The Netherlands finally leaves its naïve stance against the growing economic influence China. Not a second too early!

Living by the walls that would fascinate the world

China felt so different from the rest

Expecting fellow man was the basis of their plan

Johnny Warman – China’s Moving (West)

It was one of my frustrations of the last decade: the naïve stance of most European countries and – in particular – The Netherlands towards the “stealth” expansion of the Chinese economic and political influence on the European continent.

China, with its inconspicuous masterplans that could have time horizons of decades, was using soft power and smart investments to stealthily increase their economic – and in the process political – influence on the European continent, without the Europeans even noticing it initially.

China’s investments have always been smart and well-chosen and with a keen eye on the future of their trading empire, which was traditionally based upon the manufacturing, export and distribution of mass-produced consumer goods and 

(increasingly) on the development and distribution of (in)expensive technology:

• The German industrial robot manufacturer Kuka;
  
• The French supplier for the nuclear waste industry Manoir Industries;
  
• A currently developed €20+ billion British nuclear plant that must become the successor of the infamous Sellafield plant;
  
• Avalon, a large Irish leasing company specially for the aviation industry, as well as a few other companies in the same business;
  
• The port of Piraeus in Greece, when Greece was strapped for cash due to the Euro crisis;
  
• Large shares in seven other European ports (a.o. Rotterdam, Genua, Napels en Marseille), where Chinese stateowned companies usually purchase complete quays, that change overnight in a little pieces of China; fully controlled Chinese trade and import areas, carefully hidden away from governmental oversight by the hosting countries.

And there were other, far-stretching plans to take over European railroads in (a.o) Greece and finance the construction of highway infrastructure in the traditionally cash-strapped Eastern Europe.

These takeovers and financing operations always meant some desperately needed billions of Euros in cash for the countries involved. Consequently most countries dearly wanted to believe in the benevolent smiles of the Chinese government leaders and their willingness to operate as a partner, thus in fact giving away some of their strategic assets to China.  

And the proverbial pot of gold at the end of the rainbow of doing business with China was unlimited access to the vast Chinese market, with its 1.3 billion inhabitants. This would mean additional labour for their own companies and sales coming from their own exports, as well as a slice of the pie from the enormous Chinese distribution networks building up around the world (i.e. the new Silk Route).

Yet, the open access to the Chinese market always seemed to be a mirage: when you came close to it, it vanished again. When companies moved to China or opened a subsidiary over there, things also did not go hunkydory. High tech manufacturing companies regularly became victims of theft of their patents, ideas and construction methods, while true access to the open market never seemed to have lift-off.

The aggressive Chinese policy concerning the Spratly Islands and Taiwan should have been a warning signal for the European countries, that their Chinese partner was not so benevolent and "trade-driven" as the European might think. 

The reef-based islands belonging to the former were suddenly invaded by the Chinese, who waded millions of cubic meters of sand and constructed runways, villages and factories, while scaring away everybody who came too close (read: Vietnam, Malaysia, the Phillippines).

In Africa and Latin-America, the Chinese neocolonialism was based upon “beads and mirrors” in the form of new roads, railways and other infrastructure of which… China itself profited most. The country did so, while shutting up the leaders overthere with unlimited personal wealth for them and their families and soft loans for their country to pay for their new infrastructure projects. 

In exchange the Chinese “confisquated” their supplies of soy beans, rice, palm oil and other agricultural produce, as well as gold, silver and copper, rare earth metals, minerals and oil. Most of these trade deals of African and Latin American countries with China were (imho) extremely unbalanced, with China and the local rulers having the winning hand, while the country was plundered of its natural resources.

But the European countries seemed to ignore all these warning signals emerging from the rest of the globe and kept on smiling against the Chinese government representatives. They dreamed golden dreams of bedazzling exports and unlimited influence on the second most powerful country in the world, while ignoring that not everything was so well with China. And so did The Netherlands.

