, Esso, Thorn EMI, Fuji and Rank Xerox.
The Netherlands’ three most significant international trading companies are Ahold (international supermarket operator), SHV Holdings (involved in a wide variety of LPG, food, non-food and venture capital activities) and Hagemeyer (distribution of products and services of electrical materials, safety and other maintenance, repair and operations products in B2B markets). Dredging companies such as Boskalis, Ballast HAM and Ballast Nedam also have a presence in the Netherlands, though they have larger foreign operations than domestic ones. In the field of international telecommunications, KPN Nederland is a major player, working alongside many non-Dutch companies.
Dutch expertise in electronically cont olled machinery has generated a buoyant electronics industry and has led to the Netherlands becoming a world leader in fields such as food processing equipment, machinery for the chemical industry and vehicle manufacture. And on the subject of vehicles, or rather transport, mention should also be made of the Netherlands’ most widely known transport companies: Nedlloyd, Smit International and Frans Maas. The Netherlands also boasted the world’s oldest airline, KLM Royal Dutch Airlines, although in 2004 the Dutch company completed its merger with Air France.
The Dutch are global in their outlook and generally welcome opportunities for foreign cooperation. Indeed in January 2004, the government launched an Innovation Partnerships Grant Programme. The aim of the programme was to promote research and development, and to encourage businesses and public-sector knowledge institutes to study and launch national and international partnerships. The logic behind the programme is that by pooling their combined knowledge and expertise, businesses should become better prepared to face the competition, will improve their knowledge base and thus make the Dutch economy more innovative. Around 5,000 Dutch companies are now involved in conducting research into new products designed to boost quality and efficiency, with the country’s five largest multinationals – Philips, Shell, Akzo Nobel, DSM and Unilever – at the forefront of these industrial research and development initiatives.
13th and 14th centuries: the Dutch first emerge as a distinct people
late 16th century: become a separate political entity, when the Low Countries revolt against the Spanish Habsburgs
1648: after many years of war, Spain finally acknowledges the independence of the United Provinces after the Napoleonic wars: the Low countries become a monarchy
1815: the Kingdom of the Netherlands was established, initially encompassing all the Low Countries.
1831: Belgium separates, principally due to religious differences; Luxembourg later follows suit
1848: revolts lead to The Netherlands becoming a constitutional monarchy after 1st World war: universal adult suffrage
The Netherlands is still a constitutional monarchy to this day, with a two-tier parliament known in Dutch as the ‘Staten-Generaal’. The current Kingdom of the Netherlands now comprises not only the Netherlands proper, but also the Netherlands Antilles and the island of Aruba. The present head of state, Queen Beatrix, came to the throne on 30th April 1980 and enjoys political immunity.
Things to avoid
The Dutch are serious, honest, straightforward and very direct, which may be seen as blunt, though they can appear rather shy at a first meeting. They don’t make promises lightly, and this, in turn, means that if you give your word about something – no matter how small and irrelevant you might consider the matter to be, then they expect you to keep it. In negotiations and discussions, any form of secrecy, deception or evasiveness is heavily frowned upon, and is to be avoided at all costs, since trust plays a huge role in the success of business relationships in the Netherlands.
The Dutch like to get straight down to business, with a minimum of socializing before meetings – often a few handshakes and quick introductions (never remain seated while you’re being introduced!) are all that is required before work begins in earnest. Business cards are not always proffered immediately – more often they’re exchanged at the end of successful negotiations. First names are not normally used in business circles until a certain rapport has been established and you are invited to do so. Until then, it’s courtesy to use the more formal Mijnheer (Mr….) or Mevrouw (Mrs….) or other title, followed by the person’s last name. When taking your leave from a meeting, be sure to extend your hand for a final farewell handshake, as is customary. In written correspondence, formal titles are almost always used, even when you know the addressee quite well. There’s always the chance that a letter might be passed on to another department, so formality has to be maintained (it’s preferable to attach a less formal personal note with a business letter, if you’re on relaxed terms with the person you’re writing to).
Politics is a very popular topic of conversation in the Netherlands – however, as people there tend to be extremely well informed about politics, it’s wise not to enter into such discussions unless you’re equally well informed, or you could end up looking foolish! Tread cautiously in general conversation too. The Dutch are generally private people and are not at ease discussing matters such as private income, personal political leanings, religion (especially since the 1970s) or even (amongst older, more traditional people) one’s own family. It’s fine to mention Queen Beatrix and ask questions about the Dutch Royal Family, but absolutely not to criticize them in any way. Boasting about one’s personal circumstances, family, business achievements, etc., is not recommended, as the Dutch are generally a modest, egalitarian people and do not take kindly to people who push themselves or their organisations forward. Equally, paying compliments is not something that the Dutch indulge in – group work within a company is prized the same extent as, or even more than, individual achievements.
