The Netherlands presents compelling reasons for Middle East businesses to expand into the European market: a strategic location, a multicultural population, an outward-facing business ecosystem, and market access to 26 other countries. For a truly successful market entry, however, a comprehensive plan is necessary, encompassing the selection of the most suitable company structure, tailoring the brand for different audiences, and complying with various industry regulations.
In this article, learn how brands from the Middle East can enter the Dutch market successfully.
Market entry options
The Netherlands offers a variety of opportunities for market entry. Successful market entry is more achievable through the selection of the most appropriate strategy. Options include franchising, establishing a subsidiary, or setting up a joint venture. Each has its benefits and drawbacks.
1. Franchising
In franchising, Gulf brands can enter the Dutch market rapidly through their franchisees. The franchisee uses your brand name and business model to run the operation and pays you royalties.
Pros:
- Lower investment (the franchisee bears the brunt of setup costs).
- Potentially faster market penetration.
- The local partners handle the day-to-day running.
Cons:
- Less control over the brand.
- Requires strong legal agreements in place to protect trademarks.
- Franchisees may request adaptations.
Best for: Established brands in food & beverage, retail, or services looking for rapid growth without heavy operational involvement.
Subsidiary (BV): full ownership & control
A Dutch subsidiary (Besloten Vennootschap or BV) gives a firm control over all its operations, branding, and profits. This is ideal if you want full autonomy for your venture.
Pros:
- Total ownership and decision-making.
- More straightforward to implement branding strategies.
- More flexibility in long-term planning.
Cons:
- High setup costs
- Requires compliance with Dutch labor laws.
- Slower market entry due to administrative processes and being ‘new’ in the market.
Best suited for: businesses with strong financial backing that seek and have the power to control their European operations.
Joint venture: joint risk & the benefits of local expertise
A joint venture (JV) involves partnering with a Dutch entity to share resources, risk, and profits. This model makes the most out of local market knowledge while splitting investment costs.
Pros:
- Access to a partner’s network, knowledge and customer base.
- Shared financial and operational risks.
- A quicker adaptation to Dutch culture.
Cons:
- Potential conflicts about decision-making.
- It requires a well-structured JV agreement to prevent disputes.
- Profit-sharing reduces the overall earnings.
Best suited for: those companies entering complex industries (e.g., logistics or manufacturing) where local expertise is vital.
Which option is best for your business?
The ability to choose different legal entities in the Netherlands gives foreign entrepreneurs the optimal level of control and risk for their Netherlands business venture. The choice of legal structure rests on the industry, plans for growth, and employee hiring.
Need help deciding? Book a free consultation with our market entry specialists to tailor the best strategy for your brand.
Brand adaptation for the Dutch market
During the transition, adaptation may be required on multiple fronts. For example, a mere rendition of the brand name will rarely suffice; the company may want to consider options that are more culturally focused. In the examples given, “Al Ain” might well be changed to “Green Oasis”; “Emirates Gold” could become “Dutch Gold.”
Caveats to legalities
Besides the rules prescribed, the company must comply with EU and national rules: labels must be in Dutch with full information on all food products, and in packaging design, only sustainable materials can be permitted under the laws concerning sustainability.
Understanding consumer behavior
In entering a new market, a deep insight into consumer preferences is required. Choices made by Dutch consumers differ from those made by UAE consumers and indeed those from the greater middle ewast region in many respects. The purchase intent of a brand for an Emirati is often considered on luxury and status; the Dutch are more pragmatic, focusing on value for money.
Payment preferences further highlight these contrasts: consumers in the Netherlands favor digital payments over cash. Though on the decline, the preference for cash still exists in most middle eastern countries.
Regulatory compliance
Compliance with local regulations is key to a successful market entry. Check out these important areas for compliance:
Labor laws: Dutch labor laws require that employment contracts be written in either the English or Dutch language and conform to minimum wage standards (€2,070 gross per month in 2024). Standard benefits are also expected, including more than twenty days of vacation, sick leave, and pension contributions. Typically, failure to register with the Dutch Chamber of Commerce (KVK) before hiring may result in a costly penalty; therefore, it is in an employer’s best interest to take care of all legal and administrative requirements beforehand.
Food safety: If importing, the Netherlands has strict requirements for imported food items. Imports must meet European health and safety requirements. These include accountability and the ability to trace the food and all ingredients throughout the stages of production, processing, and distribution.
Book a Free Brand Localization Audit
Are you looking to establish your business successfully in the Netherlands? A free consultation with a market entry expert awaits.