Until last week… It seemed that the Dutch government suddenly had a brainwave about what is at stake in the Chinese-European trade policies and especially with regards to China’s increasing industrial espionage at one hand and their mounting influence on the European economies and politics on the other hand, via China’s recent network of participations and takeovers.

De Volkskrant wrote this about it:

The [Dutch] government comes with a new China strategy, as it is worried about the mounting Chinese influence on The Netherlands. The Cabinet especially wants to focus on economic espionage and risky, hostile takeovers by China. This was stated by Minister Eric Wiebes of Economic Affairs.

“Chinese companies, which appear with a backpack full of subsidies and state support, can do almost everything what they want overhere”, Wiebes warned. 

The Cabinet is seriously involved in this approach, with eight officials, under guidance of the Prime Minister”.

As far as I’m concerned this is not a second too early!

This is not a sign of emerging protectionism of the Dutch government, but rather the realistic insight that international trade should be “quid pro quo’, with mutual burdens and benefits. Not a one way street, in which the majority of the benefits lands at only one of the two parties involved.

On top of that, the Dutch government should finally get rid of their blind eye for the unavoidable drawbacks of doing business with China: 

• their locust-like neocolonialism in the Third World countries in Africa and Latin America; 
• their extremely brutal and intrusive policies against minorities within their own country... 
• and their aggressive stance against Taiwan, Tibet and other neighbouring countries, in case of political and territorial conflicts.

This, in combination with the unstoppable dominance of the Communist Party, their economic restraint towards their trade partners, as well as the opaqueness of their policies and their future agenda, makes that China as a “friend” is far more dangerous than Russia as an enemy, to these eyes.

All this, however, does not mean that the European Union cannot do business with China... It only means that you should not give too much away to someone of whom you are not sure that he will repay you to the same extent. 

In other words: do business, but don’t be naïve about your business partner!

My late mother had this old and beautiful expression: “When a fox preaches about world peace, the farmers can better take care of their chickens”.

Think about China and the European Union and think for yourself which one is the fox and which are the chickens?! I think you will know the answer to that question!

Public healtcare in hospitals isn’t an entrepreneurial thingamajig, but a necessary requirement for people in need. The simultaneous demise of two commercial hospital groups shows that to the Dutch public.

In The Netherlands two commercially run hospital groups – with in total five branches – filed for bankruptcy last Thursday. This happened after large commercial health insurance companies threw the towel and refused to further finance the mounting debt and unsolvable issues of these hospitals, that already had a reputation for enduring problems and alleged mismanagement. Het FD wrote the following snippets about this:

For personnel and patients the bankruptcy of the MC Slotervaart hospital in Amsterdam and the MC IJsselmeerziekenhuizen [hospitals] in Lelystad came almost overnight. The healthcare institutions of entrepreneur Loek Winter will be dismantled and the patients will be transfered to other hospitals. The two hospitals filed for a “Chapter 11” situation (i.e. not being able to pay expenses) on Tuesday, Octobre 23. The official bankruptcy was announced on Thursday, Octobre 25.  

On Friday, all patients of these hospitals were litterally rushed to other hospitals with ambulances, leaving a nearly empty shell with just enough money to cover a few weeks of polyclinical appointments and treatments for patients that had nowhere else to go for the time being. After that, the old casino expression is applicable: “Rien ne va plus! The hospital is not from you… anymore!”

Dozens of doctors and surgeons and hundreds of auxiliary medical personnel, janitors, cleaners and security employees were without a job overnight. And the patients are left on their own, without the doctors and healthcare services that they need and that some of them already visited for years and years in a row.

Patients in capital Amsterdam, but especially in Lelystad and three other cities in the Flevoland polder with formerly a local hospital closeby, now have to drive much farther in order to receive their necessary healthcare. Not even to mention when a real life-threatening emergency occurs. In that case the so-called ‘golden minutes’ might pass while driving on the roads to the nearest hospital.

And all of them now have to arrange new contracts with new hospitals and new doctors and go through the whole administrative mumbo-jumbo in order to receive the same healthcare they already had.