Dutch society revolves around hard facts and statistics, so presentations and speeches which contain sweeping generalisations and over-simplifications will not help sell your idea or product to a Dutch audience. Being specific and concise will.
Things to bear in mind
Contacts are vital to business success in the Netherlands. Make a conscious effort to remember people’s family names when you’re introduced and take the time to enter into conversation with business contacts once business is finished for the day. This said, remember that the Dutch tend to be quite low-key and restrained, so if you’re naturally fairly loud and effervescent, it would be wise to moderate your behaviour for the first few meetings at least, until people know you better. As the Dutch tend to be pretty serious, don’t overdo the smiling at first either or this might be taken as a sign of superficiality or insincerity.
When you’re first introduced to someone, be prepared to give a firm handshake and to establish immediate eye contact with the person, at the same time saying your family name (with or without first name) out loud. If you’re out in company and wish to summon a waiter or generally attract someone’s attention, establish eye contact and nod or call out briefly, in a friendly rather than commanding manner. In fact avoid giving any impression of (perceived) superiority or bossiness as egalitarianism is highly prized in the Netherlands. Everyone in a company – indeed in Dutch society as a whole – is considered to be worthy of respect and to be a valuable contributor to society. Clients will be accorded the same respect, but no more than any member of a company.
Not surprisingly, this attitude has a strong bearing on the way in which the Dutch do business. Consultation and consensus matter immensely to the Dutch – in commercial, political or family life. Consequently each proposal involving change has to be run past every employee or colleague likely to be affected by it, which can make decision-making in the Netherlands a rather involved and protracted process. As decisions are thus often taken by a group of people, it’s sensible to try and identify the likely decision-makers in the company you’re negotiating with and to develop a good rapport with them.
Although decision-making is perhaps slower in the Netherlands than is the case in the UK or the US, once a decision has been finalised, you can be assured that the Dutch won’t hang about! They’ll start implementing the agreed procedures straight away and will pursue new objectives with diligence and a strong sense of purpose.
Finally, it’s a well known fact that the majority of Dutch people speak excellent English, so it’s probably not worth having your business card translated into Dutch. However, it may well be worth having your qualifications printed on your card if they’re above a BA degree, as there is a great respect for education in the Netherlands. And whilst translating your card is not essential, having your product brochures and company promotional literature translated is highly recommended. Moreover, the Dutch are used to high quality printed material, so if you want your company and product or service to be taken seriously, it will almost certainly pay to enlist the services of professional translation companies and printers whom you can trust to do a first-rate job. For in the Netherlands, as in almost every other country in the world, first impressions really do count!
Some useful websites
- www.nfia.nl [help and advice for businesses who wish to take advantage of the Dutch business environment as a strategic base to cover Europe]
- www.nfia.com [as above]
- www.kvk.nl [Dutch Chamber of Commerce]
- www.expatax.nl/startingbusiness.htm [useful background info for individuals and companies interested in starting a business in the Netherlands]
- www.immigratiedienst.nl [for people planning to stay in the Netherlands – immigration information]
Good morning – Goedemorgen
Good afternoon – Goedemiddag
Good evening – Goedenavond
Good night – Goedenacht
Hello – Hallo
Goodbye – Tot ziens / Dag
How are you? – Hoe gaat het?
Very well – Goed
Please – Alstublieft
Thank you – Dankuwel
Pleased to meet you – Aangenaam (kennis te maken)
See you soon – Tot snel
International policy on carbon dioxide: where there’s a political will…
The Netherlands’ core businesses e.g. oil, transport and chemical industries conspire to make it impossible for the country to meet the reduction of greenhouse gas emissions set out under the Kyoto Protocol without raising the prices of exports considerably. Fortunately the European system of trading emissions offers an efficient solution., for it allows them to buy emission permits from other countries, which will then reduce their emissions accordingly, thereby saving the Netherlands from having to take more expensive measures which would have a knock-on effect on the prices of exports.
The Netherlands: 5th in global business environment rankings
In the latest Global Business Environment Rankings, the Economist Intelligence Unit (EIU) revealed that the Netherlands is in 5th place for the period 2006-2010, behind Denmark, Finland, Canada and Singapore. The other five countries featured in the top 10 are Ireland, Britain, Switzerland and the United States.