China Is Denmark's New Home Turf

Danish companies are in the European lead when it comes to outsourcing jobs to China. For over a decade, many DK companies have transferred a large part of their salary-heavy positions to the Middle Kingdom, and in the last five to ten years that trend has seen a very strong upsurge. Today several leading Danish companies have just as many employees in China as they do back home.

"We currently employ around 700 people in China, and without manufacturing facilities in China and other like locations, we simply wouldn't be competitive enough. In my opinion relocation is one of the solutions to Denmark's challenges, and not part of the problem", says Lars Marcher, CEO of the Danish medico company Ambu. Mr. Marcher still employs 350 people in Denmark, but Ambu is working on relocating the remaining domestic manufacturing operations to China and Malaysia.

In the Confederation of Danish Industries (DI), Denmark's primary industrial-interests organization, further outsourcing and relocation to Asia in general – and China in particular – is predicted. Not only because of more cost-efficient labor and production costs, but also because of the need to be close to one of the world's most promising markets.

"It's a great advantage for Denmark that its companies were quicker in moving to China than many of their competitors in, say, Sweden, Norway and Germany. That means that we may have outsourced a lot of salary-heavy jobs in the manufacturing sector, but in return we've also created more domestic jobs higher up in the value chain", says Trygve Ilkjaer, a consultant with DI.

One of the heavies of Danish industrial manufacturing – commtech company GN Store Nord – is now one of the veterans in setting up and running Chinese operations. The company arrived in the 80s to set up a joint venture, and eventually opened up its own factory in 2003. At first GN Store Nord primarily relocated its blue-collar work to the Chinese factory – which now handles all manufacturing of both headsets and all kinds of high-tech products such as hearing aids – but lately, more white-collar specialists have been added to the tally. Most of these are still engineers hired to supervise and optimize the manufacturing process, while product development and design is still handled from Denmark.

Danish food-industry giant Danisco has also been doing a lot of outsourcing in the past years, and the company's 1,000-strong workforce in Denmark is now evenly matched in size by the one in China.

"But there's no doubt that the workforce in China will grow faster than the one in Denmark. But our fundamental research units will remain in Europe and the United States. The R&D people we have in China are what you might call 'application' staff. They know the local foodstuffs and culture, and understand how to adapt our products to the market", says Carl Johan Corneliussen, head of press affairs at Danisco.

Full story in Danish

News category: Denmark