In the world of banking there are countries where the bank would be most successful and then there are those countries where there would have to be a lot of effort made to make it efficient. Luxembourg has become a breeding ground for those who want to do banking abroad and have found a great deal of success. The reason for that lies in the fact that, partially for its location, and has been known as a soft landing place for prospective bankers (Adas, Rima 2012). The location is right in between banks, insurance and asset manager sectors, and multilingual workers (Adas, Rima 2012). They rank number two in the world for their technology, third in the world for their banks, and number six for their financial market development (Adas, Rima 2012). It is for those specific reasons that I chose Luxembourg as one of the most successful places to do banking worldwide.
There are said to be challenges when traversing from one culture to another in any given situation. There are a whole new batch of challenges when it comes to doing business with another culture, because until you have researched their culture, and how they behave during business venues; it’s going to be a difficult case to overcome. The first challenge is that they value secrecy in banking; in other words if there is a financial regime that is working for the higher power individuals they may not share that wealth or the idea with other members of the group (Kwintessential, 2012). A few others are that it is difficult to tell when somebody likes your idea or wants to do business with you (Kwintessential, 2012). It is because the people of Luxembourg, in the business world anyhow, the people there are friendly; but they are pretty secretive, and will not give you a direct answer as to whether or not they like your ideas (Kwintessential, 2012). Decisions to those types of issues are made very slowly and you will probably not be present when these decisions are made; making it more difficult to defend your position (Kwintessential, 2012). First impressions are the most important thing to remember when meeting anybody there the first time; or even the second time. Not only are decisions reached slowly but business can react slowly (Kwintessential, 2012). Being from a fast moving world and moving on to one that is a bit slower than your normal pace would most definitely be a challenge.
Their culture consists of many different variations as far as ethnic background, but there are two official languages that are present in Luxembourg and those are French and German (old German) (Kwintessential, 2012). Their religion consists of mostly Roman Catholics, but they have an array of different people coexisting in this country (Kwintessential, 2012). They do not appreciate impatient people and this could also be a challenge (Kwintessential, 2012). If you are not used to their slow paced business environment, it could become increasingly tricky to get on anybody’s good side. It is a good idea to be very careful and prudent in your approach in the business sense (Kwintessential, 2012). When meeting somebody for the first time it is important to give a handshake, it is also important any time after that during the process of greeting to give a handshake (Kwintessential, 2012).
Legal and Political system
There is a superior court of Justice and this superior court consists of the court of cassation, court of appeal, and public prosecution (Luxembourg, 2012). If you are looking at it from a higher level there are actually two superior courts. One of those courts are located in Luxembourg and the other one in Diekirch (Luxembourg, 2012). The court of cassation consists of five different judges and their job consists of hearing cases that are seeking overturn (Luxembourg, 2012). The court of appeal consists of hearing civil judges, commercial, and criminal cases (Luxembourg, 2012). A decision was made by the court for human rights in the late nineties that the council of state could no longer serve as both the legislative advisory body and administrative court (Luxembourg, 2012).
Government and the private sector
There is an intervention into the private sector that is currently facing a large amount of criticisms and that is the time savings account (Claverie, Ariane 2011). This came into effect in the year 2010, and even though it is already been a bigger part of the Luxembourg social partners it will be new to the financial sector (Claverie, Ariane 2011). Its insertion will bring on a whole new world as far as relations in the labor department and is still facing criticism to this day (Claverie, Ariane 2011). Its purpose is to foster a social state and leave funding for those who want to save for vacations or to just save money in general (Claverie, Ariane 2011). The criticism stems from the fact that the funding will come from a person’s annual pay; which to the critics makes no sense since its formulation is to help save money (Claverie, Ariane 2011). Also they feel that there will have to be a separate insurance policy attached to it, which also costs money, in order to protect the account from bankruptcy and theft (Claverie, Ariane 2011). Staff representatives also had very little notice, so this is looking a lot like a desperate attempt to have some sort of attachment to everybody’s money and time (Claverie, Ariane 2011). They are currently trying to find a way to ease the framework of the intervention into the sector so that those who already have similar plans as an individual or a company don’t have to fully participate in the time savings account (Claverie, Ariane 2011).
