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denmark – gateway to the baltic sea region

VIEWS: 29 PAGES: 76

  • pg 1
									denmark
– gateway to
the baltic sea region
ministry of foreign affairs




denmark
– gateway to
the baltic sea region
contents




           1    Increased Integration Results
                in Increased Growth and Prosperity                  2

            2   The vibrant growth area                             7

            3   A Strong Region in Europe                          11

            4   arguments in favour of denmark                     14

            5   The Air Traffic Junction of Northern Europe        17

            6   Here things work with clockwork precision          20

            7   Catching Up with Microsoft                         23

            8   One of europe’s largest knowledge centres          26

            9   The port at the gateway to the baltic sea          29

           10   Fixed link with the knowledge community            32

           11   Northern Europe’s largest cruise harbour           34

           12   The City of Congresses                             37

           13   Danish assistance
                to the countries around the baltic sea             38

           14   Time for Action                                    41

           15   Good russian connections                           44

           16   DANISH hi-tech worth 100 million euro              48

           17   Let’s go west                                      50

           18   Russia’s self-confidence is growing                52

           19   Let the Good Times Roll                            54

           20   From Waste of Time to Waste Control                58

           21   Successful technology transfer                     62

           22   Danish history in the baltic – dream and reality   66
denmark
– gateway to
the baltic sea region




The development towards one, united Europe
has been much faster than most of us dared to
hope just a few years ago. The way has been
paved for the accession to the EU of up to ten
countries from Central and Eastern Europe, and
when this takes place we can really start out on a
new epoch of European history. Denmark has
consistently worked to promote this development
through close dialogue with the new democracies
and by extensive political and commercial coop-
eration with our neighbouring countries around
the Baltic Sea.
                                                      Sound. This has given further impetus to the
Denmark was, in fact, one of the first countries to   development of the Øresund region as a
take the initiative to create a new region in         ‘Medicon Valley’, where Danish and foreign
Europe – the Baltic Sea region. We regard the         companies within, for instance, the bio-tech and
Baltic Sea region as a growth area with enormous      bio-medical industries can find an inspiring envi-
potential. Already today the Baltic Sea area is one   ronment for research and development.
of the fastest-growing regions in the world, and
with a population base of 80 million people it rep-   Other companies use Denmark as a bridgehead
resents a considerable proportion of the new          to the other Nordic countries, the Baltic states,
Europe.                                               the St Petersburg region, Poland and
                                                      Kaliningrad. A central location in Northern
The Government aims to position Denmark cen-          Europe, an efficient infrastructure, a well-educat-
trally in that development. Our location at the       ed population, a flexible labour market and rela-
gateway to the Baltic Sea gives us many obvious       tively low rental costs in the capital,
advantages, especially in relation to creating a      Copenhagen, are among the reasons why for-
platform for activities in the countries around the   eign companies choose to establish themselves
Baltic Sea. Copenhagen Airport is the largest in      in Denmark. Read more about it in this publica-
the region, with services to 110 other airports all   tion. Welcome to Denmark.
over the world. There are 26 daily departures to
Poland and the Baltic States alone.
                                                      Anders Fogh Rasmussen
Two years ago, Denmark and Sweden were able           Prime Minister
to open the fixed road and rail link across the       Copenhagen, August 2002
Increased Integration Results
in Increased Growth and Prosperity




Interview with the Danish Minister for               able to reform. Denmark must actively support
Foreign Affairs, Per Stig Møller, about              this development.”
Denmark’s visions for the development of
the Baltic Sea Region and an enlarged EU.            What are your visions for the development of
                                                     the Baltic Sea region?
What are Denmark’s ambitions and opportuni-
ties for influencing the development in the Baltic   “Apart from becoming a region with rapid eco-
Sea region politically?                              nomic growth, it may also develop into a strong
                                                     political unit, which can help influence the future
“Denmark has both ambitions and opportunities        development of Europe and the EU because of
for influencing the development. As the only         our proximity to Russia, Poland and the Baltic
Nordic member of both the EU and NATO, we            States. There are many grand visions for the
have played a key role in the development since      development of the Baltic Sea region. One of
the late 1980s, when the region broke up.            my predecessors, Uffe Ellemann-Jensen, has for-
Denmark gave considerable support to the inde-       mulated the vision of the Baltic Sea region,
pendence of the Baltic States. Since then, we        including North Western Russia, as the most
have been one of the largest contributors to the     dynamic growth region in Europe. I agree with
reconstruction of these countries and their inte-    this aim. We have the opportunities, and we are
gration towards the West. We have persistently       on the way.
advocated and practically supported the EU and
NATO membership of the Baltic States and             As Minister, it is my task to work for the actual
Poland.                                              realisation of the visions. We must improve the
                                                     framework conditions for private businesses.
Concurrently with the enlargement of the EU          Experience from the Baltic States and Poland
and NATO, it is important to develop our rela-       shows that the private sector is the best driving
tions with Russia. President Putin has clearly       force for the integration. It is the task of the
chosen a course aimed at integrating Russia into     governments – individually and collectively – to
Western – and especially European – political        remove obstacles holding up the development.
and economic structures. We must exploit the         Much remains to be done. For instance, it is sad
major opportunities this choice offers both          to see that the border control works badly in
Russia and Europe. Russia’s integration into         parts of the region because too much time is
Europe must happen through internal reforms in       wasted waiting. Such problems must be solved.
the country, but it gives hope for the future that   In the coming years, we must work to facilitate
everything suggests Russia is both willing and       the integration.




2
                                                                                                1
Denmark – Gateway to the Baltic Sea region




As my vision – and my agenda – I will therefore     instance, turn the ‘hit list’ of our main trading
primarily emphasise co-operation between the        partners upside down in ten years?
states concerning the changes and reforms
needed to realise the visions. The Council of the   “When Estonia, Latvia, Lithuania, Poland and the
Baltic States can make a big contribution here.     other candidate countries from Central and
In future, it will become an important forum of     Eastern Europe join the EU, it will obviously have
dialogue and actual co-operation between the        a great economic effect on both them and us.
EU and Russia around common regional tasks.”        The new member states will be integrated into
                                                    the internal market and have free access to the
Ten years ago, few people believed that the for-    world’s largest market. This will increase invest-
mer Eastern Bloc countries could become mem-        ments in the countries and their export opportu-
bers of the EU and NATO. Now it may happen          nities. At the same time, the new member states
with effect from 2004. When change is so rapid,     will benefit from subsidies from the EU structural
how may this part of Europe conceivably have        funds and the common agricultural policy. The
developed in ten years – in 2012?                   enlargement will therefore result in increased
                                                    growth and prosperity in the new member
“I believe the next decade will consolidate the     states.
major advances that have taken place. The new
EU members will need to exert themselves to         The enlargement will also lead to appreciable
continue the major social changes that are          economic benefits for Denmark. It will become
underway and which will accelerate after EU         easier to trade with and invest in the new mem-
accession. Especially as regards Russia, we must    ber states, and the growing economic activity in
hope for political stability as the basis of the    the countries after they join will affect the
practical implementation of the important           demand, also for Danish-produced goods. It is
reforms currently being agreed. My prediction       likely that the candidate countries will increas-
for 2012 is therefore that we will have an inte-    ingly require goods and services from Danish
grated region consisting of stable and function-    areas of strength, such as food, industrial and
ing democracies. The welfare gap between East       agricultural supplies, environment and energy.
and West will be considerably narrower.”
                                                    An analysis carried out by the Danish Export
Which specific benefits can the new candidate       Council shows a potential for the expansion of
countries expect from EU membership?                Danish exports to the candidate countries cur-
Economic growth, of course, but how quickly,        rently negotiating for membership by up to 600
and what will it mean to a country like Denmark     per cent after the enlargement. Exports to these
that new markets are developed? Could it, for       countries might thus exceed the export to the




                                                                                                        3
Increased Integration Results in Increased Growth and Prosperity




Nordic countries. That will affect the ‘hit list’ of   EU and Russia will be over 2000 km long. That
our major trading partners significantly.”             provides many opportunities for forging links of
                                                       hitherto unknown intensity with Russia. In the
What will becoming a neighbour to the EU mean          coming years, we must work to ensure that
for Russia? What can the EU and Denmark do             Russia is given optimum opportunities to benefit
to forge closer links with Russia?                     from the enlargement. Some advantages are
                                                       obvious. Russian companies will find that cus-
“In a few years, the shared border between the         toms duties on their local markets decline after




"We believe free mobility of labour is a right within the EU co-operation
and should benefit all member states", says Per Stig Møller.




4
                                                                                                1
Denmark – Gateway to the Baltic Sea region




the enlargement. They will discover that they          The EU and Russia have jointly defined a project
are gaining access to a far larger market. If          entitled The Common European Economic Zone.
Russia is able to take maximum advantage of            The aim is the alignment of laws, regulations,
these opportunities, the enlargement will lead to      norms and standards so that the companies in
genuine normalisation of the relationship              reality operate under equal conditions with the
between the EU and Russia, and Russia will             opportunity to sell to a very large market. We
become a well-functioning part of the new              have also defined free trade as an objective. It
Europe.                                                will take time, but the objective is clear.”

The co-operation in the Baltic Sea region can          Have Danish companies taken the new markets
become a catalyst for Russia’s integration into        sufficiently seriously?
Europe. Around the Baltic Sea, Russia and the
EU are in close touch with each other. This is         “Definitely. That is, for instance, demonstrated
where companies, organisations and individuals         by the marked increase in Danish exports to the
discover the value of close contacts across the        Baltic States and Poland in recent years. Today it
borders. From here, the rings will spread              constitutes around 3 per cent of the total Danish
throughout Russia and throughout the EU.               export of goods. It is mainly directed towards
                                                       the Polish market. The export to these countries
The EU has developed a policy, The Nordic              has more than quadrupled during the 1990s.
Dimension, which focuses on co-operation with          We can be very satisfied with the efforts the
Russia in our region. The Nordic Dimension is a        Danish companies have already made. Of
framework for joint definition of priorities and co-   course it is important that the companies contin-
ordination to develop the region. It is natural to     ue their efforts on the new markets and exploit
see The Nordic Dimension as complementary to           the potential provided by the enlargement.”
the EU enlargement. It is a tool to ensure that
the benefits of the enlargement do not stop at         Denmark is one of the few EU countries which
the Russian border. The Nordic Dimension will          have already agreed to open their labour mar-
be used to create a coherent region around the         kets to manpower from the new applicant coun-
Baltic Sea. It will be developed into a policy with    tries at once. Why is that?
genuine impact for the promotion of integration
in the Baltic Sea region.                              “It is correct that Denmark, together with the
                                                       Netherlands, Ireland and Sweden, has chosen to
The next important step for Russia is member-          open its labour market to manpower from the
ship of the World Trade Organisation, WTO.             day the candidate countries join. Other EU
This will further improve the basis for trade and      countries want to defer the opening of their
investments in the Baltic Sea region.                  labour markets for a few years. We believe free



                                                                                                        5
Increased Integration Results in Increased Growth and Prosperity




mobility of labour is a right within the EU co-         ment by the ten Central and Eastern European
operation and should benefit all member states.         countries is expected to be very limited.
It is a clear principle that EU citizens are entitled   According to the EU Commission, an annual
to live in another EU country if they are               immigration to the current EU states in the order
employed there or otherwise able to support             of 70,000-150,000 people is expected in the first
themselves. It is an important signal to the pop-       years after an enlargement by ten countries.
ulations of the candidate countries that EU coun-       This is not a large figure seen in relation to a
tries open their labour markets from day one of         total labour force of 170 million in the current EU
the membership, so that we do not have A and B          and 220 million in the enlarged EU. Moreover,
members. Denmark hopes that more EU coun-               the annual immigration is definitely expected to
tries will take the same step as us.”                   decrease considerably within a few years. The
                                                        immigration that does happen will in fact have a
The integration debate has characterised this           positive economic effect on the current EU
spring in both Denmark and some other                   countries. The Commission points out that the
European countries. New EU member states                immigration will help to reduce the anticipated
may increase the pressure on Denmark’s ability          shortage of labour in the EU countries as a result
to integrate immigrants from other parts of the         of the increased average age of the populations.
world. To what extent can and should Denmark
and other EU countries be ready to handle               However, some countries and regions will
increased immigration from the East alongside           receive considerably more immigrants than oth-
the existing immigration from the South?                ers. Among other things, this will depend on
                                                        the EU country’s proximity to the new member
“The fear of immigration from new member                states and on its culture and language. Germany
states is not new. It already existed in the debate     and to some extent Austria are expected to
before 2 October 1972, when many feared that a          receive most immigrants. The Commission’s
yes to the EEC would result in mass immigration         analysis does not show any pressure of immigra-
from Sicily. What happened? The same fear               tion on Denmark. This is also the experience
existed before earlier enlargements of the EU –         from the earlier enlargements by the Southern
Greece, Spain and Portugal – and experience             European countries. Today fewer than 3,000
showed that it was completely unfounded. On             Spanish, Portuguese and Greek citizens live in
the contrary, a number of Greek, Spanish and            Denmark.”
Portuguese citizens returned to their native coun-
tries as a result of the enlargement’s positive
effect on the domestic economy.
The immigration of labour following the enlarge-




6
The Vibrant Growth Area

                                                                                                2
“The Baltic Sea region can become one of              bution to the development of the Baltic Sea
the most dynamic and prosperous regions               region. His many honorary offices include the
in the world. But it will require a little gene-      chairmanship of the influential Baltic Develop-
rosity from the EU”, says Uffe Ellemann-              ment Forum, which he co-founded. Since 1999,
Jensen, Chairman of the Baltic Develop-               this non-profit forum has gradually evolved into
ment Forum.                                           an umbrella organisation, integrating the many
                                                      separate initiatives of the region and making
Denmark’s involvement with the Baltic States          them visible to the surrounding world.
began soon after the fall of the Berlin Wall, when
as one of the first representatives of a Western      For the Baltic Development Forum, fast integra-
government Uffe Ellemann-Jensen, who was              tion into the international community is an
Danish Foreign Minister from 1982 to 1993,            inescapable condition of continued growth and
established close contacts with the Baltic States     prosperity in the region. The Baltic
striving to break away from the Soviet Union. It      Development Forum puts the region on the
was a historic window of opportunity and swift        global map by developing strong external links
action was needed. Vital security policy interests    through extensive international networking, cre-
were at stake for Denmark.                            ating new partnerships across sectors and bor-
                                                      ders. It co-operates closely with the World
“Look at a map. Denmark’s central position at         Economic Forum and the Council of the Baltic
the gateway to the Baltic Sea clearly shows why       Sea States, which were the role models for the
the region is crucial to us. If there is stability,   foundation of the Baltic Development Forum.
peace and trade, we are comfortable in
Denmark. If there is discord and unrest, we are
uncomfortable,” says Ellemann-Jensen. These           Summit in Copenhagen
first contacts became the start of a co-operation
where Denmark sees it as its role to assist the       The fulcrum of the Baltic Development Forum is
young states in developing democratic institu-        the annual summit, which this year will take
tions and to support, for instance, training and      place in Copenhagen during the Danish EU
business development.                                 Presidency. Several heads of government as
                                                      well as 400 other leading politicians, business
                                                      people, researchers and opinion-formers are
The Baltic Development Forum                          expected to gather for the summit to define and
                                                      discuss five key priorities to make the Baltic Sea
Uffe Ellemann-Jensen has left Danish politics,        region the vibrant commercial, cultural and
allowing him time for an even more active contri-     scientific growth centre of the North by 2005.




