By Andrew Roll
Contradictory reports have been released on the viability of Denmark as an expat destination.
In an ever-changing world of progress and globalization, business savvy entrepreneurs are turning their talents more and more to countries with the right blend of commercial attractiveness and demand to start up their companies.
Where once then notion of the ‘expat’ involved large companies sending employees for stints overseas, it’s now all about the individual’s desire to get up leave and go for it. One of these ‘global expat hotspots’ for capital pursuits resides in the Scandinavian country of Denmark.
Denmark has also been declared as being the third best country in the world to do business with, according to the World Bank’s ‘Doing Business Report 2015’. The report categorises business across a number of different facets including: trading across borders, paying taxes and protecting Minority investors.
In the most recent ‘Expat study’ of Denmark, which is compiled by Oxford Research every 4 years, 3 factors were found to be the most important in determining why expats choose Denmark. These factors are: To improve their career, to have an interesting job and to have the opportunity to enjoy a good work/life balance. The Expat study shows that there is an 84% satisfaction rate for expats in Denmark.
Ms. Sarah Hermann, communications consultant at the Confederation of Danish Industry believes it is down to, “Job position and lifestyle”.
The Confederation of Danish Industry is a privately owned organization owned and managed by over 10,000 companies with the aim of ensuring the best possible working conditions for Danish industry.
When it comes to Denmark specifically Ms. Hermann believes that, “Denmark excels in work/life balance, general safety, good healthcare and social security”.
Divisive reports leave potential expats confused.
However it’s far from smooth sailing for the Viking kingdom with conflicting reports. The latest ‘InterNations survey 2015’, one of the largest expat surveys worldwide, conducted earlier this year had Denmark all the way back at number 39 on it’s top expat destinations list. Citing it’s major problems being: cost of living(53rd),making friends(59th place) and ease of local language issues(46th place) as the major drawbacks. The report emphasized the ‘expat bubble’ where expats predominantly had more expat friends then local compared to other countries.
Furthermore a survey conducted by the Boston Consulting group concluded Just ‘1.6 percent of a total of 203,756 global respondents included Copenhagen among their five choices for cities they would consider working in abroad’. That put Copenhagen at just number 28 on the 30-city list.
In the Danish ‘Expat Study’ itself it was found that a small minority of expats, leave early. The reasons behind this are based around an overwhelming result of unsatisfactory social circumstances. Whether this is due to a lack of friends, relationship problems or the desire for their children to go to international schools over Danish ones.
Chief Advisor at the Danish Business Authority, Mr. Nicolai Hellmann believes that a combination of factors draws expats to Denmark.
“There are various reasons, among them is our specialized industries such as design and fashion and our offshore industry trade which has very low trade barriers. Mix this with social reasons and you have a truly unique business environment with many opportunities.” The Danish Business Authority employs over 600 staff members with the aim to make Denmark an easy and attractive place for businesses to run and grow.
The ease of setting up business in Denmark which has been praised by the World bank’s report only takes into account a part of the whole process argues Mr. Hellman. “From an administrative point it is very simple less then an hour to start up a company. Which is why it has been placed high up on the lists.
This claim was backed up by Betina Møller a consultant for Startvaekst-Aarhus, “It is very easy to set up costs are low, online there are virtually no costs, there is little corruption and little involvement by the state so overall you have a very positive business climate.” Startvaekst-Aarhus is a company that puts focus intoEnglish speaking entrepreneurs wanting to start a business in Aarhus.
However Mr. Hellman explained that what these lists don’t display is the success rates of these start up companies. They are ‘risky’ with only half surviving and Denmark is no exception to this rule. Furthermore it is harder for expats according to Mr. Hellman because of the “obvious language barriers which for some industries such as psychology for example, expat start-ups will face a much harder time”.
Ms. Møller elaborated further explaining, “Even though most Danes speak English, business is conducted in Danish including meetings and speeches so it is really important for expats to take the 3 year English course on offer.”
Ms. Møller also offered the advice to aspiring expats that finding the right team with each member having different sets of skills as one of the most crucial aspects in determining whether the start up company will be a success or not. Ms. Møller also believes it is a good idea to get a local Dane involved to help with “local knowledge and understanding of the language in the beginning.”
The three key reasons why expat start ups fail in Ms. Moller’s opinion is a lack of focus, a lack of sound research and entering the market at the wrong time in the economic cycle.
The deeper challenges for expats:
The major challenges unique to Denmark are market share and investors. The market itself was another issue presented by Mr. Hermann, “The market is very small with only around 5 million people in Denmark it is extremely difficult to be a billionaire or anything like that. It simply doesn’t have a large enough market to compete with the attractiveness of the likes of Germany or the US. This is a major challenge expats need to understand when moving to a small country.”
Concerning Denmark’s relatively high taxation system said Mr. Hermann “I don’t hear the taxes are a problem for expats starting up new companies because like the Danes they will get a lot back from these taxes and start ups don’t have much revenue when they are in the early stages and so won’t have much tax to give”.
The problem with the taxes more lies with the investors who will be taxed higher in Denmark then places like England where there is special tax breaks and incentives for investors. Therefore for these companies to attract investors it can be difficult and there are also much fewer venture capitalists in Denmark then for example the states. Venture capitalists are investors, which invest specifically in start up companies and other risky investments.
An Expat success story.
However for all the challenges presented many expat businesses are able to overcome these adversities and in doing so find success in the small kingdom of Denmark.
In the ever-competitive cuisine scene one expat has found a niche in the market and is enjoying the newly acquired taste of success that comes with it. ‘Crocodile dumpling soup’ and ‘the kangaroo’ are not items you associate with Denmark and that is exactly why Australian modern cuisine restaurant, ‘Banksia Food &Beer’ is a blooming success story in the city of Copenhagen.
Owner Joel Cox first had the idea after, “seeing a gap in the market and having interest in the area. I didn’t choose the city but I stumbled across it and instantly loved the city.”
Mr. Cox had his own challenges, which he said revolved around “Mostly the law, and understanding the rules, regulations and what things should cost. Also not having my contacts / circle of friends around to help.”
Mr.Cox would also like to see tax breaks or incentives for small business not just those founded by expats but all Danes.
He also said that while setting up business was quite straightforward, “There was one point when I nearly let everything go almost gave up”.
However he overcame these tough times with support from friends and contacts who knew more about the legal side of things.
For Mr cox it was the right move to live life as an expat in Denmark, “I love being here and enjoy the people within the industry and around it. I’m not sure I would be in the same spot if I were back in Australia. We have grown every year the restaurant has been open, and I have just opened a second place with some colleges”.
Denmark still number 1 in the Nordic region.
The small nation of Denmark is undoubtedly making waves in the international market for expats emerging as a major player on a number of lists. With increasing numbers coming in year after year particularly in Copenhagen, the life of the expat in Denmark is well and truly blossoming. As the country deemed the easiest to do business with in the Nordic region it is gaining ever-increasing popularity in the expat circles.
However Denmark is not without its faults with potential expats needing to be aware of the relatively small-scale market environment and the greater difficulty levels of obtaining investors as a result of high taxes.
The main strengths of Denmark with its ease of setting up a business, the work life balance and the social security it provides, should see Denmark as a destination for expats for years to come.