This situations seems to be the moral low of ‘public healthcare as a market’, which started so jauntily and over-confident in 2005. It was all based upon the empty government promise of offering the Dutch citizens the best healthcare at the lowest price. In reality it all turned out to be (still very) good healthcare, but at a price that is soaring by the year without an end in sight.

Where did it go wrong?

There is a whole bunch of causes for this phenomenon, among which the aggressively profit-seeking behaviour of pharmaceutical companies – especially regarding life-saving, high-end medicine – is one of the most important. This behaviour let the expenses for patented medicine go through the roof and is costing society billions of euros in extra cost for healthcare.

Other causes are the ever-growing possibilities to cure people from diseases and illnesses – or keep their situation stable for a long,long time – via new, high-tech medical equipment and treatment methods of which the purchase price amounts to dozens of millions of euros per hospital.

This, in combination with the spillage coming from excessively administered drugs and expensive, personal medical equipment that is not repaired, but simply written off after the patient has stopped using it, makes that the national costs of healthcare are going through the roof.

At the other end of the same medal, the healthcare insurance companies have become extremely powerful. So powerful in fact that hospitals, health centres, doctors and paramedical service providers (physio therapists, dieticians, obstetricians etc.) are sometimes almost in “a race to the bottom” in order to get the required annual contracts that makes it possible for them to declare their bills automatically. This automatical declaration is of paramount importance in order to stay in the business.  

And when these medical professionals tried to unite themselves in order to get a more level playing field against the big insurers, they were accused of forming an illegal cartel. The latter was of course a rubbish argument to these eyes, as the healthcare insurance companies are a kind of unbeatable oligopoli themselves.

Personnel of such hospitals and medical institutions that was sick and tired of the disappointing salaries, the long and irregular hours of working, as well as the massive amount of medical administration that was required for their job, took the slightly more lucrative option of become a freelance medical professional. 

They kept the same work and profession, but had the opportunity to gain a few extra bucks at the side, by becoming a better-paid professional at the expense of their employer.

This increase in personnel and organizational expenses for hospitals and medical institutions, in combination with the push downwards regarding the medical rates demanded by the health insurers, acted a double whammy eroding the profits and incomes at two ends. This was a big problem for non-commercial hospitals that were operated by a non-profit foundation, but a much bigger problem for commercially run hospitals, that had to yield profits for their owners and/or shareholders.

Het Financieel Dagblad wrote the following snippets in a though-provoking comment about the situation in Amsterdam and Lelystad yesterday:

With it came that all four [hospitals] had financial problems at the moment they were taken over by a.o. Loek Winter. The healthcare entrepreneur wanted to offer his services cheaper and better, but did not succeed in it.

Due to the sturdy competition in Amsterdam, he had to operate MC Slotervaart with much lower rates [for medical services] in order to close deals with health insurers. This kept the margins low and left little money to invest and deal with drawbacks. Also in Lelystad new investment lagged. This caused the inhabitants of Amsterdam and Lelystad to find their hospitals less attractive.

[…] This showed that the market in healthcare is slowly starting to function as planned: whoever does not attract the patient, has no raison d’etre!

These lines and the remainder of the article, albeit correct and though-provoking by itself, made me angry...

In an ideal world, the customer has a choice whenever he want to visit a hospital and a doctor or surgeon for a certain health problem. He chooses the best hospital, based upon hard data about recoveries and/or medical errors, personal experiences and experiences shared by others. So he or she can make an objective decision about where to go to.

The thing is, however, that patients are not regular customers that can make an objective or subjective choice, as if they go shopping or visit a restaurant. No, they are often in serious problems: either very sick, very old, (partially) disabled or even in danger of getting in a coma or to be dying. Patients often don’t have this choice to make.

They often must be rushed to the nearest hospital in order to save their life or save them from a massive amount of pain and misery. The farther the hospital is away, the bigger the risk is of serious after-effects. That is a no-brainer.