                                                                                                           7
The Vibrant Growth Area




The expectations are considerable and for good        all the countries applying for accession to the EU
reasons. In the words of Uffe Ellemann-Jensen,        is smaller than that of the Netherlands, and fol-
the last summit in St Petersburg in late              lowing the rule of thumb that 4 per cent of GDP
September 2001 – the third of its kind – became       will be transferred to them, we are talking
a milestone in the efforts of the Baltic              peanuts! It is necessary to show a little generosi-
Development Forum to break down barriers              ty and a little imagination and, moreover, get
between the countries in the Baltic Sea region.       across that it is not a zero-sum game, but a win-
                                                      win situation that is being created. We need to
“The summit took place immediately after 11           make our populations understand that,” says
September, and partly for that reason all parties     Uffe Ellemann-Jensen.
at the meeting showed great co-operativeness,
good will and understanding of the importance         The EU enlargement will also benefit the coun-
of international co-operation. Our success in         tries bordering on the EU.
submitting the important issues in the region to
debate surpassed our wildest expectations, both       “In this connection, it is gratifying to see that the
the delicate ones such as the question of Kalinin-    Danish Government has indicated its intention to
grad’s future and the border and customs issues,      develop the Nordic Dimension, the originally
as well as the harmonisation of rules and all the     Finnish political initiative, during its EU
other things which we in the old EU countries         Presidency. The Nordic Dimension ensures
take for granted,” says Uffe Ellemann-Jensen.         actual co-operation with obvious advantages for
                                                      Russia.”

Show a Little Generosity
                                                      Growth Interruption
For years, Uffe Ellemann-Jensen has been one of       Not Serious
the warmest advocates of EU membership for
the three Baltic States and Poland. He puts it        In recent years, the record growth rates in the
very simply: the future of the region – especially    Baltic States and Poland have dropped slightly.
in terms of security policy – depends on the can-     At the same time, new figures from the
didate countries around the Baltic Sea being          European Bank for Reconstruction and
invited to the EU party. Not with a limp hand-        Development show signs of stagnation in the
shake, but with a warm welcome.                       number of foreign investments. But this does
                                                      not worry Ellemann-Jensen. “Of course the stag-
“If we consider the size of the task, it is not in-   nation in global growth is also felt here. That is
superable. The total gross domestic product of        quite natural. It is more important to note that




8
                                                                                                  2
Denmark – Gateway to the Baltic Sea Region




the growth rates remain far above the European
average. So although things have slowed down
for a while, the countries are still gaining on us,
and the moment they join the EU the process
will be stimulated further.”

“We have witnessed explosive growth in the
countries’ trade with Denmark, Sweden, Finland,
Norway and Germany. Just look what it has
meant to Poland. The five million richest Poles –
i.e. as many as the total population of Denmark
– now have the same average spending power
as the Danes. If I look back ten years and con-
sider what they have in fact achieved, I become
very optimistic.”



Obstacles Must Be Removed

As a board member of several companies in
Estonia, Latvia, Lithuania and Poland, Ellemann-
Jensen follows the daily life of the companies at
floor level. “Occasionally you tear your hair in
despair at the problems you encounter. But then
at the same time you are astonished how far
they have actually got within a short time - and
this leaves you an optimist. Training has begun
to attract a new generation of good managers
into businesses and administrative positions.”        “If we consider the size of the task, it is not insu-
                                                      perable. The total gross domestic product of all
“The frustrations the companies encounter are         the countries applying for accession to the EU is
related to judicial systems that do not function      smaller than that of the Netherlands, and follow-
optimally and borders that are hard to cross.         ing the rule of thumb that 4 per cent of GDP will
Just think how much money we spend on build-          be transferred to them, we are talking peanuts!”
ing bridges, roads and airports to save a few         says Uffe Ellemann-Jensen.




                                                                                                          9
The Vibrant Growth Area




minutes. At the same time goods are held up in     However, Uffe Ellemann-Jensen regards nation-
customs for days or weeks. What if a fraction of   alist self-sufficiency as an insidious danger which
the road and bridge expenditure was invested in    may slow down the development. “It is danger-
easier routines. This is another area where EU     ous to continue to imagine we can exist as a
membership offers huge opportunities.”             nation by closing the door and building walls
                                                   against the rest of the world and believe we can
                                                   at the same time derive all the advantages from
Unnecessary Fear                                   belonging to the international community with
of the Enlargement                                 free trade and increased security - that we can
                                                   cut ourselves off completely and decide every-
Uffe Ellemann-Jensen dismisses the concern         thing ourselves. Such introversion is very dan-
some groups in Europe feel at the prospect that    gerous. Not only in Denmark, but also in many
the EU enlargement will make it easier to move     other European countries.”¯
production to the other side of the Baltic Sea,
where wages are lower.

“I am a board member of shipyards in the Baltic
countries as well as the former East Germany.
They are major sub-contractors of the Danish
Lindø Shipyard. If Lindø had not spread its pro-
duction around the region to the places where
expertise is available at a reasonable cost, it
would have had to close long ago due to the
strong competition from Korean yards.”

“The textile industry is another good example.
To a large extent, the Danish textile industry
moved first to Poland and later to the Baltic
States and Ukraine. Has the price been Danish
jobs? No, quite the reverse. It has saved the
Danish textile industry, whose design and mar-
keting are still based in Denmark and which geo-
graphically is now in the front row for a number
of new markets with rapidly increasing buying
power.”




10
A Strong Region in Europe

                                                                                                 3
Group CEO Thorleif Krarup regards the                 “Our interest in the three Baltic States should be
Baltic countries as a new strong region in            seen in two ways: primarily of course as three
Europe – and a region with great growth               independent states where we have to be because
potential.                                            our clients need us there, but also as an observa-
                                                      tion post towards the Russian market”.
The Group CEO of the largest Nordic finance
group, Nordea, is convinced that the Baltic Sea       With 40 million inhabitants, Poland offers major
region will become one of the strongest in Europe.    potential for Nordea and the Danish corporate
“In a Europe where the importance of the nation       sector generally.
state is decreasing, strong regions will play an
increasingly important role. In Nordea we believe     “We already do local business in Poland and in
that in a few years one of the strongest regions      the longer term that market might become as
will be the countries around the Baltic”, says        important to us as any of the four Nordic coun-
Krarup. He belongs to the senior management of        tries. Like in Finland, the collapse of the Russian
Nordea, which does banking and insurance              economy has had an impact on Poland. There
business in most countries by the Baltic Sea.         are many indications that Poland can recover as
Currently the four Nordic countries are Nordea’s      Finland has done and then we will have an
main markets.                                         extremely interesting neighbour a few hours’
                                                      journey from Copenhagen”.
“But we entertain great hopes of Poland and the
three Baltic States, which constitute a high-growth   Thorleif Krarup describes the Baltic Sea region
area with double the growth rates of Western          as one of the most interesting in all of Europe
Europe. Along with the Baltic States, the Nordic      and an area with good opportunities for compa-
countries, Poland and Northern Germany consti-        nies based in Denmark.
tute our domestic market”, says Krarup.
                                                      “Relatively close to us we have an area with a
                                                      growth rate three times higher than our own.
1,200 Nordea staff in Poland                          For that reason alone the Baltic States and
                                                      Poland should be of great interest to Danish
Nordea is represented in all the countries by the     companies. Now is the time to gain a foothold
Baltic States and already 1,200 of its 40,000 staff   and lay the foundations of a good and lucrative
are based in Poland. Nordea’s definition of its       market in a few years”.
domestic market by the Baltic States covers 70
million people.




                                                                                                         11
A Strong Region in Europe




Thorleif Krarup, Group CEO of Nordea, describes the Baltic Sea region as one
of the most interesting in all of Europe and an area with good opportunities for
companies based in Denmark.




12
                                                                                                 3
Denmark – Gateway to the Baltic Sea region




Good opportunities                                    “Given the central location of Copenhagen,
in Denmark                                            many companies could establish themselves with
                                                      part of their production in the Baltic States or
However, in Krarup’s opinion Danish companies         Poland and specialist functions and senior man-
have not so far paid as much attention to the         agement in Denmark”.
Baltic States and Poland as they should.
                                                      “Senior executives in Denmark will discover that
“Danish companies should be far more interest-        particularly the Baltic States are very well dis-
ed in the eastern part of the Baltic Sea region.      posed towards Danes and other Nordic peoples”.
There are many Danish activities underway, but
the Finns and Swedes have shown a far greater         Thorleif Krarup can also imagine this model
understanding of the need to act now. The             being used by other international companies
explanation is partly the Danish corporate struc-     wanting to set up in business in the Baltic Sea
ture, where the primary sector companies are          region.
not as large or strong as in Finland and Sweden.
On the other hand, Danish companies are strong        “It is an obvious option, for instance, to use
within the service sector and the need for service    Copenhagen as the base for further expansion in
businesses will increase markedly in step with        the Baltic Sea region. A lot has happened in
the development of the Baltic communities”.           Copenhagen in recent years with improvements
                                                      to the infrastructure, and the Danish labour mar-
“But this is the time to jump on the bandwagon        ket is very flexible. Denmark is one of the few
and gain a foothold. In a few years it may be too     countries in Europe where it is possible to adapt
expensive and too late and it would be a pity to      the workforce to the demand relatively quickly.
miss the boat, for precisely companies based in       In many other countries it is expensive and very
Denmark have extremely good opportunities in          difficult to lay off people even if it may be neces-
the area”.                                            sary for the survival of the company.

                                                      “Among Copenhagen’s other qualities, the rela-
A flexible                                            tively low commercial rent is also a great advan-
Danish labour market                                  tage, and of course the Danes are often singled
                                                      out for their language qualifications, though that
The challenge for the foreign companies estab-        is a characteristic we share with Norwegians,
lishing themselves in the new market economies in     Finns and Swedes”.
the Baltic States and Poland is often finding local
management with market economy experience.




                                                                                                        13
arguments in favour of denmark




Overall the Danish Trade Council has five                already established a European or Nordic head
weighty arguments in favour of foreign                   office here”, says Birger Riis-Jørgensen.
companies settling in Denmark: the country
has a stable economy, easy access to high-
growth markets, no currency restrictions, a              Rent six times lower
well-functioning infrastructure and lots of
well-trained labour.                                     The Danish Trade Council and in particular its
                                                         investment promotion organisation, Invest in
“Denmark – the land of e-opportunity” is how             Denmark, target their marketing towards com-
the country is described by the Danish Trade             panies within four sectors: IT/tele-electronics,
Council, an integrated part of the Ministry of           food, life sciences and companies seeking access
Foreign Affairs. And with some justification. An         to Northern European markets. Within these sec-
analysis prepared by the international account-          tors you will find regional clusters, e.g. wireless
ancy and consultancy firm PriceWaterhouse-               telecommunication in Northern Jutland and
Coopers shows that Copenhagen offers opti-               Proteomics on Funen. Invest in Denmark’s aim is
mum conditions for e-business companies.                 to attract foreign investors and companies to
Among other things, PriceWaterhouseCoopers               Denmark. Most recently the American biotech
has examined staff availability and staff skills,        giant Biogen has been brought to Denmark. Bio-
labour flexibility, infrastructure, attractiveness for   gen is one of the five largest bio-technological
international staff and general business environ-        companies in the world. The company is planning
ment. The study places Copenhagen as number              production and research in a new plant near Hille-
one compared with six other large European               rød, some 30 kilometres north of Copenhagen.
cities: Dublin, London, Manchester, Amsterdam,           Here 400 bio-technological staff will be working
Berlin and Stockholm.                                    from 2005 when the plant is expected to be oper-
                                                         ational. This is one of the largest foreign invest-
The conclusions of the study fit the picture State       ments in bio-technology in Denmark, but Biogen’s
Secretary, Ambassador Birger Riis-Jørgensen of           reasons for choosing Denmark are not unusual.
the Danish Trade Council normally draws for
foreign companies wanting to establish them-             “To a great extent it is the same features that the
selves in a Northern European city .                     various high-technology industries emphasise”,
                                                         says Birger Riis-Jørgensen.
“The study points to a number of strengths
about Copenhagen and Denmark also men-                   Among other things, the companies point to an
tioned by the foreign companies which have               ideal geographic location in relation to the rest




14
                                                                                   4
Denmark – Gateway to the Baltic Sea Region




“We target our marketing towards companies in four sectors: IT/tele-electronics,
food, life sciences and companies seeking access to Northern European mar-
kets”, says State Secretary, Birger Riis-Jørgensen of the Danish Trade Council.




