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The myth about Danish exports in Germany

Germany is Denmark’s absolute greatest export market. But relative to population size, the amount that Danish companies sell to their southern neighbour is less impressive, new calculations show. 
Iceland is by far the country that Denmark exports to the most when you take the population size into account, new calculations show.

Publiceret: 14.09.2017
Af Peter G. H. Madsen mail

Germans love Danish products and Danish companies.

This is the story that has been told again and again in recent years, as one report after another has shown that Germany is by far the country Denmark exports the most to.

However, that story may require a bit of nuance. If you take into account that Germany, with its 83 million inhabitants, is the most populous country in Europe, it turns out that our southern neighbour is not exactly swimming in Danish products, Senior Analyst at the Confederation of Danish Industry (DI) Allan Sørensen points out.

“There is no doubt that Germany plays an important role for Danish exports. But it is important to remember how many people live in Germany. If you ask the average German, there are unfortunately not many Danish products and companies that ring a bell,” says Allan Sørensen.

According to DI’s calculations, DKK 1,229 worth of Danish goods were exported per German inhabitant in 2016. In comparison, every Icelander bought DKK 10,199 worth of Danish goods in 2016. And also in Norway, Sweden, Finland, Ireland and Holland, more Danish goods are bought per inhabitant than in Germany.

“This highlights that there still is a large potential for Danish companies in Germany. If exports could be increased, even just a bit closer to the level of exports to neighbouring countries, it would lead to many more export orders and increased economic growth here at home.”

See also: German businesses hit by spring fever

Be competitive or forget about it

One of the companies that has worked for a number of years to get a solid foothold in the German market is Linimatic from Helsinge. The company is specialised in die-cast zinc and produces, among other things, materials for industry and for companies with high quality requirements for casting and surface treatment such as B&O’s sound systems for Audi.

Today, Linimatic has a turnover of approximately DKK 6 million on the German market. Getting there, however, has not been easy.

To get into the German market, Linimatic had to sell some products very cheaply - and in some cases so cheaply that they lost money. But that was the price one had to pay as a small Danish company in order to enter the German market, says Sales Director Torben Levinsen.

“You have to be competitive in terms of price, otherwise you can forget about it. Once you get a foot in the door and deliver good products on time, then you have a good business case in Germany,” he says.

See also: Exports threatened by labour shortage

Basic German will not do

But naturally, the bottom line is not the only factor if one wants success in Germany. Language and cultural understanding also play an important role.

“Proficiency in German is definitely an advantage. My German from school will not get me far when we have to talk business,” says Torben Levinsen, who is hoping that Linimatic will eventually be so successful in Germany that it makes sense to have more permanent sales resources in the country, as the company has previously had.

Furthermore, there is no doubt that flexibility is an advantage. For Linimatic, it has frequently been the base that a German company suddenly needs additional deliveries, which Linimatic has solved with a triple-team rotation. This kind of thing is appreciated.

“I am very optimistic about Germany. But you don’t create a market from one day to the next. We must deliver the goods and keep our word. But if you do that, major opportunities await,” says Torben Levinsen.

Indeed, a look at key figures also indicates that opportunities will only grow in the near future.

In the summer months the renowned German Ifo Institute at the University of Munich announced a sharp upwards adjustment of its expectations for the German economy.

According to the institute, German growth will rise to 1.8 per cent in 2017 and again to 2 per cent in 2018, a high level in post-financial crisis times.

See also: Companies exports create 775,000 jobs in Denmark

What’s the problem with southern Germany?

One of the explanations why Denmark doesn’t export more to Germany is that Danish companies haven’t had as great success selling their products in southern Germany.

While Denmark supplies 10 per cent of the total imports to the state of Schleswig-Holstein in northern Germany, and almost 8 per cent of imports to Mecklenburg-West Pomerania, the picture is totally different in southern Germany. In the German states to the south, Baden-Wurttemberg, Bavaria and Saarland, Danish products constitute only 0.5 per cent of the import market.

Danish ambassador to Germany Friis Arne Petersen, however, does not believe that Danish companies are doing poorly in southern Germany. But there is no doubt that great potential remains.

“Take for example the state of Bavaria. It’s a growth generator in Germany. If Bavaria was an independent country, it would be the sixth largest economy in the eurozone. It would therefore really have an effect if Danish companies were even more successful in southern Germany,” he says.

Bet on Bavaria

Danish Prime Minister Lars Løkke Rasmussen also highlighted the opportunities on his visit to Germany shortly after taking office and, during which he affirmed that the forthcoming Germany strategy would have a special focus on southern Germany.

According to Ambassador Friis Arne Petersen, the effect of the Germany strategy, which was launched in February of 2016, may soon become apparent. He points out that there have recently been several ministerial visits to southern Germany and that there has been a large interest from small- and medium-sized companies to establish themselves there.

One of the companies that is already making moves in the southern German market is the furniture chain BoConcept.

Owner of three furniture stores in Munich and Augsburg Allan Mølholm says that he was not given much chance for success when he took over a failing Danish BoConcept shop in Munich.

“Forget it. You have no chance, people said. What the southern Germans want is not Danish design, but much heavier furniture. But I had a really good gut feeling,” says Allan Mølholm.

That feeling turned out to be right. Already during the first year, he managed to change the course, double the turnover and break even on the bottom line. Today, there are 45 employees in his stores.

Allan Mølholm does not think that there is a magic formula for doing business in southern Germany.

“It’s about good, healthy core values. Treat your employees and customers properly,” he says.

He hopes that more Danish companies will follow his footsteps and try their luck in southern Germany.

“It’s completely true that the economy in southern Germany is strong. There is a lot of potential,” he says. 

If you ask the average German, there are unfortunately not many Danish products and companies that ring a bell.
SENIOR ANALYST ALLAN SØRENSEN, DI
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PUBLISHED: 9/14/2017 LAST MODIFIED: 9/14/2017