History and the Economy
After years and years, four hundred to be exact, of being controlled by other European nations, Luxembourg was granted the Grand duchy in the year 1815 (Luxembourg, 2012). Luxembourg is now recognized as independent and this has done a lot for their economic growth in terms of agriculture, technology and banking (Luxembourg, 2012). Their growth rate is 3.0%, their exchange rate translates to $1.31, and their inflation rate is 3.5% (Luxembourg, 2012). The banking industry is the most dominant portion of their economy. The two trailing not far behind are their agriculture and their technology systems. Those two continue to grow and at a fairly large rate with agriculture occupying 24% (Luxembourg, 2012). The economy has grown consistently and gradually and has become an improvement over the unemployment rate which now stands at 5.5%; better than most countries. The difference between this country and most other countries is that they have found their niche within their economy. Plenty of people will always be unemployed, a lot of times by choice, so a five percent rate is very good and it is all due to the fact that the banks have taken over and made all of its counterparts a much larger success.
International Trade and government involvement
The Luxembourg economy lives to the western European standards and as I have mentioned before the economy is well attuned to the financial sector (Lowtax, 2012). There are a wide range of professions available but the costs are high and may become even more of a problem for the people of Luxembourg at some point but for now it is financially dominated; that’s where it should stay because it is working for them (Lowtax, 2012). The laws on trade are very inexpensive for the financial market because that is the one that has become the most successful and dominant; the banks have brought so many different success stories from so many different reasons. It would make sense that the government gives leniency as far as expenses to a market that is making their economy stronger and more culturally diverse. Trade mostly takes place with European countries such as: Germany, Belgium and France; they receive 60% of the exports and provide 80% of the imports (Lowtax, 2012). The government introduced the EU savings tax directive which, in some cases, lessens attractiveness to investors (Lowtax, 2012). With this directive they are less influenced by other countries to share information; and for some this is the best and only way to grow a company is to share (Lowtax, 2012).
Presence in this country/multi lingual system
Luxembourg’s economy is very strong because of their financial institutions and has grown and will continue to grow. With more and more investors as a result of their financial environment this will allow for other trades to take place because their economy will be stable enough to do so. My presence in this country will do nothing but make my institution grow and build more jobs for people looking to get into the financial market; either people from that country or from other countries. There is a large amount of cultural diversion in this country because of all of the investors and all of the jobs that are being raked in. There are a plethora of different languages in this country and they are introduced during the school years so that prospective business men can communicate more effectively with other colleagues. There are several different languages present and being taught at this very moment in this country; and they are slowly all becoming the official languages of the country. There is no real official language in a country like this there is only history but this cultural diversion will create history along with the multi lingual languages. The languages are: English, French, German, Spanish, Italian, and Portuguese (Koff, Harlan 2012).
Choice of location
I chose this location because this has become a great place for investors and prospective financial gurus to start a business and/or make a bigger success out of their already happening business. The financial market in this country is largely dominant over anything else in their economy and has created many jobs and hopeful areas to do business in and people to do business with because the country is very culturally diverse. It has improved their economy and continues to be a success because of all the banks and financial gurus present within this country; it is a safe landing spot for people in the financial market.
I feel like with any venture overseas one would have to learn quite a bit about the country that they will be occupying. With this one it seems fairly simple to have to learn at least one of the languages and it’s a sure bet that quite a few would know our language. This country has become a breeding ground for financial investors and I feel I would do well to expand my banking in this country. There are regulations and guidelines that people aren’t completely happy about or may second guess it; but if you look at all the other success stories coexisting together in the country it seems pretty worth it to have some minor hoops to jump through.
Adas, Rima (2011). Banking In Luxembourg. Retrieved from, http://www.pwc.lu/en/banking/docs/pwc-banking-luxembourg.pdf
Claverie, Ariane (2011). Time Savings Account For Luxembourg Private Sector Workers. Retrieved from, http://www.eurofound.europa.eu/eiro/2011/03/articles/lu1103021i.htm
Koff, Harlan (2012). Regional Integration And Social Cohesion. Retrieved from, http://wwwen.uni.lu/research/flshase/european_governance_programme/collections/regional_integration_and_social_cohesion
Lowtax (2012). Luxembourg: Country And Foreign Investment Regiment. Retrieved from, http://www.lowtax.net/lowtax/html/jlxcfir.html
Luxembourg (2012). Luxembourg – Judicial System Encyclopedia Of The Nations. Retrieved from, https://campus.ctuonline.edu/pages/MainFrame.aspx?ContentFrame=/Default.aspx
Luxembourg (2012). U.S. Department Of State: Diplomacy In Action. Retrieved from, http://www.state.gov/r/pa/ei/bgn/3182.htm
Pastrana, Jinna (2011). Top Ten Recent Compliance Developments In Latin America. Retrieved from, http://www.acc.com/legalresources/publications/topten/Latin-American-Compliance.cfm