                                                                                   15
arguments in favour of denmark




of Scandinavia and the Baltic countries, a well-       very good marketing possibilities within a
functioning infrastructure as regards information      decade”, says Birger Riis-Jørgensen.
technology, road grid and distribution, a very         “The central position of Copenhagen and the
centrally located airport, easy access to well-        hub status of its airport mean that we have no
trained staff and relatively cheap square metres       hesitation in recommending that companies with
for commercial buildings.                              extensive manual production use Denmark as a
                                                       bridgehead to establish themselves in the Baltic
“Of course it is of some importance that it is so      Sea region – typically Poland or one of the three
cheap to rent office space in Denmark – the cost       Baltic States. It is an obvious choice to manage
per square metre in Copenhagen is almost six           the activities in the Baltic Sea region from
times less than in London”.                            Copenhagen and take advantage of the low pro-
                                                       duction costs a few hours’ flight from the city”.

A flexible labour market
                                                       Access from Denmark to
Denmark is also singled out for its low inflation,     100 million customers
low company tax, the advantageous depreciation
rules and a very flexible labour market. In contrast   Copenhagen Airport’s international hub status is
to most other European countries, it is easy to        another reason for settling in Copenhagen often
adapt the workforce to the demand when                 mentioned to Birger Riis-Jørgensen.
required.
                                                       “In the first instance, our marketing is targeted
Denmark’s central location in relation to a market     towards attracting businesses within the four
of 100 million people is a very important argu-        main sectors typically requiring well-trained
ment for the companies which have settled here.        labour. This is where Denmark has a lot to offer
                                                       in an international context. Companies within IT,
“Within easy reach of Copenhagen there is a            pharmaceuticals, food and services obtain a cre-
market of almost 100 million people, many of           ative and international environment with many
whom have great purchasing power. The other            competent colleagues and access to a research
countries constitute a high-growth area with           environment of high international standard”.




16
The Air Traffic Junction
of Northern Europe
                                                                                               5
Copenhagen Airport is the principal airport          There are currently 12 daily flights from
in Northern Europe, with direct flights to           Copenhagen to the three Baltic States, 12 to
110 other airports around the world. There           Poland, 2 to St. Petersburg and more than 20 to
are 26 daily departures from Copenhagen              Stockholm on weekdays.
to the Baltic States and Poland alone.
                                                     Copenhagen Airport is the main airport for the
With its geographic location in the Baltic Sea       Scandinavian countries’ joint airline, SAS, which
region and the rest of Europe, Copenhagen            has more traffic in and out of Copenhagen than
Airport is a natural centre for air traffic over     any of the other 60 scheduled airlines using the
Northern Europe. It is the “Northern European        airport. Every year 18-19 million passengers pass
hub” for many overseas airlines, and transit land-   through Copenhagen Airport and half of these
ing in Copenhagen is also a regular part of the      are transfer passengers changing planes at
schedule on many European routes.                    Copenhagen Airport.

“The explanation is our geographical location        “It is something of a record to have so many
and the large capacity of the airport”, says the     transfer passengers. London Heathrow is also
CEO of Copenhagen Airports A/S, Niels Boserup.       a major transfer airport, but only 30 per cent of
The airport is quoted on the Danish Stock            their passengers are in transit”.
Exchange and is one of Denmark’s largest places
of work with a total of 18,000 people employed       This tendency is even more marked for air freight.
by the airport and the many different airlines.      Almost 70 per cent of the goods arriving at the
                                                     airport by plane comprise transfer freight.

14 flights to the Baltic States                      For Niels Boserup this simply emphasises that
                                                     location is everything when the airlines choose
Niels Boserup defines the natural catchment area     the airports they want to use as hubs.
for Copenhagen Airport as the Nordic countries,
the Baltic States, all of Poland, and Northern       “Of course we would like to take part of the credit
Germany, a total of 40-50 million people.            by pointing to the many investments we have
                                                     made in the airport in recent years. They have
“We have several examples of passengers from         won at many international accolades, among
Germany choosing to fly via Copenhagen when          other things as a well-planned, straightforward
travelling to destinations in Poland, quite simply   airport with a high level of service and a pleasant
because the many flights to and from Copen-          atmosphere. But the main reason is the location”,
hagen make it quicker”, says Boserup.                says Boserup.




                                                                                                         17
The Air Traffic Junction of Northern Europe




A popular airport                                      rail link to Malmö, which now makes it possible
                                                       to travel by car or train to Sweden without hav-
Although just eight kilometres from the centre of      ing to sail. The train service to the airport also
Copenhagen, the airport has a capacity corre-          means that all regional trains terminate there and
sponding to the very largest in Europe. Under          that trains run between the airport and Copen-
normal conditions the three runways can handle         hagen city every ten minutes during rush hour.
83 departures or arrivals an hour and this figure      The Swedish fast train X-2000 has daily services
can be increased to 91. On the busiest days            from Copenhagen Airport right through to
there are over 1,000 departures and arrivals.          Stockholm and in a few years a new under-
                                                       ground Metro will open in Copenhagen, includ-
Market research confirms that the airport and its      ing a track to the airport. Most recently the
location are among the main competitive advan-         airport itself masterminded the building of
tages of Copenhagen when foreign companies             Denmark’s first Hilton Hotel less than 100
decide to establish themselves in Denmark.             metres from the departure lounge, and over the
                                                       next ten years over USD 1 billion will be invest-
“Several surveys list the airport as the main          ed in the further development of Copenhagen
argument, for with the increase in air traffic it is   Airport.
extremely important to be located in a place with
many air services so that customers, collabora-        Copenhagen Airport has direct flights to a total
tors and staff can travel around the world quickly     of 110 airports around the world, including 7 in
and simply. Many direct flights mean that it is        Denmark, 27 in the Nordic countries, 60 in the
often possible to travel out and back on the           rest of Europe and 18 outside of Europe.
same day, which is naturally important to many
business people”.



Investments of USD 1 billion

In the efforts to expand Copenhagen Airport and
maintain its status as the most important in
Northern Europe, Niels Boserup has benefited
from the investments made in the vicinity of the
airport in recent years, especially the road and




18
                                                                                           5
Denmark – Gateway to the Baltic Sea region




“Location is everything when the airlines choose the airports they want to use as hubs”,
says Niels Boserup, CEO Copenhagen Airports.




                                                                                           19
H e r e T h i n g s Wo r k
with Clockwork Precision




A stable Danish labour market with few                European network than any other express dis-
strikes, a central location in Europe and an          tributor.
effective infrastructure are some of the
reasons why DHL World Wide Express has                “In contrast to some other European countries
located its North European headquarters in            which tend to be politically unstable, with fre-
Copenhagen.                                           quent changes of government, Denmark is
                                                      known for its stable political climate and solid
It would be difficult for a company like DHL,         economy, with only moderate fluctuations in
which handles several hundred thousand orders         exchange rates and interest levels. It was also
a year, to operate in a disorganised environment.     very important to us that the relations between
Chaos has to be avoided on any account, for the       Danish employer and employee organisations
customers must be able to rely on the consign-        are exceptionally good, which has resulted in a
ments reaching the agreed place at the correct        minimum of strikes and labour market conflicts
time. So when DHL World Wide Express choos-           generally”, says David Spottiswood.
es to locate a distribution centre in a country, it
always carefully analyses the political and eco-
nomic situation. In other words, it is a question     Smooth Transport
of finding a location where things work with
clockwork precision.                                  Denmark’s location between Scandinavia and
                                                      continental Europe is a great advantage for many
“Stability was one of the main reasons why we         companies. Billions of Danish kroner have been
chose to locate our North European distribution       invested in extending and modernising roads,
centre in Denmark”, says David Spottiswood,           bridges and airports. And the traffic on
DHL’s Director in Denmark, where the company          Denmark’s roads is not as heavy as in many
has 11 branches around the country.                   other European countries. The fixed link over
                                                      the Sound between Copenhagen and Sweden
                                                      and the extensive renovation and expansion of
A Minimum of Strikes                                  Copenhagen Airport have also contributed to
                                                      the smooth, fast and reliable transport in the
DHL World Wide Express is a market leader             region. Copenhagen Airport is one of the five
within door-to-door express deliveries through-       largest in Europe. From Copenhagen you can fly
out the world with a global network of 36 distri-     to all major European cities in less than three
bution centres, the ‘hubs’. With some 28,000          hours. And the airport conditions are particular-
staff in almost 880 service centres in 70             ly important to a company like DHL.
European countries, DHL operates a larger




20
                                                                                      6
Denmark – Gateway to the Baltic Sea Region




“It is very important to us that the relations between Danish employer and employee
organisations are exceptionally good. This has resulted in a minimum of strikes and
labour market conflicts generally”, says David Spottiswood, DHL.




                                                                                      21
H e r e T h i n g s Wo r k w i t h C l o c k w o r k P r e c i s i o n




“We have extremely good experiences in our                               Copenhagen University Hospital, Herlev
collaboration with Copenhagen Airport – espe-                            Hospital and Hvidovre Hospital, all university
cially with regard to the demands we have made                           hospitals conducting clinical trials.
in relation to our office and airport facilities.
That also applies to Scandinavian Airline System
(SAS), which handles a considerable part of our
freight with flexibility and co-operativeness,”
says David Spottiswood.



Collaboration with Hospitals

Denmark is a country with a highly developed
knowledge infrastructure, for instance within
information technology and biotechnology. That
is a reason for other kinds of companies to
choose to establish themselves in Denmark.
One example is Genmab PLC. On the basis of an
American technology licence, Genmab develops
human antibodies used to treat life-threatening
or disabling diseases such as cancer, arthritis and
psoriasis. A few years ago, Lisa N. Drakemann,
Genmab’s Managing Director, visited various
European countries to find the best place to
establish Genmab. She chose Denmark.

“Denmark was undoubtedly the best location for
a company like Genmab. A country with good
conditions for success. There is easy access to
capital and the bio-pharmaceutical infrastructure
enables us to conduct clinical trials quickly and
efficiently,” says Lisa N. Drakemann.

Genmab PLC collaborates with, among others,
three hospitals in the Copenhagen area –




22
Catching Up with Microsoft

                                                                                                7
The Baltic States have come far in the              “Over the last three years we have registered an
change-over to a market economy. That is            explosive growth in our sales to the Baltic markets”.
also observed by Microsoft, whose Nordic            Microsoft is used to two-figure growth rates
and Baltic Director is based in Copenhagen.         elsewhere in the world, but the prospects for
                                                    the Baltic States include anticipated growth rates
“The three Baltic States constitute a potential     of up to 50 per cent annually for Microsoft.
market the size of Sweden. And we take a market     And that is not exactly common in the IT world,
that size very seriously!” The Copenhagen based     not even for Microsoft. Moreover, the sales
Jens Moberg is Regional Director of Microsoft       suffer from pirate copying, which is rife in the
with responsibility for the Baltic and the Nordic   former East Bloc countries. Microsoft estimates
markets – except the Danish. From his base in       that almost 80 per cent of the programmes used
Microsoft’s offices in Copenhagen, he commutes      commercially in the Baltic States are pirated
between Copenhagen and the capitals of the six      copies. Among private users the figure is even
countries.                                          higher. In most Western European countries
                                                    the proportion of pirated copies is around 25-30
“It is incredibly easy to get to and from all six   per cent .
capitals when living in Copenhagen. I can nor-
mally travel out and back on the same day and       “This is by no means always done in bad faith,
in that way turn up quickly if my presence is       but is often due to ignorance. Many are not aware
required at short notice”, says Moberg.             of the copyright laws, the concept of intellectual
                                                    rights and the restrictions on the right to use and
                                                    copy software. But when that sort of thing is
Big opportunities for                               brought under better control, the Baltic States
software companies                                  will offer very big opportunities for companies
                                                    in our field”.
Since the early 1990s Microsoft has sold its
products through local dealers in the Baltic        “All three countries have extremely good pro-
States and today it is represented with its own     grammers, engineers and technicians, and I can
office in Riga, Latvia. In collaboration with the   easily envisage Danish companies deriving great
local Latvian management, Jens Moberg here          benefits from using the cheap labour in those
plans the contact with major customers, among       countries for developing software”, says Mo-
them the new central administrations in the         berg.
Baltic States, which frequently use Microsoft
products.




                                                                                                       23
Catching Up with Microsoft




“It is incredibly easy to get to and from all six capitals when living in Copenhagen.
I can normally travel out and back on the same day and in that way turn up quickly if my
presence is required at short notice”, says Jens Moberg, Regional Director of Microsoft.




24
                                                                                                  7
Denmark – Gateway to the Baltic Sea Region




Technical assistance                                   Jens Moberg registers a great degree of enthusi-
from the Nordic countries                              asm and will to develop new businesses and
                                                       exploit information technology to the full in the
Microsoft has to a marked extent allocated the         three Baltic States.
software development tasks to parts of the world
where the skills level is high and the costs low,      “They are very eager to catch up and their inven-
such as India.                                         tiveness and initiative are on a level with our part
                                                       of the Baltic Sea region”, says Moberg.
“We have no current plans to enter the Baltic
States in that way, but it is certainly an area        Currently Microsoft has a score of employees in
which meets many of the requirements for our           the Riga office. Although overall control and
doing so”.                                             management come from Denmark, local repre-
                                                       sentation is important.
For the time being Microsoft is busy developing
local language versions of the most popular            “Ultimately it is a matter of credibility. You have
office programs such as the word processing            to be personally represented in a market to be
program Word, the spreadsheet program Excel            taken seriously. The customer must feel sure that
and the presentation program Power Point.              we will turn up if an acute problem arises. The
                                                       local presence is extremely important”.
Moberg considers the Microsoft collaboration in
the Nordic countries a great help in developing
the markets in the three Baltic States.

“We already have good collaboration in the
Nordic countries and it is easy to send a techni-
cian from Denmark to Tallinn, Riga or Vilnius to
help with a specific task”.

“In this connection it is important that we think
in the same way in Denmark and the Baltic
States. We have the same kind of mentality and
humour and Danes are very popular in all three
countries. It is easy for us to make ourselves heard
in both the commercial and political worlds”.




