{"id":5909,"date":"2026-09-08T10:10:44","date_gmt":"2026-09-08T10:10:44","guid":{"rendered":"https:\/\/interstatelogisticshubs.com\/?p=5909"},"modified":"2026-09-08T10:10:44","modified_gmt":"2026-09-08T10:10:44","slug":"denmarks-competitiveness-is-under-pressure-not-everything-green-is-gold","status":"publish","type":"post","link":"https:\/\/interstatelogisticshubs.com\/?p=5909","title":{"rendered":"Denmark’s Competitiveness is Under Pressure — Not Everything Green is Gold"},"content":{"rendered":"
\n

There are many facts of international marketing that export-dependent manufacturers should never ignore, especially if they reside in small, high-wage, high-operating cost countries like Denmark.<\/p>\n

Read more The Red and the Green<\/a><\/p>\n

Their companies cannot expect to out-compete local manufacturers in low-wage countries, those with ample resources,\u00a0 those with fewer regulations or those with already well-established brands. The cards are also stacked against smaller countries when larger host-country governments actively support their industries with subsidies or direct investment.<\/p>\n

Some may regard these assertions as simply generalities, but I would assert that they are rooted in reality and especially relevant to Denmark as it moves away from manufacturing and agribusiness and ever closer to an information and innovation-dominated society.<\/p>\n

Since the 1950s, the Danes have supplied many export markets with food products like bacon, with high-end designer furniture, Lego toys, Bang & Olufsen audio equipment, pharmaceuticals and with a multitude of well-engineered items for industry like pumps and thermostats.<\/p>\n

Danish wages have risen steadily with the times. Living standards have improved, dramatically. The Danes have accumulated substantial wealth and relied on their traditional industries to keep them in Kroner.<\/p>\n

As a member of the Common Market since 1973 they have had exceptional access to their neighbors.<\/p>\n

For the last fifty years, their export-reliant companies have invested in offshore manufacturing to take advantage of lower, host-country operating costs inside their principal export markets. Their investments have paid off.<\/p>\n

Just ask my former employer, Novo, where I worked in the mid-1970s. Many Danish companies have expanded their market shares and profited by sending some of their brightest people to run their overseas operations. I encountered many of them when I worked in Singapore.<\/p>\n

Agriculture and tourism were the Danes’ cash cows for decades as they pioneered new foreign markets.<\/p>\n

But they were not alone. Other EU countries like The Netherlands were also competing in the same export markets. The Dutch competitive difference lay in their strategy to add to their pure exporting efforts by actually inviting competition to their shores<\/em>.\u00a0<\/p>\n

They reinvented themselves as Europe’s entrep\u00f4t by investing vast sums of money in modernizing and expanding their air and seaports. Their gamble paid off in attracting foreign direct investment (FDI) from rivals such as the U.S. Bavaria, other parts of Germany, Ireland, the U.K., Australia, Belgium, and France, virtually all of it high-tech, biotech, med-tech, and toxic clean-up. They succeeded in promoting their relatively small country as a stepping stone to other foreign markets. “Right in the center,” their advertising literature said.<\/p>\n

The Danes chose a scaled-down approach to attracting FDI, full-well knowing that the cost of doing business in a small, excessively-regulated market which included: high wages\/benefits, high taxes, high land prices, coupled with a small labor force made them less attractive to foreign investors.<\/p>\n

Instead, the Danes concentrated on finding niche markets with well-designed, well-engineered products that had a distinct quality advantage over the competitors’ cheaper products. They left the totally price-conscious customers to others to pursue. They adapted their products to the markets instead of forcing the markets to adapt to their products.\u00a0<\/p>\n

Their strategy worked well until other competitors got wise and entered the same markets, some with knock-offs of Danish products manufactured more cheaply all while the developing world’s consumers got wealthier.<\/p>\n

Realizing that they needed a new strategy, the Danes focused on growing their innovation economy. They got better at “thinking out of the box” and decided to support the growth of an entrepreneurial class.\u00a0<\/p>\n

In short, they made a commitment to change their own paradigm, but they did not completely cut the umbilical cord that was still attached to their agricultural and tourism sectors.<\/p>\n

No small tribe cannot exist in a modern world without making some changes.<\/p>\n

During my time as Commercial Counselor at the U.S. Embassy in Copenhagen, the country underwent a change of direction starting with the Anders Fogh Rasmussen administration.<\/p>\n

The older Danish industrialists gradually transitioned from many leadership positions in business and industry and the labor unions stopped protesting and striking. Many university students switched their majors from the humanities to business-related degrees.<\/p>\n

Read more A Dose of Reality for You DSA Kiddies<\/a><\/p>\n

Businessmen were no longer viewed as pariahs, feeding off the masses. They were the vanguard of the new-age Danes, the enlightened Danes, the unapologetic capitalist Danes, who wanted houses in the Copenhagen suburbs, a Tesla in their driveways and enough money to travel the world during their six weeks of vacation each year.<\/p>\n

They prospered as the economy changed, but the income and values gap between urban and rural Danes was growing even faster.<\/p>\n

Fast-forwarding to 2020, the coronavirus pandemic hit Denmark and Europe hard and was partially responsible for the headlong race to digitalization due in part to social distancing. The Danes were already well on their way to completing the transition from analog to digital, but the social cost of taking the last steps was high.<\/p>\n

