Little Danish Things Will Help Urals Industry

21.07.2009 — Analysis

Minimalism is the distinguishing feature of the Danish companies’ products. The aspiration to simplicity, combined with the maximum number of functions, makes these goods and technologies irreplaceable in many spheres of economy. The interview given to RusBusinessNews by Peter Thomsen, the Head of the Trade Council of the Kingdom of Denmark in Ekaterinburg explains the details.

- Mr Thomsen, what area does the Ekaterinburg Representation cover?

- We opened our office in Ekaterinburg a little more than a year ago. Two more Trade Representations have been working for many years in Moscow and Saint Petersburg. However, the Ekaterinburg Representation covers not only the Urals, but all of Russia.

- Are you then not competing with your Moscow and Petersburg colleagues?

- Not at all, we are collaborating. Our functions are not divided geographically but by sectors of economy. I, for instance, specialise in industrial technologies, IT, and telecommunications. Petersburg specialists specialise in forestry and timber processing etc.

This is the modern approach. If there is no geographic separation then there is no need to work autonomously, and thus no need to keep large numbers of staff. At the same time our office, due to the geographic closeness also deals with those issues which do not involve our sectors of economy directly but lie in the sphere of competence of Petersburg and Moscow specialists, unless these issues require really deep approach to their consideration, when our colleagues from the Russia’s capitals get involved.

- What have you managed to achieve in the previous year?

- The results are evident from the dynamics of the volumes of trade between Denmark and the Sverdlovsk Oblast. It has grown almost four times in 2008 and reached 65.6 million US dollars. This, of course, is not purely my achievement as the trade has grown in both directions. And shipments of products from the Urals to Denmark prevail (more than 80% in the total structure of the country’s trade). Mostly these are shipments of metals, coal, and timber. Agricultural products (including pedigree stock), pumping equipment, electric motors, and optics are shipped mainly from Denmark to the Urals.

Worldwide experience demonstrates that whenever a trade mission opens somewhere, local business begins getting more information about the country represented by that mission. This is how it affects the annual turnover growth, however indirectly.

- What spheres of the Urals economy are most attractive for Danish business?

- Large Urals cities - Ekaterinburg, Chelyabinsk, Perm - have big potential for development. Of course, they do have developed road networks, many vehicles, huge trade centres. However, there are still many niches where, in theory, a monopoly is possible. Because some products just do not exist in the Urals market. If we take the food processing, there are no ecologically clean products with appropriate certification. For instance, there are no potatoes with a certificate confirming that they were grown without the use of pesticides. It is a paradox, but I managed to find only one type of products with ecological certificate in the Urals, and it is vodka.

- Do you suggest shipping Danish potatoes to the Urals?

- No, that would be totally inexpedient. We could, however, offer technologies for the production of ecologically clean products.

Many types of goods in the sphere of technology can be supplied from Denmark to the Urals in the future, whilst meat (beef, pork), fish, and cheese are shipped already, if not in such large quantities. There is a huge potential in the supplies of seafood. Moreover, we brought Danish pedigree pigs to the Urals for breeding several times already, there is a significant potential here for enterprising people from the Urals because the Russian market will allow selling meat made in accordance with Danish technologies for many years to come.

Negotiations regarding the supply of meat and milk processing equipment from Denmark to your region are being conducted presently. I noticed there is a lot of reconstituted milk made from powder on the shelves of the Urals’ shops. We do not have that in Denmark – only fresh milk.

- What are the prospects for collaboration in any industry sector? Would this be metallurgy, machine building?

- As I said before, large quantities of metal and coal are shipped from the Urals to Denmark.

In our country there are many companies specialising in making various devices for outsize machinery. Many production industries have a need in nonstandard parts and mechanisms which are not batch produced. We do offer such products.

Production processes at the Urals’ plants are not automated enough; moreover, your plants and factories consume very large amounts of electricity. In Denmark we have companies specialising in optimisation of energy consumption and production automation. I have to note that they offer nonstandard solutions taking into account the needs of each particular plant.

Danish companies Danfoss and Grundfos, makers of pumps and equipment for HCS, have representative offices in the Urals and are actively involved in spreading the energy saving ideas here. However, not everybody is ready for the collaboration in this sphere, a certain barrier remains due to differences in mentalities. In Russia they only accept something that can be seen and touched, like a heat adjuster on a radiator. But, for instance, software which is very expensive and capable of giving considerable savings in energy, staff, and production costs, is intangible. So the value of software is not perceived as it should be. This barrier, however, is being overcome slowly.

- At the time of crisis the Russian Government raised import duties on many types of equipment. Most likely this had an effect on Danish companies too. Do they consider setting up their production lines here in Russia and in the Urals in particular?

