Luxembourg 2.0 : towards the new technology highway?

I have been leaving in Luxembourg for more than 5 years now and am regularly surprised by the country adaptation capabilities. It moved from heavy steel and coal industries specialization to a major banking and finance center in less than few decades... And now I think that challenged by the new EU regulation regarding tax evasion,... Luxembourg is moving again!

Luxembourg 2.0 ?

Many did maybe not notice, but for the past few months, Luxembourg seems to have been moving towards new technology at fast speed. Indeed in last than 2 years, many major Internet brands have decided to establish their European Headquarters in the "Grand Duché".

After AOL, Microsoft, Apple iTunes is now operating from Luxembourg (having one of the lowest VAT rate on ecommerce (15%) is off course never a bad thing to sell music for one euro a song). Most people would be surprised but world's fastest growing service for Internet communication (Skype)  is a Luxembourgish based company too!
Few days ago, the world's largest online retailer, Amazon has just confirmed that it will finally settle its European Headquarters in Luxembourg after a year of waiting. “Amazon will also be bringing all of its sales and service activities and well as the operational units for its European websites.” (Source : Paperjam).

These big names should not hide the fact that several high success smaller high tech companies are booming in Luxembourg too. 10 minutes from my office, Xavier Buck is managing one of the booming domain names registering company called Eurodns.
In the south of the country (ok ok, it just means a 25 minutes drive from Luxembourg center ;-) ), in Esch/Alzette, Jamendo is developing an innovative platform to promote unknown artists on the P2P networks whith creative commons licenses. The service already promote more than 500 albums (for 250 000 downloads)! Never heard off them? Strangely France Minister Nicolas Sarkozy has just invited Laurent Kratz (Jamendo managing Director) with people like Jean-Jacques Goldman, Calogero or Pascal Nègre to discuss about the music industry future.

An entrepreneurial friendly environment

As managing director of Culture-Buzz (buzz, blog and viral marketing agency) and VanksenMedia (interactive agency), I personally won’t deny that Luxembourg has provided us with attractive conditions to develop our business:
- Political stability and interesting fiscal opportunities
- The very central location of the country within Europe
But two of the more motivating for us have definitely been :
- The highly skilled and multilingual workforce (it is common to have employee speaking up to 6 languages here!)
- A highly efficient and fast administration! (ok administration is still administration but common! Luxembourg has really work hard to make formalities so much easier and less time consuming than in some other countries. Face it I prefer dedicating my energy to winning more business and serving my customers rather that to fight against useless bureaucraty…)

Still some challenges to overcome

But to conclude and to avoid giving an overoptimistic view of the country, Luxembourg is still facing few challenges:
- If many companies locate themselves in Luxembourg, it does not always mean real activity there (many are only here for financial reasons and does not really employ many people here)
- International connections!!!! Located in the middle of France, Germany, Belgium, Luxembourg really needs to improve connections to its neighbors head cities. I cannot wait for the TGV to come in 2007 (train journeys to Paris will decrease from 4 hours to 2h15!!!). What about a TGV between Luxembourg and Brussels or Frankfort?
- Individual Internet connection price is still prohibitive compared to France or Germany (I personally pay more than 90 euros a months for a 2mo connection)! What about free wifi or wimax available within the whole country? The country is so small it would really be technically possible and just imagine about the positive impact for the country marketing: the only country in the world with free wifi available everywhere!

Maybe am I wrong because to focused on the Internet industry (banks are definitely not going to leave anytime soon)… But if ever you hear about “Luxembourg 2.0” in the future, don’t be surprise ;-) !

More info :
- Amazon confirms installation of European Headquarters in Luxembourg
- L'empreinte des géants de l'e-commerce