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. Last Updated: 07/27/2016

Danish Firms See Booming Days

Russia may be the land of great plans and huge designs, but Lars Thode Kristensen, a Danish export manager trading in milling equipment, has a different suggestion: Think small.


Thode Kristensen believes the living-room-size mills his Skiold company sells are part of the solution to infrastructure problems that dog Russia's highly monopolized and ailing system for milling grain and marketing flour.


Judging by the hundreds of Russian businessmen queuing up to meet him and colleagues from 45 other Danish businesses at the Danish Days trade fair at Moscow's Radisson Slavjanskaya Hotel on Monday, there is certainly a market out there.


Old and inefficient mills coupled with a poor transportation network have led to flour shortages in many regions, he said.


The solution for state farms, bakeries, private farmers, or even factories that want to supply their employees with flour, could be a mini-mill covering some 40 square meters and producing up to 500 kilograms of flour an hour.


"There is an enormous demand for such mills," Thode Kristensen said.


Skiold sells around 100 such units every year in the Commonwealth of Independent States at a cost of $70,000 each. For every mill sold, another 20 interested customers are unable to make the advance payment, Thode Kristensen said.


Like most Danish companies operating in Russia, however, Skiold has not yet invested locally. Denmark's business landscape consists mostly of small- to medium-sized companies emphasizing niche production, rather than the giant multinationals of Scandinavian neighbors Sweden and Finland and other foreign investors in Russia.


But while investment by Danish companies here is marginal, trade has been booming, said Ole Andersen, president of the Danish Chamber of Commerce in Copenhagen.


Danish-Russian trade will exceed $1 billion in 1996, said Nikolai Drozdov, Russia's deputy foreign trade minister.


Russia currently runs a considerable trade deficit with Denmark, importing chiefly food products and consumer goods and exporting mostly raw materials.


But if the political climate remains stable, trade will in turn yield investments into the Russian economy, Andersen said.


More than 1,000 business meetings had been scheduled in advance for the fair, said Ulrik Helweg-Larsen of the Danish Foreign Ministry. Most of the companies present at this week's fair represented agriculture, construction, the food industry and the energy sector. Two of Denmark's best-known companies operating in Russia -- chewing-gum maker Dandy, with the Stimorol and Dirol brands, and the united Tuborg and Carlsberg breweries -- were not represented at the exhibition.


One of the few Danish companies to take the plunge and invest is Danfoss, a major engineering group, which set up a Russian subsidiary in 1993 to produce heating thermostats for the local market, said Mogens Jessen, a Danfoss deputy sales manager.


The thermostats allow consumers to regulate heating in their flat -- a considerable improvement on the Soviet system, where the chief means of heating regulation available was opening the window.


For Russia's cash-poor regions, decentralized heating regulation could help to cut back on heating bills that have become astronomically high, because the authorities purchase energy at near world-market prices and sell it to consumers at heavily subsidized rates, Jessen said.


"Some city administrations use up to 40 percent of their budget on heating," he said.


Given the outsize heating bill, the investment in thermostats will typically pay off in less than two years, Jessen said.


Currently only some 30 percent of materials at the Moscow-based Danfoss plant, which employs around 90 people, originate in Russia, but the company hopes to increase that share to 70 percent over the next years.


The Danish Days exhibition in Moscow ends Tuesday and moves on to Nizhny Novgorod.