Denmark’s Prime Minister, Lars Løkke Rasmussen (V), led a Trade Promotion in Germany focusing on digitization together with 29 Danish IT companies.

Photo: Rasmus Emil Gravesen
06-02-19 DI Business News

Trade Promotions give Danish companies billions in revenue

Annually, export revenues generates billions when Danish companies together take on new markets to establish themselves. For smaller companies like CT-Technologies, the promotions are a cornerstone of their business.

It may be enviable that Queen Margrethe, along with 39 companies, received public grants to spend three days under the palm trees in Ghana, just over a year ago.

But it’s good business for Denmark when companies go together to a trade promotion. The consultancy firm Damvad Analytics underlines this in a new study on trade promotion.

It is stated here that while Danish companies receive grants for approximately DKK 34 million annually for export promotion activities, the companies collect billions in orders back in Demark. Precisely 4.6 billion in 2016 and 2017.

See also: Løkke and Frederiksen: The road to Denmark must be easier for foreign specialists

There is no doubt that trade promotions are an important part of how we do business. It clearly creates increased revenue and without this our company would’ve probably been a bit smaller today. Beway Bakir, Marketing Director at CT-Technologies

One of the companies that benefit greatly from the trade promotions is the engineering company CT-Technologies who, among other things, build cooling facilities for Danish food manufacturers. The company participates in about two trade promotions annually, which results in an increase of orders and projects.

After a trade promotion in the Philippines, the company opened an office here and sent many new orders back to Denmark

“The same goes for the trade promotion in Indonesia. In Myanmar we have now initiated three new projects. We had already established ourselves in Ghana, but we received many new, important contacts as well as new orders,” says Beway Bakir, Marketing Director at CT-Technologies.

See also: The trade war – what to expect in 2019

Important for smaller companies

The engineering company, with more than 50 employees globally, has a large part of their market in developing countries, where it can be difficult to establish a business.

“Getting into a new market alone can be a messy process. We tried in Ethiopia and that didn’t go as expected. Therefore, we usually try a new market with a business delegation. Doing it alone requires a local network, contact with the right parties and companies and we need the logistic side of it to work. We simply don’t have any resources for that,” says Beway Bakir.

In the study of trade promotion, it is clear that the marketing director's experience is not alone. Among 1,166 people working at export companies who were asked, 42 percent responded that trade promotions have greatly or immensely influenced their increased exports in the relevant market.

Confederation of Danish Industry (DI), who often are a co-organizer for trade promotions, also recognizes the positive outcome from the trade promotions when they receive feedback from companies.

“The trade promotions have a great effect on the many Danish companies that participate. Especially the small and medium-sized companies benefit greatly from the promotions,” says Peter Thagesen, Vice President at DI.

See also: Global guide to sustainable business

Grant savings can slow down export growth

More than 90 percent of companies believe that the Export Council's grant for trade promotions affects their participation. But the annual pool of DKK 34 million, which the Government Budget support companies with during trade promotions, seems to be lowered. This is because the grant scheme has so far extraordinarily added extra money to the pool, which otherwise is normally DKK 20 million, annually. The extraordinary addition is to be withdrawn in 2022.

“Support for trade promotion is one of the most effective business policy instruments we have. A smaller grant will have an impact on trade promotions and fewer companies will be able to participate. It also means fewer opportunities to create new agreements and increase exports, and will therefore affect Denmark. We would rather see the grant level go up,” says the Deputy Director.

For CT-Technologies, the grant means a lot for the business, and a decrease in grants will therefore affect their way of starting new projects and getting orders back home to Denmark.

“We can survive without trade promotions because we have gradually established ourselves in several markets. But there is no doubt that trade promotions are an important part of how we do business. It clearly creates increased revenue and without this our company would’ve probably been a bit smaller today,” says Beway Bakir.

See also: Danish expertise to change working life for the world’s poorest

Written by:

Rasmus Emil Gravesen

Jens Holst-Nielsen

Markedschef

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