                                                                                                        25
One of Europe’s Largest
Knowledge Centres




The Øresund region has highly developed               Third Strongest Region in
collaboration between hospitals, universi-            Europe within Life Science
ties and the corporate sector. The region is
also called ‘Medicon Valley’ to emphasise its         In just six years, the universities, hospitals and
focus on medical research and education.              research-heavy companies have succeeded in
                                                      making the Øresund region and Medicon Valley
The Øresund region is one of Europe’s largest         the third strongest life science region (pharma-
knowledge centres, focusing on both research          ceutical, medico-technical and biotechnological
and education. The area boasts 12 universities        enterprises) in Europe – after London and Paris.
and institutions of higher education with             Since 1996, between six and 16 new companies
130,000 students. Here the universities collabo-      have moved to the region every year, so that its
rate with the corporate sector and the countries’     total turnover per inhabitant now exceeds that of
public institutions to develop a knowledge base.      the American biotech industry. Since 1996, the
The strong focus on medical research and indus-       number of investors establishing themselves in
try has given the region the nickname ‘Medicon        the region in order to provide venture capital to
Valley’ as a counterpart to California’s IT strong-   the biotech industry has grown from eight to 32.
hold, Silicon Valley.                                 And the number of patents taken out by compa-
                                                      nies in the region has more than tripled since
The collaboration between industry and research       1990. It is not just the medical and biotechno-
was intensified in 1997, when the leading play-       logical companies in the region that benefit from
ers in the two countries established the organisa-    the favourable growth conditions. Other
tion called Medicon Valley Academy, whose             research-heavy companies, such as the food, IT
purpose is to strengthen the region’s internation-    and telecommunications industries also show
al position within medicine. Conferences,             significant growth – helped on their way by the
research and marketing are just some of its activ-    new science parks in the region.
ities. Alongside the integration of Denmark and
Sweden in the Øresund region, new science             A central dynamo in this work is the Danish-
parks are sprouting on either side of the             Swedish network, Medicon Valley Academy,
Øresund, including IDEON in Lund and Malmö,           which promotes increased integration, research,
CAT in Roskilde and the research centre in            education and business development among the
Hørsholm, north of Copenhagen. The spe-               life science companies in the region. Medicon
cialised centres are engaged in, for instance,        Valley Academy was established in 1997 as a
biotechnology, medical technology and pharma-         joint venture project by the EU and 11 of the
ceutical industry, food, IT and telecommunica-        universities in the Øresund region. Since 1999,
tions, all key capacities of the Øresund region.      Medicon Valley Academy has had the status of a




26
                                                                                             8
Denmark – Gateway to the Baltic Sea Region




member organisation and today has 240 mem-           ‘The fine results have been achieved on the
bers, including the major life science players,      background of a focus since the mid-1990s on
ranging from private companies, institutions of      close collaboration between private and public
higher education, hospitals and science parks to     companies and institutions around education,
professional and industrial bodies.                  research and business development that is




“Since 1996, about a dozen new companies have moved to the region every year, so that its total
turnover per inhabitant now exceeds that of the American biotech industry,” says the Director of
Medicon Valley Academy, Bent Christensen.




                                                                                                      27
One of Europe’s Largest Knowledge Centres




unique in an international context,’ says the        can exchange experiences, enter into partner-
Director of Medicon Valley Academy, Bent             ships and benefit from each others’ education,
Christensen.                                         research and qualifications,” says the ideas man
                                                     behind ScanBalt, Director of Research at Novo
“Medicon Valley Academy was created with the         Nordisk, Professor Børge Diderichsen.
primary purpose of securing a continued supply
of sufficient and up-to-date ‘brain capital’ and     From the start, the new network has received
qualifications for the life science industry, sci-   considerable support from, among, others the
ence parks, educational institutions and hospitals   European Commission, the Council of the Baltic
in the region. Our tasks include ensuring the        Sea States and the Nordic Council. ScanBalt in
exchange of knowledge and staff, co-ordinating       Biotech unites life science players from all the
various educational and research projects, pro-      Nordic countries – Norway, Iceland, Denmark,
viding recommendations to the politicians and        Sweden and Finland – as well as North Germany,
organising conferences and seminars. And we          Poland, Estonia, Latvia, Lithuania and the St
always work with a focus on both the Danish and      Petersburg region. The principal task of the new
Swedish sides of the Sound,” says Bent Chris-        network will be to promote mobility and integra-
tensen.                                              tion in Scandinavia and the Baltic Sea region.
                                                     This will among other things be done by dissem-
                                                     inating contacts and ‘brain capital’ in the form of
ScanBalt Extends the Limits                          students and research among the members of
o f M e d i c o n Va l l e y                         the network.

In 2001, the network organisation ScanBalt in        With the assistance of Medicon Valley Academy,
Biotech was established. This represented a fur-     the newly established secretariat of ScanBalt is
ther step towards making Scandinavia and the         currently mapping the region’s qualifications,
Baltic Sea area the leading life science region in   existing collaboration and funding opportunities
Europe. The vision is that in ten years the region   within life science. The more specific and visible
will be able to match the world leaders in this      initiatives in ScanBalt’s melting pot include
field with regard to research and economic           ‘Baltic Brain Circulation’, the exchange of
growth.                                              researchers and the promotion of mobility of
                                                     labour within Scandinavia and the Baltic Sea
“ScanBalt in Biotech is an international network     region.
of the national networks already existing in
Scandinavia and the Baltic Sea region. A forum
where the parties – across national borders –




28
The Port at the Gateway
to the Baltic Sea
                                                                                                 9
Copenhagen Malmö Port is integrated in a              ried on to companies and consumers than any-
large transport chain, with trains, lorries           where else in the region.
and planes. More freight is carried on to
companies and consumers than anywhere                 “In fact our task is to be a logistical hub and pro-
else in the region.                                   vide the fastest, most cost-effective and environ-
                                                      mentally sound service to the business commu-
Two ports in two different countries merged into      nity,” says Lars Karlsson, who is also a board
one company, one organisation and one legal           member of the Baltic Port Organisation – a net-
unit. There are very few such companies in the        work consisting of all ports around the Baltic
world, but the Port of Copenhagen on the              Sea, where the purpose of the collaboration is to
Danish side and the Port of Malmö on the              develop the expertise in the ports and streamline
Swedish side have merged into the Danish-             the transport between the countries in the
Swedish company CMP – Copenhagen Malmö                region.
Port. The merger happened in 2001 as a crucial
step towards the many new opportunities in the
Øresund region. And the decision to merge is          Cars and Steel
an obvious move at a time when the openness           to the Baltic Sea Region
towards the Central and Eastern European coun-
tries is increasing day by day.                       Multinational corporations have discovered CMP
                                                      and the well-developed infrastructure in the
“As a result of our geographic location, we feel      Øresund area with the fixed link over the Sound,
like a springboard to a local area with 3.5 million   the well-functioning road and rail network,
inhabitants and more than 50,000 companies.           Copenhagen International Airport in Kastrup and
But at the same time we are also the gateway to       Sturup in Malmö. That is a major reason why
even larger markets in the Baltic area. And here      Toyota Motor Europe has chosen to locate a new
we are talking about more than 100 million peo-       distribution centre in the Øresund region.
ple”, Lars Karlsson, Managing Director of CMP,        Toyota’s turnover of almost 80,000 cars a year
points out.                                           results in the docking of an ocean-going car ves-
                                                      sel and five or six feeder vessels a week.
Most people regard a port as a place where
ships simply dock to take on or discharge cargo.      “We are now centralising the import of new cars
That notion can safely be revised. In the case of     in the Øresund region, where both the fixed link
CMP, the harbours on either side of the Sound         over the Sound and CMP are important factors.
are integrated in a large-scale transport chain –     With its new modern facilities, terminals and har-
trains, lorries, planes – and more freight is car-    bours, CMP can receive our large car vessels.




                                                                                                       29
The Port at the Gateway to the Baltic Sea




“We feel like a springboard to a local area with 3.5 million inhabitants and more than 50,000
companies. But we are also the gateway to even larger markets in the Baltic area. And here
we are talking about some 100 million people”, says Lars Karlsson, Director of Copenhagen
Malmö Port.




30
                                                                                             9
Denmark – Gateway to the Baltic Sea Region




The location is perfect for Toyota. From here we      ‘We have an extensive network in the North Sea,
can cover the Nordic and Baltic markets,” says        including Esbjerg, and have established a land
René Mouritsen, Public Relations Manager for          bridge between Esbjerg and Copenhagen. And
Toyota Denmark.                                       if you draw a straight line from Copenhagen
                                                      through to Esbjerg and extend it at both ends,
The Spanish steel giant Acerinox, the world’s         you clearly see CMP’s role as a gateway
third largest producer of stainless steel, has also   between east and west,’ says Peder Gellert
chosen CMP as the gateway to the Baltic Sea           Pedersen, Deputy Director of DFDS Tor Line.
region. The Spanish steel is shipped to the
region. CMP is responsible for discharge, stor-
age and further distribution by lorry and train to
the Nordic countries, the Baltic States, Poland
and Russia.



New Passenger Terminal
in Copenhagen

Today large oil tankers can enter CMP’s fuel har-
bour, which can receive vessels with a freight of
up to 70,000 tons and a draught of 12.5 metres.
The deepening of the Port of Malmö was partly
undertaken in response to the increasing oil
transport from Russia. The transit oil is shipped
from Baltic ports in smaller vessels and
reshipped in CMP, before the oil typically is
shipped to the USA in larger vessels. A new pas-
senger terminal is being constructed in
Copenhagen and expected to be completed in
April 2004. Once it is ready, DFDS Seaways will
lease the terminal for its passenger routes to
Poland and Norway. And for the shipping com-
pany DFDS Tor Line, CMP is an important hub
for its transport of freight to and from the Baltic
Sea.




                                                                                                   31
Fixed link with the
knowledge community




The Øresund region is one of the most
important regions in Europe in terms of
environment and economic growth.

The link across the Sound between Copenhagen
in Denmark and Malmö in southern Sweden is not
merely a physical connection across the water. In
many ways it is a symbol of Northern Europe’s
new dynamic knowledge region – a region
where two cultures have joined forces in cross-
frontier integration in order to create synergy
and cooperation and a strong common future for
the local populations.

The Øresund region has some 3.5 million inhabi-
tants distributed within a radius of around 100
kilometres. The Danish capital Copenhagen
dominates the area with its 1.2 million inhabi-
tants. Malmö is the third-largest city in Sweden
with 260,000 inhabitants. Centrally located
between the two cities is Copenhagen Airport.

As a result of massive investments in the inte-
grated regional traffic, travelling times to both
regional and international destinations have
been drastically reduced. It is easy to live on one
side of the Sound and work on the other. The
contact between the cities, the people and the
business communities is intensifying concurrent-
ly with increased cross-Sound activity.
More and more foreign companies choose to
establish themselves in the Øresund region.
In Copenhagen the secretariat, Copenhagen
Capacity, has been set up to help them get started
and advise on investment opportunities.




32
                                                                                10
Denmark – Gateway to the Baltic Sea region




                    The governments of the two countries want to create the best possible condi-
                    tions for both public and private transport. That is why the fixed link between
                    Copenhagen and Malmö – the symbol of the Øresund region – consists of a
                    double-track railway and a four-lane motorway. The solution is a unique
                    combination of a bridge, a tunnel and an artificial island. The high-level bridge
                    has a 490 metre span between 204 metre high pylons. It takes about ten
                    minutes by car and five by train to cover the distance of almost 16 kilometres.
                    The fixed link has been designed to ensure efficient traffic management across
                    the Sound without harming the marine environment or the water flow.
Northern Europe’s
largest cruise harbour




Denmark has the most international tourism            cruise passengers regard the noise level in the
environment in the North. The international           city, the price level in the shops and the opening
cruise visitors are part of the explanation.          hours as the most negative aspects of Copen-
                                                      hagen.
Throughout the summer almost 200 cruise liners
arrive in Copenhagen harbour. The liners carry        “Tourism in Denmark of course embraces much
over 175,000 passengers, who have an opportu-         more than the cruise passengers, but it is largely
nity to visit Copenhagen and go shopping in the       the same features that other foreign tourists find
traffic-free environment of the pedestrianised        attractive about Denmark”, says Sandahl Sørensen.
streets around Strøget. The majority are from
the USA and England, but there are also Italians,     Denmark’s total income from foreign tourists is
Germans, Spaniards and Canadians among the            twice as large as in the other Nordic countries
cruise passengers, most of whom have chosen a         combined.
cruise of the Baltic. Copenhagen is a regular port
of call for many of the cruise liners entering the    “And fortunately we are in the happy situation
Baltic Sea where they spend 10-14 days visiting       that the turnover is distributed throughout the
ports in Poland, the Baltic States, St Petersburg,    entire country”.
Finland and Sweden.

“Copenhagen harbour has become home port to a         Tivoli is not enough
number of cruise companies. That is because the
harbour offers such a good standard of service,       The total turnover from tourists in Denmark is
but also to a high degree because foreigners feel     DKK 46 billion (6.1 billion euro), of which DKK
welcome in Denmark”, says the CEO of the              9.5 billion (1.3 billion euro) goes to Copenhagen.
Danish Tourist Board, Lars Sandahl Sørensen.          The rest is distributed across the country with,
                                                      for instance, the beaches along the west coast of
                                                      Jutland as a natural attraction. But interest in
Twice as many tourists                                Copenhagen has been increasing in recent years.
                                                      Apart from the positive comments about the
Research undertaken by the national Danish            Danes, Sandahl Sørensen explains this by the
Tourist Board shows that it is above all the Danes’   renewed interest in the entire Baltic Sea region
manner, their language qualifications, the atmos-     following the opening up of the former Eastern
phere of the city and the number of restaurants       Europe, with Denmark and Copenhagen consti-
which attract the cruise passengers to Copen-         tuting a natural gateway.
hagen. The same surveys also show that the




34
                                                                               11
Denmark – Gateway to the Baltic Sea region




“Denmark is a natural starting point for travel into the Baltic Sea region”,
says the CEO of the Danish Tourist Board, Lars Sandahl Sørensen.




                                                                                35
northern europe’s largest cruise harbour




“A North European column or region is develop-        Big city with low crime rate
ing in international tourism, where the Baltic area
can attract visitors from all over the world. We      Lars Sandahl Sørensen recognises that the positive
have a well-functioning airport with international    development of cruise tourism experienced by
hub status for many airlines and the geographic       especially Copenhagen over the last 5-10 years
location in itself makes Denmark a natural centre     should also be seen in connection with the devel-
of this development”.                                 opment in Poland and the three Baltic States.