- Not only duties have grown during the crisis, but all sorts of barriers in the relationships between the countries. Denmark is a small country, however, and thanks to this we are very flexible. Some of our companies which supply, for instance, meat to Russia, just left Russia for other markets. It is not difficult. Some companies come here, others just leave.

- Companies in the Urals have a large choice of equipment from European producers. What are the competitive advantages of Danish companies?

- Our most important advantage is the design. Design manifests, first of all, in minimalism. The Danes try to make things as simple and as small as possible but with the maximum choice of functions. We don’t know how to do products which we can see, for instance, from this window here - the large golden domes of an Orthodox Christian Church. This is very beautiful, but the Danish style is different. It is simple, straight, but functional; it manifests in everything, from milk processing lines to clothes. For example, it takes only one person to manage the process of cleaning the sewerage system when you use Danish equipment.

Large Danish companies can be counted on the fingers of two hands. But our small and medium sized business supplies products and technologies to the world’s giants. We can not produce large machines but no fighter jet and no cruise missile can fly without microchips from Denmark. Thousands of programmers work for Google all over the world, but the most important "engine" for browsers is a little thing made in Denmark. Again, this is how our minimalism manifests.

We will not be able to supply something large and heavy for machine-building plants in the Urals. We can, however, make a small part that would completely optimise all their production, this is exactly the kind of thing one should come to Denmark for.

- What specific techniques do the Danes use to promote their products in the Urals?

- We do have a governmental Export Credit Fund (Eksport Kredit Fonden) which issues loans for the implementation of large projects. Under its aegis there is the Investment Fund for Central and Eastern Europe (IØ), it work specifically in funding projects in Russia. These funds work together with Atradius, a Danish insurance company that is capable of insuring projects to the amount of up to 70 billion roubles.

Moreover, Danish companies, as well as other European companies, can also count on the support from the government. The Russian Federations provides subsidies to local producers, for example. It also applies to Danish companies which produce goods within Russia, they often get tax benefits from the RF State authorities. SAC, a company that assembles cattle raising complexes in Russia, does use this form of support. In the near future Gold Products, a company that has a large share of the Scandinavian hair care products market and plans to start sales in the Urals, is planning to get the same support.

- What is planned to be done in order to inform the Urals business community about the opportunities offered by Danish companies?

- The International Cultural and Economic Forum "Caravan of Friendship Russia – Denmark" will be held in Copenhagen in October 2009. The top hundred of the most successful representatives of small and medium sized businesses from Russia, including the Urals, will be participating in the business programme of the forum.

I would like to note that it was Russia that initiated the organisation of the Forum. I am glad that representatives of Russian small and medium sized businesses come to us and say that "We sell Danish products in Russia, now we would like to go on to the next stage and to make the collaboration deeper. How can you help us?" This demonstrates that Russian businesses are well informed about Danish products and that the financial situation is improving.

- It is, however, quite difficult to travel from the Urals to Denmark. Is there going to be a direct flight organised at some point?

- We did discuss this issue very seriously with SAS, the Scandinavian (Denmark-Sweden-Norway) carrier. We did have plans to continue this discussion but the company changed its strategy last year. This is why SAS is unable to invest into opening the direct service as yet.

We have not yet discussed this question with the Ural Airlines, the main Koltsovo carrier. I fly to Copenhagen via Helsinki. At the moment this is the best route; flying time is about 4 hours.

- Is Denmark ready to offer tourist services to people from the Urals?

- Representatives of the Danish company VP-Travel which organises tours to Denmark came here not long ago and met with many local operators. There are tourist programmes designed specifically for the Urals tourists.

Denmark is not a place where one goes simply to lie on the beach, sunbathe, and swim (these things, are also possible in the summer, undoubtedly). You have to see the architecture and people in Denmark. Only all this combined would create the correct perception of out country, of our way of life. Already the Urals tour operators offer trips to Denmark for everyone.

- But you need a visa to Denmark for that, and it can only be obtained in Moscow. Will the entry permits be issued in the Urals?

- The Ministry of Foreign Affairs of Denmark (Udenrigsministeriet) is considering several options for issuing visas in Ekaterinburg, it is a very important issue for me personally. What is going to be done here will remain here permanently.

Taking this opportunity I would like to inform you that our Trade Council in Ekaterinburg has moved a few days ago to a new, permanent office on ul. Karla Libknekhta 22, of. №501 (tel.: +7 (343) 2535320, fax + 7 (343) 2535317; e-mail: DanishTrade@Gmail.com). I would like to invite everybody interested in the collaboration with the Kingdom of Denmark to see us.

The interview has been prepared by Pavel Kober