Transatlantic Perspectives: Denmark: Wonderful, but expensive…

Stephen, the executive director of the American Chamber of Commerce in Denmark, is a veteran expat who has lived in Denmark more than 30 years. AmCham is the voice of international business, and Stephen writes about issues affecting international companies in Denmark and the people working for them.

International investments are a necessity for higher productivity and growth. And international companies that can choose where to locate their next investment hold the key to Denmark’s future growth. 

Unfortunately, because too few international companies are choosing Denmark, we have a massive investment gap.

Cause for concern
But what is it that makes some companies choose Denmark, while others run away?

AmCham’s annual ‘Business Barometer’ – a survey of the international companies in Denmark – consistently shows that approximately 50 percent of the companies have moved or are considering moving investments and jobs out of Denmark.

This does not mean they plan to leave completely, but when companies move projects and jobs to other locations, it will lead to a gradual erosion of the foundation of the Danish welfare system.

Unlikely rival
And they are not moving to China! In fact, those that do invest in China probably don’t even consider Denmark as an option. Actually, the most serious competition comes from close to home: Sweden!

Sweden’s flying strong (Photo: Colourbox)

One factor in particular is highlighted as a reason for moving out: the high cost of doing business. Not surprising perhaps, but just because we have heard it before doesn’t make it go away.

Not all bad
On the positive side, companies rate Denmark fairly highly in key areas such as infrastructure, overall business climate and availability, and quality of labour. 

But the highest rating is Denmark’s ‘living environment and quality of life’. This corresponds to other studies showing that expats generally appreciate the ‘work-life balance’ Denmark offers.

Although a great argument for bringing expat families to Denmark, this balance – involving short working days and long holidays – is not a strong selling point when trying to attract companies to invest here.

Over the Øresund
The reasons companies even consider Denmark are the educated workforce, high productivity, absence of corruption and generally stable conditions for business. 

But in all these areas, Sweden is on a par with Denmark. So, when Sweden has (slightly) lower taxes, (somewhat) lower costs and a market twice our size, why would anyone want to place their investment in Denmark?

If we can’t answer that question, it’s high time we do something about it!