The days are past when foreign tourists could be      “The countries around the Baltic Sea are getting
lured to Denmark with tales of the Little Mermaid     increasingly good at looking after international
and national costumes.                                tourists expecting a high standard of service.
                                                      That benefits Copenhagen owing to its central
“These days foreign tourists expect far more          location by the entrance to the Baltic Sea and
experiences than they did 15-20 years ago.            the airport. Denmark is a natural starting point
Today the holiday has to have an element of           for that development”.
adventure. People want to experience some-
thing special”.                                       “Denmark’s strength is, furthermore, that foreign-
                                                      ers feel they can walk about safely in Danish
“The entire Baltic Sea region is an exciting area     cities such as Copenhagen, Århus, Odense and
where they can peep into an unfamiliar world of       Aalborg – and we have many experiences to
monarchies – including the Danish – and formerly      offer”.
closed East Bloc countries and at the same time
experience a cultural life and natural scenery
which many people are not used to at home”.

“In addition, city breaks are becoming increas-
ingly popular with tourists - and today
Copenhagen is a major city break destination in
Northern Europe, probably because it offers
many different experiences, even within walking
distance: theatres, gourmet restaurants, beauti-
ful architecture, numerous shopping opportuni-
ties, etc.”




36
The City of Congresses

                                                                                   12
Copenhagen is among the ten most popular
congress cities in the world, according to the
Union of International Associations.

Together with cities such as Paris, Brussels,
Berlin and London, Copenhagen is among the
world’s ten most popular cities for international
congresses. Copenhagen hosts around 100
international congresses annually and over the
past few years the figure has increased rapidly.
The city’s central location in Europe, the short
distance from the airport to the centre, a clean
environment and low crime rate are some of the
explanations.

“We host a growing number of medical and IT
congresses because Copenhagen and the                “Thanks to new hotel and congress facilities
Øresund region are internationally known for         Copenhagen together with Malmö will be able to
their dynamic research and science environ-          accept even more of the very large congresses”,
ments within these two areas”, says the              says Lars Bernhard Jørgensen.
Administrative Director of the organisation
Wonderful Copenhagen, Lars Bernhard
Jørgensen. Wonderful Copenhagen is the official      “The international congresses contribute greatly
convention and visitors’ bureau of Greater           to increasing Copenhagen’s fund of knowledge.
Copenhagen, dealing with all aspects of Copen-       And with the establishment of the fixed link from
hagen as a tourist and travel destination.           Copenhagen to Sweden, Copenhagen together
                                                     with Malmö will be able to accept even more of
The international congresses are a considerable      the very large congresses with over 4,000
asset to the research and development environ-       participants”.
ments in the Øresund region. The thousands of
research and development people coming to the        Lars Bernhard Jørgensen also mentions the
city every year to take part in an international     opening of the Hilton and Marriott hotels as an
congress help make Copenhagen a lively and           indication that Copenhagen has moved into the
very attractive location for research institutions   major league as regards its ability to attract
and science-heavy companies.                         foreign congresses.




                                                                                                    37
Danish Assistance
to the Countries around the Baltic Sea




Since the fall of the Berlin Wall in 1989,          Foreign Affairs, the Ministry of the Environment
Denmark has supported the reform efforts            and the Ministry of Economic and Business
of the Central and Eastern European coun-           Affairs, and a large number of other public insti-
tries considerably. The Danish efforts have         tutions, companies and organisations are
been focused primarily on the countries             involved in the Danish efforts.
around the Baltic Sea. This applies both to
the Baltic states and Poland and to the             Preparing for the EU
Russian Baltic Sea regions.
                                                    The ten EU candidate countries from Central and
The assistance has covered a broad spectrum         Eastern Europe are currently working on aligning
from the establishment of institutions to the       the final parts of their legislation with EU rules
solution of environmental problems, advice to       and regulations (the Community acquis). The
companies, and assistance to the protection of      adaptation to the EU acquis is a task that has in-
human rights and democracy. So far, Denmark         volved virtually all bodies of law and public insti-
has contributed a total of DKK12 billion (approx.   tutions in the candidate countries. It is equally
1.6 billion euro) to the reform process. To this    important that the candidate countries establish
should be added Denmark’s contribution              the necessary institutions to administer the EU
through international organisations, especially     regulations, for instance directorates for paying
through the EU.                                     out agricultural support to farmers or for approv-
                                                    ing new products such as building materials or
In recent years, developments have been rapid,      furniture in accordance with common EU stan-
and it is expected that the first Central and       dards.
Eastern European EU candidate countries will
accede to the EU in 2004. In the final phase        The projects under the EU preparation pro-
before the enlargement of the EU, Danish bilat-     gramme run by the Danish Ministry of Foreign
eral support to the Central and Eastern European    Affairs are based on close co-operation with the
countries will be targeted towards the countries’   recipient countries. The recipient countries des-
final EU preparations. The EU enlargement must      ignate the needs for expertise and support,
not create new dividing lines in Europe. Danish     whereupon the Ministry of Foreign Affairs identi-
assistance therefore also focuses on the EU’s       fies the institution, company or organisation in
future Eastern neighbours, especially Russia.       Denmark which can provide the required expert-
                                                    ise and support. In some cases so much expert-
The Danish support will continue at a high level    ise is required in an area such as agriculture that
during the period up to the enlargement. The        the Ministry places a long-term adviser at the
assistance is administered by the Ministry of       disposal of the government in the recipient




38
                                                                                    13
Denmark – Gateway to the Baltic Sea Region




country. In the final phase before the enlarge-       creating a better environment. A better environ-
ment, eight such special EU advisers are expect-      ment in the recipient countries also implies a
ed to be stationed in Estonia, Latvia and             better environment at the regional and global
Lithuania. In addition to this approximately thirty   levels. In 2002-2003 the activity of the Danish
Danish pre-accession advisers are seconded on         Environmental Protection Agency is concentrat-
longterm contracts in all the Candidate               ed on the countries around the Baltic Sea. Until
Countries, financed under the EU Phare                the anticipated EU enlargement, the support to
Twinning programme.                                   the candidate countries (Estonia, Latvia,
                                                      Lithuania and Poland) is still focused on compli-
                                                      ance with EU environmental legislation and the
Focus on the Russian                                  transition agreements reached between the
Baltic Sea Regions                                    countries and the Commission. This implies con-
                                                      tinued Danish support towards the countries’
In its CIS support programme, the Ministry of         adaptation of legislation and their capacity
Foreign Affairs focuses on the Russian Baltic Sea     development with a view to implementing and
regions: Kaliningrad, St Petersburg and Pskov.        enforcing the legislation, where results are
The programme is intended to contribute to the        achievable within a short time span. At the same
development of a modern and efficient public          time, Danish support will be given to the prepa-
sector. The effort primarily consists of advice       ration and delivery of necessary investment proj-
with regard to adapting and developing the            ects within the water and waste sectors, as well
regional administrations. Among other things,         as the preparation of a climate effort in the form
Denmark contributes to the establishment of a         of ‘joint implementation’.
well-functioning tax administration in St
Petersburg and efficient agricultural land regis-     Priority is also given to the nuclear area. Among
tration in Pskov. The Danish effort in Russia also    other things, this takes the form of a special
involves the social area, where Danish funds          effort in relation to the closure of the Ignalina
have, for instance, been used to improve the          nuclear power plant, but other energy projects
conditions at a children’s home in Kaliningrad        with an environmental objective will also be
combined with specialist training of the staff.       implemented.

                                                      The effort in the candidate countries is carried
A better environment                                  out so as to achieve a smooth transition from
around the baltic sea                                 bilateral support to EU-based support when the
                                                      countries, as expected, become members of the
The purpose of the environmental support is           EU in a few years.




                                                                                                      39
Danish Assistance to the Countries around the Baltic Sea




In the areas of Russia close to the Baltic Sea, the   The commercial bilateral support to the Central
focus will be on limiting the pollution of the        and Eastern European countries will also focus
Baltic Sea region. This activity will also be         on helping the partner countries meet the EU
closely co-ordinated with the EU and other            requirements within the energy area, for
actors.                                               instance with regard to the liberalisation of the
                                                      energy markets. This effort is implemented by
                                                      The Danish Energy Agency. A new example of
Business and Energy                                   this contribution is support towards capacity
                                                      development in the Estonian energy inspectorate
The business support provided by the Ministry         to enable this institution to undertake its regula-
of Economic and Business Affairs, is focused on       tory tasks efficiently in liberalised energy mar-
Estonia, Latvia, Lithuania and Poland, where the      kets and in accordance with the EU acquis.
framework conditions of trade and industry are
being strengthened on the basis of the recipient
countries’ priorities. Efforts are targeted           Consolidating Democracy
towards the establishment and development of
institutions, towards building a commercial,          Since 1990, Denmark has granted more than
technological and knowledge infrastructure, and       DKK 1 billion (approx. 145 million euro) to assist
towards the development of the advisory sector.       the countries in Central and Eastern Europe in
This means that the focus will, among other           their efforts to develop and consolidate democ-
things, be on contributing to the development of      racy. Approximately one third of this sum went
national business strategies and regional busi-       to the countries in the Baltic Sea region, many of
ness development. Another focal point will be         which are expected to join the EU soon. In
advice in connection with capacity development        order to avoid new dividing lines in Europe, the
within institutions, such as standardisation, inno-   democracy consolidation support provided by
vation and incubation centres.                        the Ministry of Foreign Affairs will continue, with
                                                      special priority given to cross-border pro-
A special effort will continue to be made in rela-    grammes and to programmes in countries not
tion to St Petersburg and Kaliningrad, aimed at       expected to join the EU in the short term.
promoting commercial collaboration between            Priority areas for the Danish programmes contin-
Danish and Russian companies, including intro-        ue to be the development of democratic institu-
ducing Russian company managers to modern             tions, such as an independent judiciary, general
management tools.                                     reinforcement of human rights, including minori-
                                                      ty rights, good governance, strengthening of
                                                      civil society, and free, independent media.




40
Time for Action

                                                                                       14
There are still openings for foreign com-              within the same field who might have been bet-
panies in the eastern Baltic countries.                ter partners”, says Peter Vogt.
But action needs to be taken now.
                                                       In Rambøll’s experience, the Danish companies
“Foreign companies have great scope for doing          with activities in Eastern Europe initially targeted
long-term business in Eastern European coun-           the Polish market. Some 500 Danish companies
tries but too few do enough about it”, says Peter      have some kind of representation here – from
Vogt, who is a senior adviser with Rambøll             sales offices to the large production plants of, for
Private Sector Management. Rambøll is a Danish         instance, Danfoss and Velux. In the three Baltic
firm of consultants which among other things           States the total number of companies with a
specialises in advising Danish companies about         Danish connection is under 500. Finally, around
the Baltic States, Poland and Russia.                  200 Danish companies have tried their luck on the
                                                       Russian market – mostly around St. Petersburg.
Peter Vogt has seen several Danish and foreign
companies succeed in Eastern Europe and with-          “It is quite natural for interest to focus on Poland,
out hesitation encourages other companies to           but this is the moment when it is possible to
take these markets seriously. “This is the time to     obtain a solid market share in the Baltic States
enter the markets. Every day the opportunities         and that can be just as interesting from a com-
for establishing a good market share or business       mercial point of view. And it is important to get
at a sensible price are reduced. But first of all a    started. It will never become cheaper or easier to
thorough analysis of the business idea should be       gain a foothold than it is now”.
undertaken and many fail to do that”.

                                                       The Danes lead on points
It will not become cheaper
                                                       Precisely the Baltic States are well suited for
“Many of the foreign activities in Eastern Europe      Danish companies, which are used to operating
are characterised by coincidence. I have seen          in markets of a similar size. The largest German
several examples of companies starting produc-         and other European companies may find these
tion, export or collaboration in one of the Baltic     markets too small to be of real interest at the
States following a casual contact at a fair or exhi-   moment.
bition. Of course that can be excellent, but not if
it subsequently turns out that the market is not
yet ready or that there are many other players




                                                                                                         41
Time for Action




“It will never be cheaper or easier to gain a foothold than it is now”, says
Peter Vogt, senior adviser with Rambøll Private Sector Management.




42
                                                                                       14
Denmark – Gateway to the Baltic Sea region




“And of course there are good opportunities for        Beware of the old ghosts
Danish companies, which already lead on points,
compared to the companies of larger countries          Peter Vogt does not have similar expectations
with greater cultural and social difficulties in the   concerning the former state-owned companies
Baltic countries. The Danes are well received in       which had a long life during the Soviet era.
all three Baltic States and in Poland. Most Balts      “Many of them are managed in an old-fashioned
are very happy to do business with the Danes,          way, their buildings are too large and antiquated,
who are considered less likely than others to          and hitherto they have been far too dependent
dominate the Baltic companies and                      on exporting to Russia, exports which are well
collaborators”.                                        known to have virtually ceased in certain sectors”.

Peter Vogt can easily envisage a Danish or for-        The advantage of running a business in Eastern
eign company starting with its head office in          Europe is the low wage costs. In Poland and the
Denmark and its production in an Eastern               Baltic States the wage level is a fifth of the
European country. “It is very easy to get to all       Danish. On the other hand it should be borne in
the Baltic countries from Copenhagen”.                 mind that it can be difficult to sack staff if sales
                                                       and production are not going as planned.
Rambøll regularly comes across Baltic companies
suitable for complete or partial take-over by          “That is another reason why it is important to
foreign companies. Most of them were created           undertake thorough market research before
after 1990 and established from scratch.               seizing on a casual contact to see if it works.
                                                       Success is not just a question of a good idea.
“They actually have the basis for starting large-      In those areas it is essential to have the right
scale export. They have good local management          contacts and collaborators. There are many
and their production is reasonably efficient but       possibilities of making mistakes and the owners
they often lack the capital to move on. In such        often have unrealistic ideas of the value of their
cases foreign companies can pick up a bargain          company if a foreign company wishes to buy it”,
by buying, for instance, half or slightly more of      says Peter Vogt.
the company”.
                                                       “But if the project is approached systematically
                                                       and carefully, with good preparatory work,
                                                       virtually all foreign production companies still
                                                       have good opportunities – especially in the Baltic
                                                       States and Poland. It is merely a matter of getting
                                                       started”.




