Wallonia, the francophone region of Belgium, long ago recognised the need to revitalise its post-industrial economy. In 2005, with a nod to the post-war bailout of Europe by the US government, Wallonia devised and began to implement what it calls 'the Marshall Plan'.

This was an ambitious scheme for the promotion of public-private sector synergies in a number of high-value-added industry sectors. The aim was to facilitate the region’s export capacity, while encouraging new partners and investor companies, some of whom may otherwise have overlooked Wallonia’s potential. Were they to have, it would not have been for the lack of a strong story to tell.

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Belgium has a complex history (and perhaps a complex future). But a part of that tapestry is Wallonia’s identity as one of Europe’s major hubs in the industrial age. The steel mills and factories are not yet silent: Arcelor Mittal remains an important investor and employer in the region. But it has been long understood that Wallonia needs to transpose its educated workforce, strategic location and techno-industrial heritage into a new paradigm of industry if it is to thrive and compete in the 21st century and beyond. This means taking advantage of its not inconsiderable assets.

AWEX support

Among Wallonia's assets is its proximity to other important European markets, including the rest of Belgium (Flanders), Germany, Luxembourg, France, the Netherlands and the UK. Karelle Lambert, business development manager of AWEX, Wallonia’s investment and export promotion agency, points out that companies based in Belgium have access to some 60 million consumers within a four-hour road journey.

Belgian workers also possess some of the best language skills in Europe (and some of the highest productivity rates). But a clincher, arguably, is the support that AWEX is prepared to give to investors and exporters in its efforts to secure the region’s continued exposure and competitiveness.

One of the most important industry groupings for the region is the pharmaceuticals and life sciences sector, worth about €3bn per annum to Wallonia, and employing nearly 15,000 people. A number of world-renowned players in the industry have established major operations in Wallonia, including vaccine manufacturer GSK Biologicals, biopharmaceutical and medical device maker Baxter, and proton therapy provider IBA.

In part this is due to the efforts of BioWin, what AWEX calls a 'health competitiveness cluster', which facilitates partnerships between about 500 players in the private sector, in academia and at research centres. But BioWin also invests: to date, providing funding worth more than €72m to 21 projects.

KytoZyme success story

One recipient of BioWin funding is KytoZyme; 10 years old and a spin-off of a project initiated within the department of botany at the University of Liège. The company’s products are the result of innovative research into biopolymers extracted from fungi.

KytoZyme’s main product is what it calls KiOmedicine, an ultra-pure chitosan produced from a non-animal source, which is being formulated for a number of applications including wound treatment, biosurgery, vaccine and drug delivery, and ophthalmology. But the company sees opportunities outside of the medical sector, for example, in cosmetics, and food and beverage companies. One application of the chitosan is as a stabilising agent in wines. 

In relative terms, KytoZyme is a small company (the majority of shares are in the hands of the Meldagh family, a local Walloon dynasty). Its first plant was up and running in 2006; it employs 50 people, 12 of whom are involved in production. It also boasts a strong in-house regulatory affairs team and its first significant sales were achieved last year. They were in the region of €600,000, but its portfolio of customers is more than 100 strong.

The government of Wallonia has invested about €3m in KytoZyme. According to the company’s head of marketing, Sandrine Gautier, the fact that its core competence coincides with one of the clusters that AWEX is keen to support has not in any way altered its strategy. She says: “Without the funding that the government has provided, and the networking opportunities, it is doubtful that we would be where we are today.”

Eurogentec happy

KytoZyme is at the larger end of the small to medium-sized enterprise spectrum. Good manufacturing practice contract manufacturer Eurogentec, on the other hand, with annual sales in 2010 in excess of €50m and employing about 400 people, is a very differently sized company. Eurogentec has three manufacturing sites outside Belgium; two in the US and one in Japan. And in October of last year, Japanese chemicals manufacturer Kaneka acquired a majority share in the company, having previously indicated an interest in its bioproducts division.

But, says head of sales Pascal Bolon, the company’s current location on the outskirts of Liège remains the optimum site for its headquarters. “Why Liège? There are a number of reasons. One is the stability of employees. There simply aren’t the same employment opportunities here as there are in some other locations, so job hopping isn’t an option. Also, we’re able to draw on the resources and technicians available at the nearby University of Liège, which provides many of our PhDs,” he says.

Another quality on Mr Bolon's list of pluses: Wallonia has coined the phrase ‘biologistics’ to refer to the capacity of its airports, in particular Liège airport, to handle volatile pharmaceutical and biological products, as well as raw materials (it is also the European hub of freight carrier TNT Express).

Outsiders welcomes

Eurogentec and KytoZyme are, of course, Walloon companies in origin. But there are good reasons for foreign companies to look at the region. These include land availability and investment incentives worth up to 35% on the purchase of land and buildings, new equipment and non-tangible investments, including patents, licenses and technical expertise.

But the Walloons will say that affinity with their aspiration to succeed will determine whether potential investors are prepared to offer something to a region that almost certainly has something to offer them.

The cost of this report was underwritten by the Wallonia Export & Investment Agency. Reporting and editing were carried out independently by fDi