The Flanders-China Chamber of Commerce organized a webinar focused on Financial Incentives for Doing Business with China on 9 July 2025.
Ms Gwenn Sonck, Executive Director, Flanders-China Chamber of Commerce, welcomed the speakers and participants, and introduced the topic. As we all know, doing business with China has become more complex. Many companies are in China, not only to serve the local market – so in China for China – but also to be part of a globally competitive innovation ecosystem. In 2024, China ranked on the 11th place of the Global Innovation Index published by the World Intellectual Property Organization, while in 2010, China was on the 43rd place. So the speed of innovation in China is really remarkable. That is also why so many of our companies are in China for its innovation drive. So if our companies want to keep up with the technology of the future, then they really must continue to invest in China.
Mr. Rik Daems, former Belgian Minister and Vice Chairman of the China-Belgium Direct Equity Investment Fund (CBDEIF), introduced the Fund. The story of the China-Belgian Direct Equity Investment Fund starts more than 40 years ago. Belgium and China have a long-lasting relationship. In the early 80s, the Belgian state invested in a joint venture in Shanghai, the well-known Shanghai Bell, which is quite famous in China. So it is more than 40 years ago that Belgium already invested in China in order to help the Chinese economy to develop. When I was Minister of Telecom, I had this in my portfolio. They didn't pay us any dividend. We hadn't anyone on the board. So we said, what the hell are we doing there? So we sold off our shares in Shanghai Bell. On my staff, I had a Chinese person who told me to watch out because if you're going to sell off and you take your money back to Belgium, you will hurt the concept of friendship. So this was the first time that I heard about friendship. So I understood that if you want to have a good relationship, this is something that you have to take into account fully all the time. I sold off these shares estimated at 600 million Belgian francs for 3.4 billion, which was quite amazing. In the Council of Ministers, I asked my colleagues to leave 10% to continue to be friends with China, and they allowed it. 340 million Belgian francs is €8.5 million. This is the capital that we put into this new fund. It's a bit of a strange number, because in Europe, you would say it'll be five or 10. In China, you would say it would be 8.8 or something like that, but 8.5 simply comes from the 10% of the sale of Shanghai Bell.
We contacted China, and instead of making a one-shot investment, we asked ourselves whether we could do more? So we found a partner in the Ministry of Finance and came up with the concept of a private equity fund, which did not exist at that time. This is the reason why the China-Belgium Fund is not a private equity company or fund, it is a cooperation agreement under the Council of Ministers. My counterpart as Vice Chairman of this fund is the Vice Minister of Finance. This fund is not only an economic vehicle, but also a diplomatic vehicle, because it connects two countries at the highest level. So the Fund is not a private equity fund as such, but is a cooperation agreement. The MOU was signed in March 2002, the Council of Ministers approved it in 2003, and we got started in 2004. It was Premier Wen Jiabao himself who came to sign it, just to explain the level of cooperation. The Fund has a capital of CNY1 billion and we added CNY1 billion, because we made a lot of profits and we kept it as working capital, not as equity. The Fund is basically a corporation, but there is no space for us anywhere in Chinese law. The duration is 28 years, so we celebrated our 20 years. Mr. Daems has been there from the very beginning and went to China over 100 times. The objective was to make an evergreen fund, but the bank opposed to it due to compliance and Basel III issues.
The investment scope is SMEs, quite big in Belgian terms, but small in Chinese terms. We have sponsors and partners. The sponsor is the Chinese state through the Minister of Finance and the Belgian state through SFPI, which is the Belgian sovereign wealth fund. Those are the two basic partners. There are two partners who set up the fund manager, Haitong Securities Co and Fortis Bank, which was bought by BNP Paribas. These are the four main partners, and then there are five additional ones, four public and one private. The private one is Guangdong Strong Group, which makes candy. The other partners are the National Council for Social Security Fund, which has many investment funds, the China Development Bank Capital Co., the State Development and Investment Corp, and the China Banknote Printing and Minting Corp. Our custodian bank is the Shanghai Pudong Development Bank and the fund manager is a joint venture between Haitong and BNP Paribas.
What is the objective of CBDEIF? Bilateral economic and trade cooperation, but also diplomatic. We have to perform even better economically because we've got this diplomatic element. The Articles of Association stipulate that we have to only aim at SMEs, but it has to be in advanced technology and management practices. So we cannot just go for the money, we need to have an angle of helping the economy develop. The fund can only invest in mainland China. The Fund has invested close to CNY 4 billion in 119 companies in manufacturing and strategic emerging industries, quite evenly distributed between the new generation of IT, new energies and electrical vehicles, new materials, and high end equipment. The exit ratio is 64%, which is normal. You get in for five to seven years, sometimes you stay in longer, sometimes you can get out earlier, 36% is still under management, but we are reinvesting all the time and making new investments. The IPO ratio is 31%, which is amazing. The average investment is like €4 million to €5 million. The Fund also invested over €25 million in five Belgian companies. The Fund became a bridge for China and Belgium at the highest level: the King of Belgium went to China and we had access to Li Keqiang, Xi Jinping, Wen Jiabao, and Hu Jintao. When you've got this kind of a relationship at the political level, the guanxi is quite important.
