Multinational groups in Belgium

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Datalab - Multinational groups in Belgium

DataLab
Multinational groups in Belgium

As a result of the globalisation of the economy, the share of groups is becoming more and more important. The purpose of this page is to give some basic statistics on their weight in the Belgian economy.

First, let’s define the concept of ‘enterprise group’. It is an association of legal units (CBE number[1] bound together by direct or indirect links that are mainly financial (shareholding or control), but also frequently organisational (management, strategies, etc.) and economic (pooling of resources).

A European initiative has made it possible to create a register of multinational groups. The following figures come from this register, called the  EuroGroups Register (EGR)[2]

The EGR is the statistical business register of multinational enterprise groups having at least one legal unit in at least 2 European Union Member States. The EGR is created for statistical purposes only, with the aim to facilitate the coordination of survey frames in the European Statistical System (ESS) for producing high quality statistics on global business activities, like Foreign Affiliates Statistics (FATS[3]) and Foreign Direct Investment statistics (FDI[4]. For information on units resident in EU Member States and in EFTA[5] countries the EGR uses data from the respective national statistical business registers, while commercial sources are used for covering units outside the EU and EFTA countries.

Further in this analysis, we present the results broken down according to the concept of ‘group head’. In order to understand this concept, we distinguish within a group:

  • the unit ‘leading the group’, i.e. the legal unit which is not controlled either directly or indirectly by any other legal unit (see diagram below).
  • the unit deciding on the economic policy (ultimate decision-making unit)

We consider that a group’s nationality is that of its decision-making unit: the objective is to avoid locating groups too systematically in countries where only their financial holding companies reside. So, a group whose decision-making unit is in Belgium and whose unit ‘leading the group’ is in Luxembourg will be considered as a Belgian group head.

There is another underlying concept: we speak here exclusively of multinational groups in the sense that the group has legal units in at least 2 countries of the European Union. Consequently, domestic groups or groups exclusively present in Europe through their presence in Belgium (e.g. a Belgian-American group) are not examined here.

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The results presented here are based on new data sources and methods. Given that these statistics have not yet reached maturity in terms of harmonisation, coverage or methodology, they are called ‘experimental statistics’.
The register is currently in its ‘youth’ phase. Indeed, this is illustrated by the evolution of the number of groups and subsidiaries during the years 2014 to 2017. The coverage in the database in terms of groups has increased by 70 % between 2014 and 2015 (which is significant) and by another 25 % between 2015 and 2016. The figures between 2016 and 2017 seem to be stabilising, since the number of groups has increased by 4 % only. The group coverage seems to be stabilising. Regarding subsidiaries, we currently note a regular annual growth of 15 % between 2014 and 2017. Knowledge about the subsidiaries continues to increase, it has not yet fully stabilised.

The table below shows the weight of multinational groups in Belgium.

Year Number of groups present in Belgium Number of Belgian legal units in these groups Compared to the whole economy Employment in Belgian units Compared to employment in Belgium
2014 3,231 10,296 1.2% 895,934 23.4%
2015 5,530 14,039 1.6% 977,963 25.4%
2016 6,794 17,005 1.9% 1,038,253 26.6%
2017 7,036 17,471 2.0% 1,058,832 26.7%

We note that in Belgium, the weight of multinational groups is significant because, even if less than 2 % of legal units belong to such structures, they account for more than 1 job out of 4.

You will find below the figures regarding groups whose decision-making body is in Belgium.

Year Number of Belgian group heads Number of Belgian legal units Compared to the whole economy Employment Compared to employment in Belgium
2014 2,069 5,930 0.7% 336,338  
2015 3,004 8,171 1.0% 412,201  
2016 3,958 10,519 1.2% 429,096  
2017 3,798 10,148 1.1% 422,726  

If we compare both tables, we can see that the groups present in Belgium are predominantly controlled by a Belgian group head and that in terms of the number of subsidiaries the proportion remains similar. However, in terms of employment, groups controlled by a Belgian group head only have 40 % of the employment of the groups present in Belgium.

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Nationality of groups operating in Belgium

Among multinational groups operating in Belgium, groups controlled by a Belgian group head account for more than half, the rest is broken down as follows:

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The largest part of groups present in Belgium are groups controlled by a French group head.       

Remark: As mentioned in the introduction, these statistics are experimental. The figures for France in 2014 and for Germany in 2014-2015 should be considered very carefully.

         

Geographical breakdown of subsidiaries of groups controlled by a Belgian group head

For multinational groups whose decision centre is located in Belgium, Belgian subsidiaries account for around 40 % of the total number of subsidiaries. Neighbouring countries such as France, the Netherlands and Germany are logically the countries where most of our groups are established. You will find in the chart the development over time of the breakdown between the main countries.