So of course it is bad news that these regional hospitals either disappear now or will be continued in a much more basical form.

And it is said that another 14 regional hospitals run the risk of going bankrupt within a limited span of time. Will the Dutch government and the healthcare insurers save these hospitals from their demise? I seriously doubt it!

To me this proves the moral bankruptcy of the market in national and regional healthcare. I hope that we can stop this bankrupt system within a decade and nationalize healthcare again, in spite of the obvious drawbacks that a government-run system offers too.

Public healtcare in hospitals and medical centres isn’t an entrepreneurial thingamajig, but a necessary requirement for people in jeopardy of dying or remaining seriously ill. And healthcare insurers are not there to please their share- or stakeholders, but to deliver a public utility service to the citizens of The Netherlands. A role that they can do much better, when they don’t feel the ‘carrot and stick of the market place’!

Now it is official: The Netherlands IS the mailman of China! And Prime Minister Mark Rutte is the head of the mail department! But we should ask ourselves if that is what we really want!

Prime Minister Rutte is old-fashionedly begging Jack Ma of Ali Baba to build his behemoth distribution centre close to Maastricht Aachen Airport in The Netherlands. And guess what?! It won’t yield a lot of jobs and it won’t bring much innovation to The Netherlands.

Probably the only thing it does is making the Dutch landscape uglier, while flooding The Netherlands and other European countries with a tidal wave of cheap products with a very limited lifespan and a high “near-future waste”-factor. When will the government leaders stop with aiming on low quality distribution and service jobs for the sake of it…?!

It was the news of last weekend. The Dutch Prime Minister Mark Rutte was “smooching and sweet-talking” to founder Jack Ma of Alibaba, in order to make him establish his new, behemoth distribution centre in The Netherlands, close to the Maastricht Aachen Airport. To achieve this, PM Rutte has to make a better ‘bid’  than the earlier bid from Belgium, which thought it already made a winning one with its offer for Zaventem Airport as place of establishment.

The following snippets are from Het Financieele Dagblad:

Belgium thought to have won the battle, but The Netherlands surely hopes it didn’t. As PM Mark Rutte himself has interfered in the battle: winning the bid for the establishment location for the European distribution centre of Alibaba. It is the glittering prize this year for countries that want to put themselves on the map as logistic strongholds. The battle seems to have become in a decisive stage.

The Chinese powerhouse Alibaba is very much challenging the throne of Amazon as largest webstore in the world. This requires six enormous hubs, of which one will be located in Europe. And there is big money involved. For the development of the six global distribution centres, Alibaba reserved a total of $16 billion. 

Both The Netherlands and Belgium have deployed ‘heavy artillery’  in order to lure the Chinese. PM Rutte is said to have received an executive-laden delegation of Alibaba in his official office, Het Torentje (i.e. the tiny tower) in The Hague. The nature of this visit is not disclosed. Next to Jack Ma, founder and withdrawing executive of Alibaba, also the Executive Officer of the ‘Global Business Group’, Angel Zhao, and the CEO of Alibaba Europe, Terry von Bibra, were part of the delegation.

I appreciate it when the Dutch Prime Minister does his utmost to lure interesting companies to The Netherlands, especially when large numbers of high-quality jobs are involved. And Alibaba and its founder Jack Ma are definitely some of the biggest names in the business. Nevertheless, I still don’t get it. I really don’t understand this international battle for this distribution centre.

Yes, it will become big and it will arguably become one of the biggest distribution centres in the world. But will it become a big driver of jobs? I really doubt that…!

At the beginning of my career, I have worked at the factory and distribution centre/warehouse of a local milk plant. Even though the automation of processes already became more prominent then (i.e. end Eighties / early Nineties) and the early deployments of robotization had already started, it was still a labour-intensive plant.

Packing roll-in dairy containers, putting crates of bottles and packages from pallets into distribution carts was still heavy physical work, that required quite a few workers. And of course there were the jobs of forklift truck and pallet truck driver and all those other logistical jobs that kept the clockwork of a modern factory running.