                                                                                                         43
Good Russian Connections




Danish companies are involved in Russia             the EBRD (European Bank for Reconstruction
and Central and Eastern Europe in every-            and Development), the EU and the World Bank.
thing from replacing water pipes to produc-         In St Petersburg and the Ukraine alone, Per
ing breakfast cereals.                              Aarsleff has an order book for similar replace-
                                                    ment works worth around 20 million euro.
Formerly, 30,000 of the inhabitants of Gatchina
had to live with an irregular water supply
because of a rusty water pipe running under-        Pipe Replacement
neath the main street of the town. The quality of   Without Digging
the steel in the water pipe was so variable that
the pipe had to be replaced at regular intervals.   The Danish engineering firm uses a patented
The municipal government had got used to dig-       pipe replacement method, which virtually avoids
ging up the entire street every 5-6 years to        digging up the street. Instead the new water
replace the faulty pipe with a new one, which       pipe is pulled through the old by a machine with
often proved equally short-lived. Merely dig-       a tractive force of 125 tons. This is an efficient
ging up the street took almost a year every time,   way of replacing water pipes, and Per Aarsleff
and during all those months the households had      has a similar project worth around 14 million
to find alternative water supplies. In less than    euro in St Petersburg, financed by a loan from
four weeks, the Danish engineering firm Per         the World Bank. The renovation of sewers is
Aarsleff had replaced 1,450 metres of water         another speciality of Per Aarsleff, which has
pipe, for which the town had received support       developed a method to line sewers with poly-
from Denmark, among others. The municipal           ester fibres. Hot water is used to pump the
government, led by mayor Stanislav Borgdanov,       polyester through the sewers, where it hardens
has subsequently decided to have another 900        to form a tube within the tube. After this treat-
metres of water pipe replaced at the town’s own     ment, the life of the sewers has also been
expense.                                            extended by at least a hundred years.

“We give a hundred years guarantee on the new
pipes, so now the citizens have one thing less to   Competent
worry about,” says Kim Slavensky, who is            Russian Manpower
Director of Per Aarsleff’s Russian branch in St
Petersburg.                                         The Russian branch of Per Aarsleff employs 25
Much of the financing of the pipe replacement       local people and draws on back-up from
projects is done with grants from the Danish        Denmark when required for training new staff or
bilateral support to Central and Eastern Europe,    during peak periods.




44
                                                                                 15
Denmark – Gateway to the Baltic Sea Region




The mayor of Gatchina, Stanislav Borgdanov, has ordered the replacement of another 900 metres of
water pipe from Kim Slavensky, Director of Per Aarsleff’s Russian branch. The pipe replacement is
taking place in the street running past Empress Maria Feodorovna’s summer palace. She was the
daughter of the Danish King Christian IX – also called the Father-in-Law of Europe. Her Danish name
was Dagmar, but when she married Grand Duke Alexander, who later became Czar of Russia, she was
given the name Maria Feodorovna and later the title of Empress. She was the mother of Nicholas II,
the last Czar of Russia. He was murdered in 1918 after the Revolution and Maria Feodorovna fled to
Denmark, where she lived until her death in 1928. In Russia she supported Danish business interests
and when she returned to Denmark, she helped Russians who had fled from the new regime in
Russia.




                                                                                                 45
Good Russian Connections




“We have a good team of workmen, who are             This also applies to the Danish businessman Ola
just as competent as our workmen in Denmark.         Kvist, who has lived in Russia since 1995. As
We are now sending several of them to Finland        Director of the company Belso Cereals, he has to
to work on new renovation projects using the         teach the Russians to eat fibre-rich muesli with
same method,” says Kim Slavensky, who                their yoghurt. The man behind Belso Cereals is
describes the collaboration between Danes            the Dane Tom Belsø, who after a career as a rac-
and Russians as good. “We feel very welcome          ing driver started a chain of bakeries in England
over here.”                                          and today owns a Danish health food factory.




„I have learned a lot from the Russians, but they have also benefited from having a Danish
boss. For of course the Danes often question the established routines and it is probably quite
healthy for a country when foreigners do that,“ says Ola Kvist.




46
                                                                                   15
Denmark – Gateway to the Baltic Sea Region




“The Russians give Danish business people a          matured considerably and the contact with the
good reception. It is probably attributable to our   Russian supermarkets and chains is becoming
honouring agreements. It is also easy to get         increasingly professional. That applies to every-
competent Russian manpower, for Russians like        thing from the payment of outstanding accounts
working for a Danish company,” says Ola Kvist,       to merchandising and marketing of the prod-
who has gradually acquired several Russian           ucts.”
friends, although he does not feel entirely at
home in Russian. “My Russian is only suitable        The wage level in Russia is still very low com-
for social occasions. I cannot negotiate in          pared with the current EU countries. Factory
Russian, but often English will suffice.”            workers receive between 100 and 150 euro per
                                                     month and clerks between 500 and 800 euro per
The factory in Denmark is the hub of the activi-     month. “It is easier and cheaper to establish a
ties in St Petersburg, which apart from the sale     company in St Petersburg than in Moscow and
of muesli will also include production targeted at   of course it is easy to keep in close touch with
the Russian market. The raw materials – includ-      Denmark and England through frequent flights
ing wheat – mainly come from Ukraine.                to Copenhagen,” says Ola Kvist. “This can
                                                     simplify the start-up of new activities consi-
                                                     derably.”
Low Labour Costs

“In several areas, there is a pioneering spirit in
Russia, which creates a good atmosphere. But
you must also have patience before you see
results,” says Ola Kvist, who expects great things
from the Russian market, especially when the
muesli factory in St Petersburg starts producing.
“Currently the Russian market is approximately
the same size as the Danish, but we expect to
reach a volume of muesli sales of 2,500 tons a
year, which roughly corresponds to our current
volume of sales in England, our largest market.”

Ten years ago, muesli was largely unknown in
Russia, so that is a development which pleases
Ola Kvist. “In recent years, the market has




                                                                                                    47
Danish hi-tech worth 100 million euro




Under the brand name of Dirol, Dandy was             factory by Novgorod, some 200 kilometres south
one of the first foreign companies to estab-         of St Petersburg. The factory was built com-
lish itself in Russia. Today the productivity        pletely according to Danish standards of quality
of the newly-built factory in Novgorod has           and design and is the most modern of Dandy’s
reached the level of the factory beside the          factories.
head office in Denmark.
                                                     Dandy entered the Russian market early.
Dirol sells 7,000-8,000 tons of chewing gum a        Already in 1992, Dandy established a packing
year on the Russian market and most of this is       plant, sending semi-finished goods from
produced at a newly-built architect-designed         Denmark to Russia by road and sea. Today Dirol




Carsten Bennike estimates that the Dirol factory has created 2,000 additional jobs in Novgorod,
including new jobs with sub-contractors and in the city’s service trades. Among other things, Dirol’s
involvement has resulted in the establishment of the company Infochaine with 35 staff, which helps
other companies with IT implementation.




48
                                                                                    16
Denmark – Gateway to the Baltic Sea Region




employs 1,300 staff – mostly Russians –              “The connections between Denmark and Russia
throughout most of Russia. Production is locat-      are good, and it does not take long to get raw
ed in Novgorod and the sales organisation in         material to Russia from Denmark, as is occasion-
Moscow.                                              ally required at times when the demand on the
                                                     Russian market is particularly large.”
“We chose to invest carefully at first to test the
market. It was relatively easy to manage the         During the early years of the factory’s start-up,
operation from the head office in Denmark and        local workers were sent to Denmark for three
the financial risk was negligible,” says Carsten     months of training.
Bennike, Managing Director of Russian Dirol.
                                                     “Danes and Russians work well together. The
The involvement in Russia has been a great com-      chemistry between us is good and the Russians
mercial success. The Russian production has          are very interested in learning new things. We
now reached the Danish level, and for the first      Danes occasionally tend to act slightly too much
time ever the company is a big player on a large     on our own initiative and then the Russian disci-
market with its products.                            pline can help systematise things. Both parties
                                                     have something positive to offer to the collabo-
“We are big in several other markets, but they       ration. Altogether the Russians are very open to
are relatively small. Russia is a gigantic market    change and keen to try something new”.
and here we are among the largest suppliers of
chewing gum.”                                        In summer 2002, the English Cadbury-
                                                     Schweppes concern took over the production,
Ten years ago chewing gum was virtually              sales organisation and marketing of, among
unknown in Russia, but today Dirol has keen          other things, Dirol from the Danish company.
competition from other producers, especially the     Dirol will continue to be produced in Novgorod,
American company, Wrigley.                           reporting to the head office in Vejle, Denmark.



Good connections
with Denmark

The Novgorod factory is largely self-run and can
now manage without the support of the head
office in Denmark, which in the early years was
crucial to the involvement on the Russian market.




                                                                                                         49
L e t ’ s G o We s t




The Russian regions of St Petersburg, Lenin-          ties in Russia, the relatively small Novgorod
grad Oblast and Novgorod Oblast are look-             Oblast region, with 750,000 citizens, has now
ing towards the Baltic Sea region and an EU           moved up to number 21.
co-operation from which much is expected.
                                                      It is to a large extent foreign investments that
Novgorod Oblast is one of the smallest regions in     have helped move things forward in Novgorod.
Russia, but it has been very successful in attract-   The main foreign investors come from Finland
ing foreign investments, especially from Den-         and Denmark and the municipal government in
mark, and the Chairman of the Novgorod Oblast         the main city, Novgorod, is particularly delighted
Economic Committee, Arnold Shalmuev, is look-         with the Danish chewing gum factory, Dirol.
ing forward to further co-operation with the EU.
He has no particular misgivings about the Baltic      “Dirol plays an important role for Novgorod and
States and Poland soon becoming part of the EU.       Novgorod Oblast. It has created many new jobs,
“It may be a foot in the door for Russia. Certainly   both directly and indirectly. Dirol was one of the
the EU without Russia is not a true EU. Our pre-      very first foreign companies to establish itself in
parations for starting accession negotiations with    Novgorod and we see its success as a proof that
the EU are in full swing,” says Arnold Shalmuev.      it is profitable to invest in our area.”

“Russia is now a country with a market economy
and in fact I believe Russia will be able to com-     Company Tax Relief
plete the accession negotiations more quickly
than the Central and Eastern European countries       In total, foreign companies have invested
currently negotiating. But whatever happens and       approximately 600 million euro in the region
however long it takes, the EU and Russia will         since 1994, when Novgorod began its effort to
strengthen their co-operation and trade over the      attract foreign investors. The annual foreign
coming years. Both areas are large markets and        investments are now around 60-70 million euro.
we can benefit considerably from each other. The      The key elements in an outward-looking com-
process of change is particularly rapid in our part   mercial policy include company tax relief until
of Russia.”                                           the investment has been recouped, and the
                                                      region has also set aside a reserve fund of 100
                                                      million roubles – around 3.5 million euro – to
The First Foreign Investments                         cover any projects suffering financial losses
                                                      because of errors in the local administration.
From being number 69 of the 89 Russian regions
on the list of economic development opportuni-        “If we have committed errors resulting in




50
                                                                                 17
Denmark – Gateway to the Baltic Sea Region




delays, the fund will be used to indemnify         contact person from the regional authorities.
investors. But we take great pains to smooth the   This is usually our Vice-Governor or the
path for foreign investments and each invest-      Chairman of the Novgorod Oblast Economic
ment project has its hand held by an accountable   Committee,” says Arnold Shalmuev.




‘We have good experiences from our collaboration with Danish companies and Danish authorities.
Mentally we get on well with the Nordic countries,’ says the Chairman of the Novgorod Oblast
Economic Committee, Arnold Shalmuev.




                                                                                                   51
Russia’s Self-Confidence is Growing




Russia wants to be part of the development            recent Western European cars, restaurants and
in the Baltic Sea region, which Russian               lifestyle shops with fashion clothes have become
politicians and business people regard as a           part of the street scene. St Petersburg now has
new strong region in Europe.                          three five-star hotels and many new hotels are
                                                      sprouting in the city, which will celebrate its
It used to be a border area where the surrounding     300th anniversary in 2003.
countries were divided by an Iron Curtain. Today
the Baltic Sea is a natural rallying ground and the
Russians expect great things from the develop-        Over 70,000 Private Companies
ment of the Baltic Sea region, to which many
Russian business people feel they naturally           ‘We have many well-educated people in our
belong. And in the opinion of Sergey Balanev,         region and several foreign software companies
General Manager of the St Petersburg Foundation       have established development branches in St
for SME Development, St Petersburg should be          Petersburg. Many of our workforce are universi-
particularly interesting to foreign investors. The    ty graduates, so it is natural for companies spe-
private organisation was founded in 1995 and          cialising in software, IT and similar technologies
serves as consultant and advisor to Russians          to come to our region,’ says Sergey Balanev.
wanting to start their own businesses. The client
list includes small and medium-size Russian com-      The St Petersburg region has over 70,000 small
panies as well as foreign companies wishing to        and medium-size private companies, about half
establish themselves in the St Petersburg region.     of which are in trade and catering.
The assistance provided by the St Petersburg
Foundation for SME Development includes the           For several years, Sergey Balanev and his ten
drafting of business plans, market research and       colleagues in the St Petersburg Foundation for
training.                                             SME Development have collaborated with
                                                      Danish consultancy firms in order to help more
“With 4.7 million people in the St Petersburg         Russian companies export their goods.
region, we have almost as many inhabitants as
Denmark. Between 15 and 20 per cent have a            “It is important that we are outward-looking and
buying power corresponding to the average             collaborate with the countries around the Baltic
European consumer, so establishing a company          Sea. This has huge potential for the small and
here has great potential,” says Sergey Balanev.       medium-size Russian companies. Russia should
                                                      be an integral part of the Baltic Sea area and we
Sergey Balanev’s point is substantiated by a walk     have every chance of achieving that. We merely
through the centre of St Petersburg, where            need to find our niche.”




52
                                                                                18
Denmark – Gateway to the Baltic Sea Region




M o r e K n o w - H o w Wa n t e d

Today the St Petersburg region has largely
recovered from the shock of Russia’s crisis in
1998, when the rouble was heavily devalued,
and today it has become considerably more
expensive for foreign companies to buy up com-
panies in Russia.