Older Danes were left in the analog dust while their children and grandchildren celebrated social media. One of the unfortunate by-products was the unfortunate devaluation of their person-to-person culture. The pandemic and the energy-related “Russian energy threat” also served as a wake-up call for the Danes to become more energy self-sufficient. And while the country as a whole had always been environmentally conscious, it now shifted into overdrive.<\/p>\n

The environmentalists linked arms with the Danish left and joined the ranks of those who predicted the end of the world if something was not done immediately to lower the world’s temperature and lessen dependency on fossil fuels. Greening-up was the answer. Saying “no” to oil and gas and “yes” to the wind and the sun became the national mantra in the government’s green new deal.<\/p>\n

New pressures on industry resulted.<\/p>\n

Out of a sense of ethical and planetary responsibility, the government created environmental and energy initiatives that went way beyond the ambitious. The Danish Climate Act which was adopted in 2020 committed the country to major greenhouse-gas reductions (a 70% reduction by 2030 compared with 1990). The government subsequently set an 82% reduction target for 2035. The aim was climate neutrality.<\/p>\n

The Green Tripartite Agreement (2024) is an enormous restructuring of Danish agriculture, land use, forests, nature, and waterways. Roughly DKK 43 billion (USD 6 billion) is being committed and plans include 250,000 hectares of new forest, converting about 140,000 hectares of lowland farmland to nature, improving fjords and coastal waters, and introducing the world’s first CO\u2082-equivalent tax on livestock emissions.<\/p>\n

If that were not enough to scare the pants off the Danish corporate futurists, the government also introduced the “Green Tax Reform” which uses CO\u2082 taxation to make fossil-energy-intensive industrial production more expensive and green investment more attractive. The agreement (2022) has a goal to cut emissions by about 4.3 million tons of CO\u2082 by 2030. To put it simply, the Climate Law tells Denmark where it intends to go. The Green Tripartite and the Green Tax Reform are the tools it is using to make it happen.<\/p>\n

“The operation was a success. Unfortunately, the patient died.”<\/p>\n

Not everyone is on board the climate train. The business community and Denmark’s 50,000 Danish farmers are raising the alarm that while these goals may be laudable, they are unrealistic and the costs will severely impact their ability to compete globally and even survive as domestic producers. The Danes are committed to de-agriculturalize their economy, saving only enough farms, farmers and farmland to support the Danes’ own consumption. Couple this with their aggressive support for solar power, building data centers and conversion to electric vehicles many doubt that the Danish grid will be able to handle the load. The major problem is the speed and sequencing of the transition. Just last month, the Danish government explicitly said that, “The grid is under pressure\u201d and warned that the situation threatens to bring parts of the green transition and economic development to a standstill.<\/p>\n

The Danes have always been a pragmatic people, but they have also been a very idealistic people. They know they are a small country in relation to their neighbors, but sometimes they act like a terrier standing toe to toe with a Rottweiler, oblivious of the size difference. This refusal to acknowledge some facts like weather and climate do not respect national borders is an example. Another is the conflict between Denmark and the U.S. over Greenland.\u00a0<\/p>\n

Enter Artificial Intelligence.<\/p>\n

Just as the Danes were settling in to their prosperity, along came AI and complicated matters. Now, even the world’s “B teams” are suiting up to play in the exporting big leagues with AI as their secret weapon. Coupled with lower costs of doing business and enjoying the same market access, the developing world is nipping at the heels of the developed world’s companies. This is especially true of China which has abundant resources, a massive home market, low operating costs and a government that supports its companies to the hilt.<\/p>\n

How then, will the Danes compete in the new AI-driven export marketplace?<\/p>\n

Their population is aging and the cost of supporting them is increasing, putting pressure on their national budget which could lead to a rise in corporate taxes. Their energy costs are also increasing as their proposed sustainable alternative energy projects have not yet been built. Workers are demanding higher wages. Residential real estate in the capital city is unaffordable and many smaller businesses around the country are closing because they cannot compete with online retailers. Denmark lacks raw materials and it must import components for many of its high-priced products. It is also scrambling to finance a growing military NATO commitment. The challenge to stay competitive is enormous.<\/p>\n

One answer may lie in the simple law of business balance: “You get what you pay for.” Quality<\/u> is the one component that is missing from many of the world’s products. As countries’ consumers climb the wealth ladder, their ability to pay more for quality products that are functional, reliable and well-designed is increasing and that provides an opening for the Danes who have always had a sterling reputation for quality.<\/p>\n

If the Danes want to offset their high costs of production and compete in world markets going forward then they had better keep their focus on five important steps: 1. Do ample market research before products leave the drawing board; 2. Produce products of visibly high quality; 3. Concentrate on markets where the competition is the weakest and the potential customer base is affluent; 4. Produce locally if necessary, but never skimp on quality control; 5. promote, promote, promote.<\/p>\n

If Denmark needs a national tag line, then the most obvious one is: “Made in Denmark: We do it better.” No product should ever leave the country without some version of that message stamped on it.<\/p>\n

Stephen Helgesen is a retired career American diplomat specializing in international trade. He has lived and worked in 30 countries over the course of 25 years under the Reagan, George H.W. Bush, Bill Clinton and George W. Bush administrations. He is the author of fifteen books, seven of which are on American politics. His latest book deals with the Danish-American relationship, written in both Danish and English. He has penned more than 1,500 articles on politics, economics and social trends. He now lives in Denmark and is a frequent political commentator in Danish media. He can be reached at: [email\u00a0protected].<\/em><\/strong><\/p>\n

Read more Making the World Great One Nation at a Time<\/a><\/p>\n

Image: PxHere \/\/ CC0 public domain<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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