Luxembourg: Europe’s Center for Goods, Real and Virtual

Surrounded by France, Belgium, and Germany, the small nation of Luxembourg has built a first-class reputation for logistics and information technology in Europe.

Known in Europe as a logistics hub, the small, centrally located nation of Luxembourg worked throughout 2007 to build on that reputation. In November of last year, the government unveiled plans for transforming a former U.S. Army maintenance base into a high-end logistics park to be known as Eurohub Luxembourg South.

The construction and management of the housing facilities for logistics activities on one part of the site will be supervised by a new partnership company formed by the Luxembourg government and the French group Sogaris, which specializes in the management of multimodal logistics freight platforms. Sogaris manages over 110 acres of logistics facilities throughout France.

Another French group, Transalliance, will begin its value-added, third-party logistics activities in existing facilities on the Eurohub site. Transalliance will also base its general headquarters for its European subsidiaries (except for its subsidiaries in France) in the existing administrative building while it waits for its new infrastructure to be built. The group is a major European operator in the logistics sector offering multiple integrated services such as maintenance, stock management, pre- and post-positioning assembly activities, quality control, and picking and conditioning as well as organization of transports, documentation management, and labeling.

Because Luxembourg is also a major center for finance, information technology, and other data-driven, high-value business models, the country is often chosen by companies that need to make their virtual goods easily available throughout Europe. The concentration of highly educated, multilingual employees in Luxembourg complement the country’s well-maintained digital and physical infrastructure, making it an ideal choice for many companies.

A perfect example is Rakuten Inc., a Japanese company founded in 1997 that has created e-commerce services in its home country. Now the largest e-commerce company in Japan, Rakuten sells its e-commerce services and products to retailers in the small- and medium-size enterprise (SME) market, allowing the retailer to focus on selling rather than the technology and logistics behind the sale. In February, Rakuten announced that it had chosen Luxembourg as the location from which it will introduce its e-commerce model into Europe.

Operating from Luxembourg, Rakuten Europe will, among other things, be responsible for core corporate functions such as strategic coordination and human resources. The company foresees that at a later stage, its Luxembourg presence will serve as a central platform for logistics and research and development activities.

“I am impressed with Rakuten’s business model that we had the opportunity to discover through our discussions over the last months,” says Luxembourg Minister of the Economy and Foreign Trade Jeannot Krecké. “Mr. Mikitani and his team have developed a unique tool to broaden SME’s market presence on the Internet. … Rakuten’s decision to establish its Central Coordination Entity in Luxembourg confirms our country’s unique assets for e-commerce in Europe.”