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Sunday, 2 November 2014

Is the ‘Regal Bonus’ of royal presence during trade missions, a myth for Dutch, internationally oriented entrepreneurs?!

Give back to Caesar what is his(?)

Investigation by lecturer 'International Business' Huub Ruël of Windesheim College shows that trade excursions with the Dutch king are perhaps prestigious events for the participants, but prove often to be a waste of time and tax-payers money.

I’m not a particular fan of the royal house of Orange, as I consider royalty-by-heritage as an obsolete, undemocratic and overrated institute. Besides that, I think that in general all people in a country should be equally valuable. 

Consequently, I personally expect that The Netherlands would be a better country as a republic, with either a ceremonial or an executive president, than as a kingdom. Nevertheless, I respect the circumstance that a large majority in The Netherlands totally disagrees with me, regarding this matter.

Moreover, however, I detest the government officials, dignitaries, representatives of respectable media and business tycoons, who butter the Dutch royal family up, in order to market themselves and thus reinforce their own position and influence. 

This ubiquitous 'buttering up' shows itself often through people – even the most battle-hardened professionals – showing childish, horribly uncritical and otherwise disgraceful behaviour in the presence of the King or Queen.

Nevertheless, I thought that I should give to 'Caesar' what is his: that the queen (and now King Willem-Alexander) is very important for trade between The Netherlands and other countries. 

More than three years ago I wrote an article about Queen Beatrix’ state visit to Oman in those days. In that article I handed to her that she did a fine job in helping Dutch entrepreneurs to reel in new orders and new business. Queen Beatrix was perhaps an ‘expensive, but yet very  succesful marketing tool’ for Dutch entrepreneurs; although one could consider her to be a little overpaid, she had proven to be very effective for many entrepreneurs abroad:

We build it very good and we export it even better, thanks to the best marketing tool a country can have: queen Beatrix of The Netherlands. The queen is the kind of person that opens doors for the Dutch industry that remain closed for other people and countries. Although the Dutch royal family seems like a “blast from the past”, it never ceases to amaze me how effectively they can operate, as a lot of leaders are attracted by the glamour of real royalty.

A few days ago, however, my ‘believes’ in the trading and marketing powers of the royal family received quite a blow. Huub Ruël, a lecturer International Business at The Windesheim College – a college for high vocational education – had conducted a thorough investigation in 2014, into this so-called regal bonus during official trade missions. The results of his investigation were quite disappointing.

The highly appraised ‘regal bonus’ of official trade missions, in which Dutch captains of industry were accompanied by the King or Queen, proved to be a myth after all. 

This was not so much the fault of King Willem-Alexander or his predecessor, Queen Beatrix, but rather the result of undervaluation of the necessary-work-to-be-done for successful trade contracts and blatant underachievement of the participants before, during and after such trade missions. 

What could be the chance of a lifetime for many companies, often turns out to be an extremely expensive school journey, mostly at the expense of the Dutch tax-payers.

NRC Handelsblad wrote an article about this subject, of which I print the pertinent snippets:

Insiders of trade missions downplay it [i.e. the importance of royal participation in trade missions]. According to Hans Wijers – former CEO of AKZO Nobel, who often participated during official state visits of the Dutch royal family – the so-called ‘regal bonus’ is not decisive for the success of a trade mission. ‘The statement “Gold mine for international trade” is exaggerated, in my humble opinion’.

According to him, success is too much dependent on other factors, like the right product being on offer, the right timing and the quality of the network of the Dutch embassy at the location of the trade mission. “The royal presence is important, but the king is not a merchant”, according to Angélique Heijl of employer’s organization VNO-NCW. “Nobody who travels with the king thinks: now my contract will be a no-brainer”.  

Huub Ruël, lecturer International Business at Windesheim College in Zwolle, thinks that presidents might have a competitive edge, in comparison with the royal families: “Presidents are often bolder than kings, in their struggle for the interests of large companies. A few years ago, France captured a large Chinese order right before our Dutch noses, due to interventions of the French president.

More commonly, it is true that contracts, which are signed with much pomp-and-circumstance during a royal state visit, were already prepared for signing in an earlier stage. The exports already increased before the mission. Besides that, the growth-effect dims quickly when there are no quick follow-up visits by the heads of state or prime ministers".

Investigations into the economic effects of trade missions supply a mixed image. Huub Ruël did not find ‘a substantial increase’ in the Dutch trade balance with countries, that had been visited by a royal trade mission from The Netherlands. Four economists of SEO Economic Research did find positive effects on the trade balances, during their investigation in 2008.

In an article in De Volkskrant, Huub Ruël made a few other important statements, with regards to the importance of regal presence for an official trade mission:

Huub Ruël calls all publications with regards to ‘multi billion euro’ orders, which allegedly have been acquired by trade delegations during official trade missions, shamelessly exaggerated. ’It happens that a minister accompanies a trade mission, due to the circumstance that an important contract can be signed during this mission. All the preparations have been done already. Subsequently, the impression will often be made that the trade mission itself enabled the trade deal‘.

According to Ruël, there is neither any empirical evidence that trade missions with a representative of the royal family or a minister have significantly more success than missions without dignitaries. “The King or Queen can open doors; especially in countries which are more sensitive for the presence of royals, like China. Yet, this fact itself does not supply any orders. To that respect: business remains business”.

Ruël: 'Often these trips lack commitment of the participants. Such a group meets one time in the prelude to the journey and that’s it’. Also the aftercare is not good, leading to deals going up in smoke, which could have been made easily.

Ruël states that The Netherlands organises many trade missions annually, but that the revenues are very low. Matchmaking is essential for the success of such missions. Trade missions by itself ought not to be useless. ‘These missions do not directly lead to export orders, but could help companies to internationalize themselves’.

These are important conclusions for companies, which are pondering about participating in such a regal school journey. Yet, Huub Ruël words will probably fall on deaf ears.

As a matter of fact, one of the secrets of royalty is that it nourishes its own splendour and grandeur and upholds the myth of its ‘near divinity’ and indispensability for the (economic) wellbeing of a country. As long as people and companies feel ecstatic in the presence of royals, their position and privileges will be warranted.

Having a royal house in your country, is like having a Rolls-Royce: it is not so much the car itself, that lures people, but especially what other people will think about them, when they drive one!

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