“The Russians have every confidence in being
able to manage by themselves. Foreign capital
used to be in great demand, but today most
Russian companies prefer to enter into a joint
venture or cooperation agreement with a foreign
company rather than transferring ownership.
Know-how is still in demand, but not money.
And companies from Denmark have good
opportunities to do business with Russian com-
panies. The Danes have the reputation of being
easy to work with and of being reliable business
partners. And that is important to Russians,”
says Sergey Balanev.




                                                   “We expect great things from the Baltic Sea
                                                   region. The market around the Baltic Sea is
                                                   enormous and although it is characterised by
                                                   keen competition, I am sure the St Petersburg
                                                   companies will find a niche,” says Sergey
                                                   Balanev, General Manager of the St Petersburg
                                                   Foundation for SME Development.




                                                                                                   53
Let the Good Times Roll




The Danish Cultural Institute opened in Riga
in the summer of 1990, a good year before
the collapse of the Soviet Union. Today the
Institute is represented in all three Baltic
States with the primary task of promoting
cultural exchange between Denmark and
the Baltic States.

“Already on my first day here I realised that they
knew more about us than we knew about them”.
The Director of the Danish Cultural Institute in
Riga, Rikke Helms, has now lived in Latvia for
more than ten years and feels it has been easy
for her to interest the citizens of the three Baltic
States in Denmark and Danish culture. The moti-
vation to get to know Denmark better is high in
all three Baltic States. But the tasks and working
conditions of the Institute have changed consider-
ably since August 1990.

“Initially the Danish Cultural Institute was politi-
cal support in cultural clothing”, says Helms,
referring to the considerations of the Danish
government in the late 1980s. At that time
Denmark had no official representation in the
Baltic States. That would have required permis-
sion from Moscow and merely requesting per-
mission would in reality constitute an indirect
recognition of the incorporation of the three
Baltic States in the Soviet Union. Denmark had
recognised the Baltic States as independent
nations already in 1921 and maintained this atti-
tude until 1991 when the Soviet Union dissolved.




54
                                                                              19
Denmark – Gateway to the Baltic Sea region




Rikke Helms came to Riga in 1990 and became the first Director of the
Danish Cultural Institute in the three Baltic States. Next to her a Russian
street musician makes a living near the impressive opera building in Riga.


                                                                               55
Let the Good Times Roll




                                                     The result was instead the establishment of the
                                                     Cultural Institute in Riga in an attempt to sustain
                                                     cultural relations with the surrounding world,
                                                     often the only breathing space for the population
                                                     of occupied countries. A few months after its
                                                     establishment in Riga, the Cultural Institute
                                                     opened similar branches in Tallinn and Vilnius.



                                                     We a l l h a d n e w n e i g h b o u r s

                                                     Today the Institute’s seven employees in the three
                                                     Baltic offices, in collaboration with the head office
                                                     in Denmark, are busy organising and acting as
                                                     midwives for exhibitions, concerts, lectures, con-
                                                     ferences, plays, film screenings, exchange visits
                                                     and much else on both sides of the Baltic.

                                                     “Our tasks reach both ways. We help bring Danish
                                                     artists and activities to the Baltic States, but we also
                                                     send Baltic artists to Denmark”, says Rikke Helms.
According to tradition, Denmark got its flag when
it floated down from heaven during a battle in       “The cultural ties between Denmark and Estonia,
Estonia in 1219 at this place, which is now called   Latvia and Lithuania are strong. I notice great curios-
“Taani Kuninga aed” – Courtyard of the Danish        ity about Denmark, and many Danes are also sur-
King.                                                prised how great the interest in Denmark is here”.

                                                     “I find it fantastic that it is possible to study
                                                     Danish at the university and the Academy of
                                                     Culture in Riga, there is an upper secondary
                                                     school for Nordic languages, a publishing house
                                                     specialising in translating and publishing Danish
                                                     books from Hans Christian Andersen to Peter
                                                     Høeg, and even upper secondary classes where
                                                     every pupil has Danish on the timetable”.




56
                                                                                        19
Denmark – Gateway to the Baltic Sea region




The Danes are also curious to know more about            has 5.3 million inhabitants, Estonia, the smallest
the Baltic States.                                       state, has 1.4 million, Latvia 2.4 million and
                                                         Lithuania 3.6 million.
“In 1991 we suddenly acquired new neighbours,
whose existence we were of course aware of,              “Denmark was the first country in the world to
but who we only now really got to know. There            send an ambassador to the Baltic States after the
are still many prejudices in Denmark about the           day when they regained independence in 1991,
Baltic States being in a wretched condition. But         and Denmark remains one of the main financial
that is a very simplified image. They are three          investors in the area. This naturally helps increase
beautiful countries with fine old cities, impressive     the interest in Denmark”, says Helms, hinting that
architecture, very friendly and obliging popula-         culture, economy and politics have a tendency to
tions and a high cultural level. And it is incredible    be inseparable.
how much has changed during the 11 years I
have been here. Many Danes are extremely
surprised when they visit for the first time”.           The ten most important years

                                                         Rikke Helms unhesitatingly calls her first decade
Increased interest in Denmark                            in the Baltic States the most important time in her
                                                         life.
In Rikke Helm’s opinion, Denmark can learn a
great deal from the Baltic States in the cultural        “It has been an incredible period, when every-
field.                                                   thing was destroyed and rebuilt. For me personal-
                                                         ly it has been fantastic to experience the time
“There is a tradition of cultivating the elite and       from before independence day to today, when so
promoting the classic art forms and the classic          much has happened. I regard it as a privilege that
presentation. In all three Baltic States school-         the Danish Cultural Institute has been part of that
children work very seriously with art and music          development”. When people ask why I have
already from the 4th year, when classical music is       remained here for so long I usually reply that being
on the curriculum with regular exams. Although           allowed to participate in the ups and downs of the
it is an optional subject, it is very popular”.          Balts has been epoch-making to me. I feel at
Rikke Helms explains the countries’ interest in          home in all three countries and have made many
each other by the historical ties between Denmark        friends. And ultimately that is after all what
and the Baltic States. The fact that Denmark, like       culture is about. Getting to know each other.
the three Baltic States, is a relatively small country
also contributes to the fellow-feeling. Denmark




                                                                                                          57
F r o m Wa s t e o f T i m e
t o Wa s t e C o n t r o l




With Danish assistance, two Estonian                  pare surveys of the various production processes.
electronics companies have started                    The Fabec management know precisely where to
environmental management.                             intervene to reduce the strain of environmental
                                                      impact on staff and the surroundings, and today
“Surely it cannot be that important!” Managing        they have a very positive view of the environ-
Director Andrei Nassonov, Technical Manager           mental management concept.
Marina Strik and Production Manager Aleksandr
Shyrnin agreed that the Danish state’s offer of       “Meanwhile, we have acquired customers, for
help to introduce environmental management            instance in Switzerland, who are only prepared
would at best be a waste of time. But after con-      to buy our output if our production process is
siderable pressure from Danish environmental          environmentally friendly”.
consultants, the three Russians in charge of the
electronics company Fabec Elektroonika oü             Among other things, Fabec lacked a system for
– which was established in 1993 – agreed to           managing their waste water. They simply had no
start a Danish-supported environmental project.       idea what the waste water emitted from the
Today, environmental management is an integral        factory contained.
part of the production of the company which,
profits permitting, invests in environmental tech-    “We might have had a hunch that we were pol-
nology to reach the same level as Western com-        luting, but we believed it probably was not too
panies. Briefly, it is a question of clarifying the   bad. You have to remember that pollution and
environmental impact of the production and            environmental impact simply were not discussed
then have a plan and a system for getting rid of      during the Soviet era when we were involved in
the waste in an environmentally responsible way.      metal production in other companies”.

“We were completely unused to thinking in that        Today 65 employees – mostly Russians with
way during the Soviet era”, says Andrei               Estonian citizenship – work on sub-contract
Nassonov.                                             mounting, soldering and testing of electronic
                                                      parts. The customers are in the Nordic countries
                                                      and Western Europe, for instance sub-suppliers
A i m i n g f o r We s t e r n                        to the automotive industry and the commercial
environmental certification                           and consumer industries.

All three managers visited Denmark to see how         The company received ISO 9001 certification in
Danish companies handle environmental manage-         2000 and now aims for the environmental
ment, and Danish consultants have helped pre-         certificate ISO 14001. New laws in Estonia mean




58
                                                                      20
Denmark – Gateway to the Baltic Sea region




“Many clients are only prepared to buy our output if our production
process is environmentally friendly”, says Andrei Nassonov.




                                                                       59
F r o m Wa s t e o f T i m e t o Wa s t e C o n t r o l




that all companies must examine and describe              owned and the Managing Director Aular Soon
the risk involved in their various production             emphasises that it is a deliberate policy to avoid
processes.                                                large customers and keep growth to a level the
                                                          current 31 employees can handle.
Apart from the environmental management
project, the Fabec managers have participated             “I wish many more foreign companies would begin
in a Danish-supported Business Development                with close collaboration and then perhaps buy a
Project which, in layman’s terms, was to help             small ownership share instead of buying up the
them run the company according to Western                 entire Estonian company from the start. It can be
principles.                                               risky for us Estonians to sell all our companies.
                                                          What will happen when wages increase to the
“We have gained much valuable knowledge from              Western level? Will the foreign companies then
the projects in which we have participated. They          move everything to Russia or China?”
are a condition for our being able to manage in
the EU”, says Nassonov.                                   For the same reason Soon believes the future for
                                                          Estonia is technological companies with a high
                                                          level of automation. The company is aiming for
No to large customers                                     ISO 14001 certification and has just invested
                                                          5 million kroons (approximately 298,000 euro).
The company Brandner PCB is located in an                 in new equipment for printed circuit board pro-
industrial area constructed during the Soviet era,        duction. The machine can be operated by one
15 minutes drive from the centre of Tallinn.              worker; the same process used to require four
Its management has likewise participated in a             people.
Danish-supported project to introduce environ-
mental management.                                        “We cannot survive in competition with China.
                                                          Our competitors are the electronics companies
“Initially I considered environmental management          in Western Europe”.
a waste of time, but gradually I came to under-
stand the advantages. And today the situation is          The many prejudices
probably that if we wish to export to the EU, we          of the Danes
have to control the environmental impact”.
                                                          Aular Soon is the type of businessman who
Unlike many other electronics companies, Brand-           appreciates the foreign interest in Estonia, but is
ner PCB has not been taken over by a foreign              irritated by the many prejudices about standards
firm. The company is 100 per cent employee-               in Estonia that flourish abroad.




60
                                                    20
Denmark – Gateway to the Baltic Sea region




“The Danes are often amazed when they come
here for the first time and surprised how much
has happened in ten years. Unfortunately we still
encounter distrust from Danish sub-suppliers,
who are the only ones still requiring payment in
advance when we buy from them. We do not
have that kind of problem with Germans and
Italians”.




                                                     61
Successful Technology Transfer




In 1996, Rationel Vinduer invested 4.2 million Estonian kroons – around 250,000 euro – in the company,
which gave it 35 per cent ownership of the factory. Today the Danish company has withdrawn, but Rationel
Vinduer’s Danish Project Manager and former consultant to the factory, Hans Peter Høeberg (right), contin-
ues his involvement as Chairman of the Board of the company, which today is 100 per cent owned by the
Estonian company, Paide Kek, led by Director Toomas Agasild (left).




62
                                                                                  21
Denmark – Gateway to the Baltic Sea region




Rationel Vinduer PLC was among the first            The Estonian Director, Toomas Agasild, believes
to establish production in Estonia and              the reason for the factory’s success is that the
Poland. In 1996, the company took the               owner group from the start included a Western
first steps towards setting up a windows            partner with solid knowledge of the production
factory in Estonia. Today the factory is            and of quality control.
self-run and 100 per cent Estonian-owned.
                                                    “Without Rationel Vinduer, it would have taken
The story of Rationel Vinduer’s involvement in      us ten years to reach our current level and we
Estonia is a textbook example of successful tech-   would have spent large sums on correcting mis-
nology transfer from Denmark to Estonia. In         takes. We would probably have gone bankrupt
1996, the Danish windows factory entered the        several times in the process,” says Director
Estonian market in a joint venture with the         Toomas Agasild.
Estonian company Paide Kek and the Danish
investment fund for Eastern Europe. In 2002,        Today the process of transferring knowledge
the Danish company and the investment fund          from the Danish to the Estonian factory is com-
were able to sell their shares in the company to    plete and the Estonian management is now
the Estonian partner. What remains is a healthy,    responsible for running the factory without
Estonian-owned windows factory, which today         Danish involvement. After the withdrawal of
has a firm grip on the domestic market and          Rationel Vinduer, the factory has changed its
exports to countries as different as Norway,        name to Viking Windows PLC.
Denmark, Finland, Sweden and Japan.

The process of establishing the company took        We H a v e L e a r n e d a L o t
just under two years. On the other hand, it only    from Other Countries
took seven months to get production going in
the former warehouse of a Soviet development        Toomas Agasild points to the work ethic and the
firm. And since then the pace has been rapid.       understanding of the need to produce quality
Since the start-up of the factory in 1997, the      products as important differences between the
number of staff in Rationel Eesti PLC has           Danish and the Estonian mentality. Window
increased from four to 75, and in 2001 the com-     panes with more than one layer of glass were a
pany had a total turnover of 50 million Estonian    rarity in the Soviet Union, where energy was
kroons – approximately 3.3 million euro. Since      never in short supply and the room temperature
the company’s second accounting year, the fac-      was regulated by opening the window rather
tory has shown increased profits every year.        than turning down the heat.