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The nationality breakdown of our subsidiaries according to employment is not in the same order. We note that the Netherlands, where on average 11 % of our subsidiaries are established, only account for 4 % on average of the employment in our subsidiaries around the world. China ranks 5th followed by some Eastern Europe countries.
Remark: the employment in our subsidiaries in China for the year 2016 should be taken with reservations, as the employment is provided by a private source that we do not control. We can also note a decrease for France in 2015. It is most probably a consequence of the maturation of the data processing operation and in no way an economic reality.

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Another way of presenting the establishment of our groups in other countries is to consider sizes. In the chart below, we have determined the employment size class ([0 ;10[ - [10 ;50[ and [50 and more[) of each subsidiary. This information allows us to specify the profile of our groups' establishments in other countries. It should be noted that there is instability (between the 2014-2015 and 2016-2017 periods) concerning the figures of the American subsidiaries. These variations can be explained by the information source, which is a private source that cannot be controlled. The sharp increase registered for Germany in 2017 shows the ‘experimental’ nature of these statistics. Improvements remain to be done to stabilise these figures.

 

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This chart shows that the establishments of Belgian groups are mostly small, that the legal units tend to be larger in Eastern countries (Czech Republic, Poland and Romania) compared to those present in Belgium or even France.

The same remarks on data quality, in particular regarding the figures of the United States and China, apply here.

Main economic sectors in which groups are active

The group register also provides information on the activity carried out by the subsidiaries. The two charts below provide a breakdown of the main activities in terms of number of subsidiaries and employment.

Here, the concept of ‘economic sector’ refers to the Nace section (source https://statbel.fgov.be/fr/propos-de-statbel/methodologie/classifications/nace-bel-2008). These are the main aggregates of the economic activity. There are 21 in the 2008 nomenclature (construction, industry, accommodation and food service activities, ...).

The figures only refer to the years 2016-2017. The activity of many subsidiaries is missing for the years before.

Number

 

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Paid employment

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A joint analysis of the two previous charts shows that:

  • manufacturing is the main economic sector (in terms of employment) of groups controlled by a Belgian group head
  • the section of ‘trade and repair of motor vehicles’ ranks first in terms of actors (legal units), but that its weight in terms of employment is lower. The same goes for the section ‘professional, scientific and technical activities’ and more specifically for the section ‘real estate activities’.

Complexity of groups controlled by a Belgian group head

In this part, we focus on the concept of group complexity. Two criteria have been established:

  • Geographical complexity makes it possible to apprehend geographical dispersions.
  • Economic complexity makes it possible to see whether the groups are essentially active in a given economic section, or rather active in several simultaneously.

Geographical

We divided the groups into three classes:

  • low complexity: if the group is present in 2 countries at most (Belgium and another European country),
  • medium complexity: if the group is present in 3 to 5 countries (Belgium and at least another European country),
  • high complexity: if the group is present in 6 countries or more (Belgium and at least another European country).

In other words, the breakdown is based on the geographic scope, i.e. Belgium and at least another European country. These thresholds have been chosen to be in line with the European thresholds used by Eurostat[6]

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Over both years 2016 and 2017, the figures for groups controlled by a Belgian group head are stable. 5 % of them are present in more than 6 countries, the major part (78 %) is only present in two countries (Belgium and only one other country, European at that). It appears that groups controlled by a Belgian group head are much less dispersed geographically than all groups present in Belgium.
If we look at the latter, those present in more than 6 countries are more numerous than those present in 3 to 5 countries. This shows another facet of globalisation in our country.

Economic

We can also look at economic complexity. In order to grasp this complexity, we divided groups as follows:

  • mono-active group if a section accounts for more than 80 % of the group’s total employment
  • dually active group if two sections together account for more than 90 % of total employment
  • otherwise, pluri-active group.

We can see that the majority of groups are active in only one section.

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Conclusion

As a conclusion, the aim of these statistics is to give a picture of the groups active in Belgium, according to whether or not they are controlled from Belgium. Groups account for almost 25 % of Belgian employment. Those controlled from Belgium are mainly located in neighbouring countries and, symmetrically, Belgian units controlled by foreign entities are controlled from neighbouring countries. In terms of activity, manufacturing is by far the most represented.

It should not be forgotten that these are experimental statistics, they present at times some breaks due to the relative youth of the data but also due to the complexity of their elaboration.

An update will be proposed every year.


[1] CBE-number

[2] EGR

[3] Foreign Affiliates Trade Statistics

[4] Foreign Direct Investment

[5] European Free Trade Association,

[6] Eurostat