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We need Dutch courage to compete with the US

The Times: We need Dutch courage to compete with the US

“Even the great Dutch firms are looking a bit sickly: Royal Dutch Petroleum, the senior Shell partner, is low in oil and embroiled in scandal…”

European Briefing

By Carl Mortished

October 06, 2004

WHO will be the great Dutch traders of the 21st century? A small and exceedingly wealthy country, the Netherlands has always been about trade, more about buying and selling things than making them. From the early 17th century the Dutch have been roaming the world, finding inexpensive goods and shipping them out or exploiting cheap labour in remote places for a quick profit.

What has happened to the flair, the ruthless eye for commercial advantage? Today, the Netherlands looks rich but tired, its economy is going gently nowhere and unemployment is on the rise. Even the great Dutch firms are looking a bit sickly: Royal Dutch Petroleum, the senior Shell partner, is low in oil and embroiled in scandal, Unilever has been mugged by American competitors while Philips is treading water in a sea of Asian electronics. And KLM? It has been devoured by the French.

All this would matter little if the Dutch had great new ideas about how to make money. Instead, the big idea has not changed a great deal since the 1600s and it doesn’t change because it still works. It is the port of Rotterdam and the network of shippers and forwarders at Schiphol airport that keep the 16 million Dutch in the style to which they have become accustomed. Trade in merchandise and services accounts for two thirds of the Dutch economy.

The Dutch got into the trade racket in a big way in 1602 with the creation of Vereenigde Oostindische Compagnie (VOC), otherwise known as the Dutch East India Company. By the second half of the 17th century they had removed the Portuguese from Java and Sumatra and kicked the British out of the Malay peninsula. At its peak, VOC was an empire in itself with 40 warships, 150 merchant ships, 50,000 employees and 10,000 soldiers to help to extend its market reach.

The relationship between the traders and those whose goods and sometimes bodies were traded, was not easy. The clumsy efforts by the officers of this early multinational to ingratiate themselves with their Asian hosts is well documented in an exhibition, “Encounters” at the Victoria & Albert Museum. The Dutch merchants are beautifully captured in contemporary Japanese paintings, tall with long noses and rather scruffy, in one painting lasciviously eyeing up a pair of Japanese courtesans.

At first the Dutch presented trinkets, gifts of worthless junk. Later, the traders learnt better to impress with guns and other weaponry but the lasting contribution from both sides was probably cultural — systems, lifestyles and ideas.

VOC itself was an idea, believed to be the first company to issue its own shares. VOC paid an annual dividend to its shareholders which at one point was 63 per cent.

It is the dividends that expose the dependence on overseas trade of a small country on the edge of Europe. The Dutch East India Company survived two centuries, succumbing, in the end, to competition, war with England and its own corruption.

The dependence remains. Royal Dutch and Unilever NV together paid out €3.7 billion (£2.6 billion) in dividends last year, a huge buttress shoring up the pensions of the Dutch. If the Netherlands is to continue to prosper, this cashflow from overseas must continue to grow and the Dutch need to find new ways to make trade work in their favour.

It may not be entirely coincidence that Royal Dutch/Shell and Unilever have both struggled with the business of controlling their far-flung empires.

Latterly, the decentralised Europeans have been shown up by the command-and-control Americans. ExxonMobil trounces Shell while the buttoned-down salesmen from Procter & Gamble’s head office in Cincinatti knock spots off Unilever. The latter prides itself on being a multi-local multinational, a vision more sensitive and more in tune with a world of diversity but its sales don’t sparkle.

Who is right? Unlike the East India traders, we are not mercantilists. We don’t believe in a finite amount of trade but we do believe in comparative advantage. Britain, like the Netherlands, lives well because it trades and our pensions are equally dependent on profits repatriated from Africa, Asia and Latin America.

There is no reason to despair. American enterprise is not invincible and one famous firm is now in retreat in a world that has become weary of burgers. The early European traders were multi-local multinationals, adopting local customs as it suited them and imposing their own when required. There is nothing wrong with the European way. We just need more attitude and to recapture the ruthless commercial streak of the early Dutch merchants.

[email protected] and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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