One euro put in brought you already more than four euro in dividend. The Belgian state already received more than €40 million euro. The total value on paid in is over six, which is quite amazing. The internal rate of return (IRR) is 34% on average over 20 years. The fund manager is a joint venture between Haitong Capital and BNP Paribas. Recently Haitong Capital has been has been merged with Guotai, the second largest securities company in China. Guotai-Haitong is now the largest securities company in China, with over €200 billion, compared to SFPI, the sovereign wealth fund in Belgium, with about €25 billion. The Belgian companies the Fund has invested in are Eden Chocolates, Shandong Huiyin New Energy, Nanjing Raychem Laser Group, Innoscience (Suzhou) Technology, and Jiangsu Leuven Instruments Co.
Mr Steven Levecke, Partner, Capricorn Partners, introduced the Capricorn Fusion China Fund, a fund managed by Capricorn Partners, which manages in total now over €500 million, split over 10 different investment funds, of which the Fusion Fund is one. Capricorn Partners itself was founded in 1993, investing both in stock-listed companies, as well as in private companies. The target companies are typically SMEs, which are either headquartered in Europe or in Asia. The Fund prefers to invest in companies that already have a strong management on board, and still have strong growth ambitions, and a positive EBDA, so a positive profit margin. The Fusion Fund is sector agnostic with the three pillars of health-tech, clean-tech and software. The typical deal structure is investing in equity, so becoming shareholder of the company, investing up to €5 million, sometimes in a consortium with other investors. The Fund can do primary or secondary deals. A primary deal is participation in a capital increase and a secondary deal is buying out existing shareholders.
The Fund can only do minority positions, so will never have a controlling stake in the company. We are not speculative investing, but at some point, we need to exit and return the money to our investors, so our typical investment horizon is somewhere up to six years, Mr. Levecke explained. What we try to do is really support the management teams of our portfolio companies in achieving their growth ambitions. We have a portfolio now of over 50 private companies and about 25 public companies, so we do have quite a lot of best practices on strategies, business development, doing add-on acquisitions, the international strategy, and getting companies ready for exit. With the 10 funds that we are currently managing, we of course also have a good network of investors in our funds, which are typically institutional investors. We've been doing business in China with our portfolio companies for close to 20 years, so we have built up quite a decent network in China with some industrial companies in health-tech and clean-tech, Currently four people are working on the Fusion Fund.
We had a very nice success story with Punch Power Train, a Belgian company developing transmissions for passenger cars, which six years after the investment was sold to a Chinese conglomerate for a very decent multiple. The portfolio companies the Fund has include Xian Thiebaut Pharmaceutical Packaging, making collapsible aluminum tubes; Xenomatix, developing LiDAR sensors; Spectricity, developing a hyperspectral sensor; Fruitcore Robotics, an industrial robot manufacturer based in Germany; and Finquest, a big data and AI company. The Fund is still open to make some additional investments, so if there is any company that could fall within the criteria and is looking for capital, you can contact Mr. Levecke.
Mrs. Caroline Steensels, Team Leader Financial Support, Flanders Investment and Trade, presented “Financial Support by Flanders Investment and Trade”, focusing on subsidies and grants, whereas the two previous speakers focused more on investment funds. Flanders Investment and Trade (FIT) has a dual mission, on the one hand trying to assist Flemish companies realizing their export strategies, and on the other hand, trying to attract or stimulate investments into Flanders and Belgium. FIT is a governmental agency directly under the Prime Minister, with a network of employees working in Flanders and abroad. For the domestic network, it is active in each of the regions in Flanders and headquartered in Brussels, and has a very elaborate network of offices abroad. Some of the offices have a very clear geographical focus, and others have a more thematic focus, for example, life sciences, clean-tech, deep-tech and AI. FIT has four offices in the greater China area in Beijing, Shanghai, Taipei, and Hong Kong. For any question that arises, just feel free to contact them, such as address lists of potential business partners in China, information on trade regulations or trade legislation, reaching out to potential B2B partners, or looking for potential contacts in China. FIT provides advice on going into markets, organizes booths at different trade fairs all over the world, offers market information, and last but not least, financial support.
Receiving financial support in the form of a subsidy is not the main purpose of FIT, but it is a way to assist us in reaching our goals. The subsidies that FIT provides are for projects that stimulate experts from Flanders to the rest of the world. Sourcing, looking for companies to produce in China, does not fall into its framework. We have a focus on Flemish SMEs based on the European definition of what an SME is. A a Flemish SME, you can be based in Brussels, but you also need an exploitation address in Flanders to qualify.
You have to apply for a subsidy at the latest seven days before your trip starts. The maximum amount of funding is limited, intended to help you in realizing very specific goals and activities. FIT has a subsidy for digital commercial communication, you want to be found and you want to be found in the proper language. Secondly, you're interested in doing business abroad and you want to check whether or not there is demand for your project. You can ask for the subsidy to attend international trade fairs or events. If you want to explore the potential of your markets, then you start to organize individual B2B meetings or a prospection trip outside of Europe. The prospection office is when you really want to establish a long term presence in your new market abroad, and the custom made subsidy is when you have a project that does not fit in any of the other categories. You can ask for up to a maximum of four projects per year to be funded, but you can choose freely from any of the categories above except for the custom made. There is a sixth subsidy for starting exporters that haven't received funding from FIT yet, but the Chinese market is not ideal to start as a first time business.
A Q&A session concluded the webinar.
