As the world’s largest, fastest growing and most densely populated continent, Asia has captured the attention of the world's leading economic players over the past two decades. It is also among the most diverse regions in terms of economies, industries, law and regulations, as well as culture, which makes the practice of law in Asia different from other parts of the world.

Luxembourg as a hub for Chinese companies in Europe

An ever-growing number of companies from China and other parts of Asia are investing in a range of assets worldwide, and especially in Europe. In 2016 Chinese outbound M&A deals set new records, with $76.5 billion of investment in more than 100 deals in Europe - including many projects closely related to China's Belt and Road Initiative. The trend continued throughout most of 2017.

As this trend has progressed, Luxembourg has emerged as a preferred hub for Chinese companies doing business in Europe - and not only in the financial sector, with Chinese investment also seen in areas such as logistics, technology, automotive and components, plus innovation. Chinese groups have been encouraged to build up their presence by the country's secure living and working environment and thriving economy, and many large companies have chosen the grand duchy as a long-term base for European activities.

Its wealth of connections in the heart of the EU, state-of-the-art infrastructure, business-friendly legal and regulatory environment, and outward-looking approach to attracting foreign talent and companies have played a large role in making Luxembourg a hub for financial and non-financial groups to access the European market.

Key facts and figures regarding the relationship between China and Luxembourg include:

• Permanent embassy of China in Luxembourg since 1988
• Strong relationships and exchanges between high-level officials from Luxembourg and China over more than 40 years of diplomatic relations
• Leading Chinese banks, to date ICBC, Bank of China, China Merchants Bank, Agricultural Bank of China, Bank of Communications, China Construction Bank and China Everbright Bank, have chosen Luxembourg as a base for their European strategies in banking and finance, investment funds and private wealth services
• Chinese-based asset management groups have set up Luxembourg-domiciled investment fund vehicles to access EU customers under passporting rules, including Harvest Global Investors, CSOP Asset Management, China AMC, China Universal, E Fund Management and Fullgoal Fund Management
• A double-tax treaty was signed between Luxembourg and China on March 12, 1994
• Between 1998 and 2012, various memorandums of understanding have been signed between the Luxembourg financial regulatory authority CSSF and the China Securities Regulatory Commission, as well as the China Banking Regulatory Commission
• Chinese industrial companies including Huawei and SAIC have chosen Luxembourg for the development of their EU business
• Luxembourg has around 5,000 Chinese residents, approximately 1% of the population
• More than 40% of Chinese investments in Europe are made via Luxembourg, according to China's Ministry of Commerce
• Managers benefitting from Qualified Foreign Institutional Investor and/or Renminbi Qualified Foreign Institutional Investor licences and quotas, and now from the Stock Connect and CIBM Direct Access schemes for direct investment in Chinese securities markets, have a broad range of options to use Luxembourg funds to implement China investment strategies on behalf of investors in the EU, the Middle East, Latin America and Asia

How can we help?

Arendt is experienced and well-equipped to help Chinese companies do business in Europe, having opened an office in Hong Kong in 2009 to provide better coverage of China and the Asia-Pacific region. The firm advises exclusively on Luxembourg and European law from all its offices, assisting clients with establishing activities in the grand duchy or elsewhere in Europe, as well as on cross-border activities.

Our Chinese clients include asset management and private equity firms, besides multinational corporations, insurance firms and banks. We provide legal services regarding the establishment of retail (UCITS) and private equity (PERE) real estate funds, hedge funds, tax structuring, listing on the Luxembourg Stock Exchange and private wealth structuring. The firm also assists banks, insurance companies and multinationals in establishing businesses in Luxembourg and throughout Europe.

Should you require more information on local hot topics, please download the documents below:

• Luxembourg, an ideal hub for Chinese companies to do business in Europe  
• QDII, R-QDII, QDII2, QDIE, QDLP and Luxembourg vehicles
• QFII, R-QFII, Stock Connect, CIBM Direct Access, Bond Connect and Luxembourg Funds
• European Private Equity and Real Estate investments through Luxembourg, the Asian Connection
• FAQ on Luxembourg funds and investment vehicles

Have a look back at the insights discussed at last month's first Arendt China Forum:

Claude Kremer Co-Chairman, Partner Arendt Florence Lee Head of China Sales & BD EMEA HSBC (London) Li Bing MD, Product Development ICBC Asset Management (Global) (UK)     Philippe Seyll Co-CEO Clearstream Rudolf Haas Partner King & Wood Mallesons Sandra Lu Partner Llinks Law Offices (Shanghai)   Simon Lee Head of Inst. Business CSOP Asset Mgmt (HK) Timothy Harvey CEO Ntree International Limited (London)