                                                                                                      63
Successful Technology Transfer




“Altogether foreign investments in Estonia have      every six weeks for board meetings and consul-
taught us a lot. That is why we regard them very     tancy tasks.
positively. For instance, no one is upset about
the Danish Maersk Air owning 40% of our air-         According to Hans Peter Høeberg, an important
line. Quite the reverse. All Estonians under-        reason for the successful process is that during
stand that such investments create jobs,” says       the entire period the Estonians have been very
Toomas Agasild.                                      motivated to learn. At the start-up of the facto-
                                                     ry, Rationel Vinduer sent out a Danish craftsman
“Five or six years ago all companies went bank-      to teach the Estonian workers to build windows
rupt, but with a larger share of foreign capital     to Western standards.
and know-how it is more certain that the compa-
nies will survive and therefore that people will     “But we sent him home after a fortnight. He
keep their jobs.”                                    could not teach them any more. The Estonian
                                                     workers are just as good as the Danish and
                                                     already on day one we produced windows of
High Skills Level in Estonia                         exactly the same quality here as at our other
                                                     plants in Denmark,” says Hans Peter Høeberg.
The Dane Hans Peter Høeberg was Project
Manager of the company from the start-up in          “The commitment of the Estonian workers was a
1997 until 2002. For the first two years, he was     positive surprise.”
more or less permanently seconded to Estonia
from his base in Jutland, Denmark, where             The wages, including employers’ contributions,
Rationel Vinduer has its headquarters. He is         are around a fifth of the Danish and in principle
now Chairman of the Board of Viking Windows          workers can be laid off if sales cannot keep up
PLC and describes the collaboration between          with production. Both factors contributed to
the Danish factory and its former subsidiary         making the involvement in Estonia a project
company in Estonia as excellent.                     bearing relatively little economic risk for the
                                                     Danish company, Rational Vinduer.
“The entire process has been a very positive
experience. Viking Windows has found a good          “Fortunately we have never had to send people
niche which is not in competition with our inter-    home because of a shortage of orders. The
ests and we still co-operate in many areas. For      Estonians work 40 hours a week all year round
instance, the Estonians can draw on us for tech-     and have their holidays in the winter, when there
nical assistance, service and training,” says Hans   is less construction activity than in the summer.”
Peter Høeberg, who now only visits Estonia




64
                                                    21
Denmark – Gateway to the Baltic Sea region




Good Local Management
Important

According to Rationel Vinduer, good local man-
agement is an essential prerequisite of starting
production or trade in the Baltic States.

“It is important to have someone with language
qualifications and a good understanding of the
country’s legislation and way of doing things.
We would never have managed without a good
local man. A joint venture with a local company
was the ideal solution for us,” says Hans Peter
Høeberg.

He did not learn Estonian himself and now does
not feel he needs to. During the entire process
Hans Peter Høeberg spoke English with the
Estonian Director and it also helped that one of
the Estonian secretaries at the factory speaks
Danish.

“The Estonians are very open towards other peo-
ple and I have always found it easy to manage in
English. But it was a mistake that I did not take
the time to learn Estonian. You should do that if
you are going to be here for as long as I was.
Had I known what I know now, I would have
attended an intensive Estonian course. But that
is the only thing I regret. It has been a huge
experience for me personally to be here. And a
good stroke of business for Rationel Vinduer,”
says Hans Peter Høeberg.




                                                     65
DANISH HISTORY IN THE BALTIC
– DREAM AND REALITY




Rikke Agnete Olsen is an historian and author who has written many popular
and academic works, for example “Danmark i Verden” (Denmark in the World),
which covers Danish history from c. 700 to the Reformation.



66
                                                                                      22
Denmark – Gateway to the Baltic Sea region




By Rikke Agnete Olsen                                 – now Tallinn, “the town of the Danes” – on June
                                                      15th 1219. This date is designated “Valdemar’s
Denmark today is considerably smaller than it         Day”, and June 15th is an official flag-flying day in
was during most of its history. Scania, Halland       Denmark.
and Blekinge were part of the realm until 1660,
as was all of Schleswig until 1864. Thus territo-     During the age of the Valdemars, Crown and
ries change through the ages. So do interests         Church worked together to create a strong cen-
and influences.                                       tral power in Denmark. Churches and monaster-
                                                      ies were founded all over the country, Christian
Estonia came into the picture during the age of       ethics and morals were introduced to society, and
the Valdemars between 1157 and 1241 when              the Church condemned war between Christians.
King Valdemar the Great and his sons, Canute VI       It was different with heathens. If the purpose was
and Valdemar the Victorious, ruled Denmark.           to convert them to Christianity, war against hea-
Before Valdemar the Great came to the throne,         thens became a crusade sanctioned by the Pope,
there had been succession disputes in Denmark         but that did not make the battles less bloody. Thus
for about thirty years, and the country had almost    fighting was thick at Arkona, the most important
fallen apart. The inner weakness made Denmark         heathen centre of worship for the god Svantevit.
an easy target for Wendic attacks, but King           The Danish historian Saxo described vividly how
Valdemar successfully protected coasts and            the huge wooden idol was chopped into small bits
borders against assaults from outside.                which ended up under the Danish cooking pots.
                                                      This was to convince everyone of the impotence
The Wends were Slavonic tribes inhabiting the         of a heathen god! King Valdemar’s foster-brother,
long stretch of coast south of the Danish waters.     Bishop Absalon of Roskilde, later Archbishop of
During the kingdom’s period of weakness, they         Denmark, saw to the destruction personally.
seized the opportunity to trade and plunder and
gain wealth, almost in the Viking manner. King        According to tradition, God also sided with the
Valdemar the Great and his sons reversed the          Danes in Estonia in 1219. As the battle was rag-
picture. They carried the war into enemy territory,   ing and the heathen Estonians were about to win,
and their “Wendic campaigns” were a combina-          a red flag with a white cross floated down from
tion of wars of expansion and crusades leading to     Heaven on the armies. This gave the Danes
the conquest of stretches of the Baltic coast,        courage and strength. They won the day and
including even Estonia. The first major step was      Denmark got its national flag.
the fall of Rügen and the destruction of Arkona
on June 15th 1169. The crowning touch was the         However, Denmark’s glory did not last long.
conquest of Estonia after the battle of Lyndanise     Soon the kingdom had many rivals for its power




                                                                                                        67
the history of denmark in the baltic – dream and reality




in the Baltic. These were not only the German         ever, were unable to secure peace and order in
princes and the Teutonic Order, who established       the country and neither could they recover their
themselves in the Slavonic areas and colonised        money. The conditions in Denmark also caused
them. The many new trading towns such as              great inconvenience to trade and in the end the
Lübeck, Rostock, Stettin, Danzig etc. were also       foreigners decided to re-establish law and order
important and they formed a strong trading            by placing Christoffer II’s youngest son, Valdemar,
alliance, “The Hanseatic League”. For centuries       on the throne and making him able to redeem the
the Hanseatics controlled the trade in the Baltic     country. With the exception of the Scanian pro-
and far beyond. At the zenith of their power,         vinces, he did so in less than ten years, and where
they could largely determine the economy of the       money did not suffice he used military power.
area, including that of the princes.
                                                      Some of the funds came from the sale of Estonia.
The military policy of Valdemar the Victorious        Although the loose tribal territories conquered by
was opposed by other princes in the area, and in      Valdemar the Victorious during the Danish period
1223 he and his eldest son were captured by           had been defined and administered as one coun-
Count Henrik of Schwerin. Their release, against      try, it was difficult to govern such a remote
a gigantic ransom, a couple of years later put an     province. There had been a peasant revolt in the
end to King Valdemar’s victories and dealt a death-   years immediately before the sale, and the neigh-
blow to the economy of the country. The con-          bouring Teutonic Order was an obvious buyer.
quered territories were surrendered or fell away.     The Order had the necessary military power to
They had, after all, only been under Danish rule      control the area, and as a result of intensive and
for a few years and there had been no Danish          privileged German colonisation the Grand Master
colonisation.                                         and his government enjoyed popular support at
                                                      home.
Estonia, however, remained Danish until 1346
when King Valdemar Atterdag sold the country          Although the sale did not mean that Denmark
to the Teutonic Order. He had to do so because        abandoned its interests in the Baltic, for many
the Danish Crown had gone bankrupt during the         years the situation in the Nordic countries was of
century after the death of Valdemar the Victorious    greater importance. Valdemar Atterdag regained
in 1241. When Valdemar Atterdag’s father,             the Scanian provinces by force of arms in 1360
Christoffer II “Lackland”, died in 1332, all the      and also conquered Gotland which, together with
Crown lands in Denmark had been pawned to             Bornholm, was an important outpost in the Baltic,
several mortgagees headed by Counts Gerhard           partly because Visby on Gotland was a Hanseatic
and Johan of Holsten, and for the next eight years    town. King Valdemar was succeeded as ruler by
Denmark had no king. The mortgagees, how-             his daughter Margrete, who joined the three




68
                                                                                     22
Denmark – Gateway to the Baltic Sea region




Nordic countries in the Kalmar Union in 1397.        During the Middle Ages, when thick shoals of
The construction was a personal union consist-       herring came through the Sound every autumn,
ing of three independent countries under a           the markets of Skanør and Falsterbo attracted
mutual monarch and the first was Margrete’s          merchants from all the Hanseatic towns, and after
adopted son, Erik of Pomerania. The Union last-      Erik of Pomerania had introduced the Sound Toll
ed with intervals until 1523, when the heavy-        in 1429, every ship passing Elsinore had to
handed policy of King Christian II made Swedish      pay duty to the Danish Crown, even if it was not
and Danish co-existence under one Crown              intending to trade in Denmark. The toll went
impossible. It had, however, always been a prob-     straight into the royal coffers and made the
lem that the Danish king as head of the Union        monarch rich and independent of the Rigsråd
pursued Danish policies. Norway did not have         (Council) and the nobility. It also provided him
the strength to oppose this, but the powerful        with an important political tool for securing allies
Swedish nobility was a tougher proposition.          outside the Baltic, e.g. in the Netherlands or
                                                     England.
After the dissolution of the Union, the Vasa
dynasty laid the foundations for a strong Swedish    The Sound Toll made Christian IV one of the rich-
Crown, and over the years Sweden became a            est monarchs in Europe but he also knew how to
dangerous rival to Denmark in Scandinavia and        spend money, and after 1660, when there were
the Baltic. Denmark and Sweden competed for          two masters of the Sound, the Toll could not be
territories on the Baltic coast, and in the second   enforced as before, although it persisted until
half of the 16th century Denmark acquired Ösel       1857. This was the beginning of the end of
or Sarema which was, however, surrendered in         Denmark’s role as the dominant country in the
1645. After King Christian IV’s unfortunate wars,    Baltic, but the dream of being a great European
Sweden was the leading power in the area.            power did not receive its final blow until 1864,
Following yet another war, King Frederik III had     when Schleswig was lost to Germany.
to surrender Scania, Halland and Blekinge to
Sweden in 1660. This was a serious set-back to       The victory at Tallinn in 1219 was a military peak
Denmark’s dream of Baltic supremacy, “domini-        in the history of Denmark but during the cen-
um maris baltici”, which had for so long been a      turies that followed the economy was more
permanent part of the country’s foreign policy       important. In the 17th century, Dutch merchants
and had partly been sustainable because the          said that the soul of all trade was in the Baltic and
Sound, the main passage to and from the Baltic,      the cooperation and cultural exchange caused
was Danish waters and provided the Danish            by the trade have been of great importance in the
Crown with large revenues.                           region ever since, also for relations between
                                                     Denmark and Estonia.




                                                                                                       69
Danish bilateral assistance to countries in the Baltic Sea region
1990-2001, in million euro

                                 Grants      Loans and shares    Total commitment
Poland                              255                   165                  420
Lithuania                           190                    40                  230
Russia*                             145                    57                  202
Latvia                              143                    34                  177
Estonia                             122                    10                  132
Baltic Sea region, unallocated       60                     -                   60
* including the Soviet Union 1990-1991
All figures are rendered as million euro, converted from DKK (exchange rate 1 euro = DKK 7.50)




Denmark’s trade in the Baltic Sea region
2001, in million euro

                Export from Denmark       Import to Denmark
Estonia                         140                     187
Finland                       1,682                   1,279
Latvia                          152                     193
Lithuania                       262                     249
Poland                          960                   1,020
Russia                          780                     460
Sweden                        6,605                   5,928
Germany                      11,099                   1,082

The table shows the value of Danish trade with the countries in the Baltic Sea region. All figures are
rendered as million euro, converted from DKK (exchange rate 1 euro = DKK 7.50)




70
Denmark – Gateway to the Baltic Sea Region




Prime Minister’s Office stm@stm.dk www.stm.dk fax +45 33 11 16 65

Ministry of Environment and Energy mem@mem.dk www.mem.dk fax +45 33 32 22 27

Ministry of Finance fm@fm.dk www.fm.dk fax +45 33 32 80 30

Ministry of Foreign Affairs um@um.dk www.um.dk fax +45 32 54 05 33

Ministry of Trade and Industry em@em.dk www.em.dk fax +45 33 12 37 78

Baltic Development Forum bdf@mm.dk www.bdforum.org fax +45 33 14 13 94

Copenhagen Airport cph@cph.dk www.cph.dk fax +45 32 31 31 32

Copenhagen Capacity info@copcap.com www.copcap.com fax +45 33 22 02 11

Copenhagen Stock Exchange xcse@xcse.dk www.xcse.dk fax +45 33 12 86 13

Council of the Baltic Sea States cbss@baltinfo.org www.baltinfo.org fax +46 8 440 1944

Culturenet Denmark kulturnet@www.kulturnet.dk www.Culturenet-denmark.dk fax +45 33 14 11 56

Danish Secretariat for International Cultural Relations sec@danishculture.dk
www.danishculture.dk fax +45 33 74 49 02

Danish Tourist Board dt@dt.dk www.visitdenmark.com fax +45 33 93 14 16

Danish Trade Council um@um.dk www.eksportraadet.dk fax +45 32 54 05 33

Investment Fund for Central and Eastern Europe (IØ) ioe@ioe.dk www.ioe.dk fax +45 33 32 25 24

Invest in Denmark info@investindk.com www.investindk.com fax +45 33 92 07 17

SAS (Scandinavian Airlines) www.scandinavian.net fax +45 32 32 21 49

The Danish Cultural Institute dankultur@dankultur.dk www.dankultur.dk fax +45 33 15 10 91

The Danish Cultural Institute Riga d-k-i@mail.bkc.lv www.dankultur.dk fax +371 7 28 99 94

Wonderful Copenhagen woco@woco.dk www.woco.dk fax +45 33 25 74 10

Øresund Identity Network info@oresundnetwork.com www.oresundnetwork.com +46 40 97 27 75




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