But that all changed quite dramatically… The same milk factory, with relativity small branches spread all over the country is now condensed into a few mega-factories and warehouses that are strongly automized and robotized, enabling the same turnover as those smaller plants, but with a fraction of the people involved. Hundreds of jobs had vanished due to the robotization in those factories.

A few years ago I had the chance to look into the “slow mover” distribution centre of my own employer, PLUS Retail in The Netherlands. PLUS is a chain of 250+ supermarkets and it operates four distribution centres at strategic places in The Netherlands. 

Although the distribution centre already used a modern robotized collection machinery for small articles, there was still quite a lot of manual labour involved. Yet, those workers consisted for a large share of Polish and Bulgarian workers, who were ‘operated’ by a computerized voice on their headsets. The machine speaks and the people collect. This is not interesting work anymore and it doesn’t require a large level of skills and trainings.

Yet, PLUS is now developing a new, even more modern distribution centre, which – albeit much, much smaller – can be very well compared to the distribution centre that Alibaba wants to develop. Keywords of this distribution centre are: fully automized, fully robotized and labour-extensive to a degree that only a limited number of operators is required to operate it 24 – 7 (in theory). May there work 50 to 75 people when it is fully operational, then I am probably on the upside of labour requirement.

I don’t expect the Alibaba distribution centre to require many more workers, as I also expect that to be fully automized and robotized, to a degree that – in spite of its mammoth size – probably less than 100 people suffice to operate it. And I’m afraid I also expect the establishment and development of this distribution centre to be mainly a Chinese affair, with probably very limited involvement for Dutch companies and Dutch construction jobs.

What remains then is an extremely large, box-shaped and blind building in the Dutch landscape, that offers a few dozen medium and high-qualified jobs and a lot of extra, logistical traffic on the Dutch highways, ports and airports. Of course those logistical activities are all jobs, but it is not the kind of job that I would like my country to have.

In past articles I have called my country sarcastically The Mailman of China, as it continues focussing on logistical and distribution jobs related to the so-called ‘mainports’ Schiphol and the ports of Rotterdam/Amsterdam; all on behalf of massive imports, exports and transit freight to and from the European continent and the British isles. This way of working is fully using the Dutch logistical network of waterways, railways and highways, with all the drawbacks that it brings.

Unfortunately, all these activities bring a lot of pollution and they clot up the Dutch infrastructure with endless stacks of trucks, trains and inland waterway vessels.

With this massive distribution centre of Alibaba, the inland and foreign logistics will be intensified to much higher levels. And the increased distribution of Alibaba products will lead to a surge in low-cost, low-quality products with a lifecycle of less than a year. Near-future electronic waste, in other words.

When I say that I would wish that the Dutch economy would invest more in high-qualified, labour and research-intensive jobs, I probably start to sound like a broken record.

Companies like ASML, Philips, (formerly) Akzo/Organon, NXP and many others can bring and maintain The Netherlands at the forefront of Research & Development, in cooperation with the Dutch universities and tech infrastructure. 

Those are great jobs and jobs that cannot be easily taken over by other European countries, as they would be lagging in knowledge and skills.

Distribution and transport is relatively easy and doesn’t require special skills. 

Besides that, it deteriorates the environment and air in the very dense populated country The Netherlands, due to the pollution and excess traffic it produces. Another factor that is increasing in influence is the ‘trashification’ of the Dutch landscape, with countless large and ugly buildings, like distribution centres, data centres and large warehouses.

Everybody who traveled to Northern France via the ‘Route du Soleil’, knows what the devastating and depressing influence can be of the countless ugly warehouses at the side of the road that one sees there. The surroundings become ugly and depressing for the people who live there.

Is that what we want for our small country? Or is that a development we need to avoid at all costs?!

I made my choice! Let Belgium have Jack Ma and his giant distribution company and let The Netherlands focus on companies and jobs that really matter for the world!