China (Henan) – Luxembourg : “Silk Road in the air” or “e-Silk Road”?
On Tuesday July 10th, 2018, a large delegation of about 100 officials and entrepreneurs from the Henan Province, led by HE Mr. Wang Guosheng, Secretary of CPC Henan Province, came to Luxembourg in the framework of “China (Henan) – Luxembourg ‘Silk Road in the Air’ Economic Conference”. The event, which was organised in collaboration with the China Council for the Promotion of International Trade (CCPIT) of Henan and Henan Civil Aviation Development & Investment Co., Ltd (HNCA), gathered more than 200 participants.
Henan is the birthplace of Chinese civilisation with over 3,000 years of recorded history, and remained China's cultural, economic, and political center until approximately 1,000 years ago. Today, with its Central Plain location, Henan Province becomes China’s logistics hub. Henan is the 5th largest provincial economy of China and the largest among inland provinces.
In his welcome address, Carlo Thelen, Director General of the Luxembourg Chamber of Commerce reminded that China-Luxembourg friendly exchanges enjoy a long-standing history. The bilateral cooperation in areas such as economy, trade, finance, transportation and culture has achieved fruitful outcomes since Luxembourg and China established diplomatic relations 46 years ago.
In the framework of the “Belt and Road” construction, China supports the construction of an “Air Silk Road” between China’s Zhengzhou, the capital city of Henan Province, and Luxembourg. In that context, Lux-Airport and Henan Airport Group have signed a strategic cooperation agreement in 2014 already, in which they agreed to cooperate on the development of passenger and freight transport between Zhengzhou and Luxembourg, a “win win” deal to develop sustainable ties with mutual benefits.
In June 2017, Prime Minister Xavier Bettel, together with François Bausch, Minister of Sustainable Development and Infrastructure visited China and met with Chinese President Xi Jingping to further enhance this collaboration. Then, in September 2017, the Chamber of Commerce organised an economic mission entitled “Belt and Road” to China, focusing mostly on logistics and cross-border e-commerce, during which the first edition of “Henan - Luxembourg Belt and Road Economic Forum - Air Silk Road” was held . Yesterday’s conference was the second edition of this event, which intends to be organised annually, alternatively in China and in Luxembourg.
In his keynote speech, HE Mr. Wang Guosheng described his province, extremely rich historically and culturally, and the historical ties between Henan and Luxembourg and also mentioned the last official visits. He stressed that since the opening of the “Air Silk Road”, the world ranking of Cargolux has jumped from 9th to 5th. Due to its central location and its very well developed infrastructures’ network, Henan has a unique development advantage. Besides being an important industrial province, there are currently many business opportunities flourishing, like in the field of e-commerce. With 100 million inhabitants, the Province also represents a wide market for European countries and the whole world. Finally, Secretary Wang stressed that his Province is fully supporting the “Belt and Road Initiative” aiming at reforming and opening China and that Henan also wants to contribute to the development of the world economy.
Then François Bausch, Minister of Sustainable Development and Infrastructure, insisted in his keynote speech on the fact that Luxembourg is playing a crucial role in the Belt and Road Initiative and fully understands the mutual interest to establish efficient and connected multimodal logistics networks, serving as a basis to foster mutual trade and investment. He said that the Belt and Road initiative has become a centerpiece of China’s economic development policy that was soon complemented with an Air Silk Road.
By looking at the numbers, this vision is largely successful. Indeed, since the launch of the Luxembourg – Zhengzhou international route in June 2014, the frequency of flights between the two hubs increased from 2 weekly landings in June 2014 to 16 weekly landings in June 2018, among a total of 27 flights per week to China. The cargo volume transported by Cargolux has grown by 37% in 2017 compared to 2016 and the contribution rate to cargo growth of Zhengzhou airport is about 60%. He concluded his speech by mentioning the progress that have been made on the discussions about a direct passenger route from Zengzhou to Luxembourg (charter or regular flights) and the MoU that has been signed in that context last Monday.
Five agreements were also signed during the conference between Henan Airport Group and Cargolux, between Henan Airport Group and Lux-Airport and between Bonded area logistics center of Henan and the Luxembourg government. This last named agreement aims at conducting in Luxembourg an European pilot project in the field of Logistics services linked to cross-border e-commerce with the Chinese Group Henan Imported Materials Public Bonded Center.
After this official opening session, several presentations were made. A first intervention was done by Mrs. Guo Yanhong, Deputy General Manager HNCA, who described more into details the shared benefits of the “Silk Air Road” for Luxembourg and China thanks to the strategic partnership between Cargolux and HCNA.
Mrs. Yanhong speech was followed by a presentation about the city of Zhengzhou, delivered by Mr. Wan Zhengfeng, Deputy Mayor of Zhengzhou who highlighted that Zhengzhou is an important node city in the “Belt and Road Initiative”, a national integrated hub city, as well as a “dual-hub” with Luxembourg.
On the Luxembourg side, Mr. Daniel Liebermann, Director of the Directorate Logistics at the Ministry of the Economy then briefly presented Luxembourg as a Logistics hub with a focus on Cross-Border E-Commerce Opportunities. Cross-border e-commerce is indeed a key trend in global trade, due to the globalisation and the digitalisation of the society. In China, the development of the e-commerce is a national priority and very important to improve China’s trade exchanges (import/export) whereas in Europe, the digital economy is also seen as a driver for growth, encrypted in the EU Digital single market strategy. In that context, Luxembourg is ideally located in the heart of Europe’s e-commerce market, to become a logistics hub and a gateway to the 500 millions EU consumer market.
Finally, Mr. Serge Heinen, Project director Commercial Vehicles, Sales Intralogistics and Surface Treatment at CTI Systems delivered a company testimonial about the development of the business of CTI Systems with the company Yutong, located in Zhengzhou, since the first contacts were established in 2013. Yutong is the biggest Bus manufacturer in the World. CTI Systems has collaborated closely with Yutong in the context of the development of their plants meant to deliver 300 busses a day.
After those presentations, a panel discussion was organised to debate about the future perspectives for the logistics between Henan and Luxembourg. Moderated by Malik Zeniti, Director of the Luxembourg Cluster for Logistics, the panel discussed the positive outcome that could be generated for both countries with the development of the e-commerce. With the increasing purchasing power of the Chinese population, trade and commerce will also benefit them and more and more Chinese people might buy European products in the future. This would help to balance the exchanges between China and Europe. Also, according to some studies, 35% of the global trade will be done via e-commerce upon 2030, so the growth perspectives in that context are huge and the panelists suggested that instead of talking about the “Air Silk Road”, we should talk about the “E-Silk Road”, which can encompass the air, the land and the e-commerce Silk Road. One of the biggest challenges in this context remains the import restrictions and that is why it is very important to unify customs procedures.
Jeannot Erpelding, Director of International Affairs at Luxembourg Chamber of Commerce concluded the seminar by insisting on the fact that the Henan Province is one of the focus of the Chamber of Commerce to help Luxembourg companies to develop their business in China. He stressed that Cargolux is helping a lot in that context, thanks to the cargo freight and the partnership with HCNA on the one hand, and by strengthening the good reputation of Luxembourg in the Province, on the other hand. Mr Erpelding concluded by announcing the next important event related to China organised by the Luxembourg Chamber of Commerce : an economic mission to Hong Kong, Shenzen and Shanghai from November 5th to 10th, 2018 that will include an accompanied visit to China International Import Expo in Shanghai.
The seminar was followed by a matchmaking session between Chinese and Luxembourg participants. In total, 14 Chinese companies had a total of 34 meetings with 19 Luxembourg-based companies.