Denmark Touts Beer and Wind as China’s President Hu Visits

Denmark is playing to its strengths as Carlsberg A/S (CARLA) and Vestas Wind Systems A/S (VWS) signed deals with the world’s second-largest economy ahead of Chinese President Hu Jintao’s visit to the Nordic nation.

Hu’s three-day visit will be the first by a Chinese head of state. He will attend a business conference, meet with the Danish Prime Minister Helle Thorning-Schmidt and Queen Margrethe II, as well as tour Copenhagen, including a visit to the Little Mermaid statue on the capital’s waterfront.

“It’s a signal to Chinese industry and other economic actors that this is a kosher country in which to invest,” said Clemens Stubbe Oestergaard, senior research fellow at the Nordic Institute of Asian Studies. “Since China is going to invest billions in Europe, it indicates that Denmark is a good place to invest and the government will back it up.”

It marks the second top-level visit by a Chinese official to Scandinavia in less than two months. Premier Wen Jiabao in April stopped by Iceland and Sweden, forging closer business and diplomatic ties in a region that has emerged as a haven from the debt crisis in the euro area. Denmark, which is a member of the European Union, has opted out of the euro.

The Deals

The visit has been preceded by a flurry of deals. Carlsberg, the world’s fourth-largest beer maker, on June 12 announced it will invest about 4 billion kroner ($670 million) through 2025 in a brewery in China’s Yunnan region. The new brewery’s peak production will be twice the size of Carlsberg’s total output in Denmark, where it began production in 1847.

The company reported 3 percent sales growth in northern and western Europe in the first quarter, while sales jumped 40 percent in Asia, helped by acquisitions of stakes in breweries in India, Vietnam and Laos, it said May 9.

APM Terminals, which is owned by A.P. Moeller-Maersk A/S, will sign a contract tomorrow to invest more than 3 billion kroner in a new container port in China.

“The visit will cement the good relationship between China and Denmark, also on a business level,” Maersk spokesman Michael Storgaard said by phone. “That’s valuable for all parties.”

Imbalance

Danish companies may sign deals worth a combined 18 billion kroner in connection with the visit, Pia Olsen Dyhr, Denmark’s trade minister, said in an interview with broadcaster DR. About 20 contracts will be signed, Karsten Dybvad, chief executive officer of the Confederation Danish Industry, said by phone today.

“We’re focusing on attracting investments to Denmark,” Dybvad said. “We have more direct investments going out of Denmark than in, and we would like to rebalance that so we get more incoming investments, and that goes for China as well.”

Vestas will see an investment going the other way. The world’s largest maker of wind power turbines sold a factory in Denmark to China’s Titan Wind Energy (002531) (Suzhou) Co., Ltd., allowing 120 “green jobs” to remain in Denmark, according to a statement from the Danish foreign Ministry. The plant had been slated to shut. Denmark generates a quarter of its electricity from wind, more than any other country in the world.

Normalizing Relations

Stubbe Oestergaard said the visit suggests relations are returning to normal after a 2008 strategic partnership deal stalled following a visit by the Dalai Lama in 2009.

The Chinese have now visited all Scandinavian nations this year except Norway. Relations between the two have been strained since Chinese dissident Liu Xiaobo was awarded the Nobel Peace prize in 2010. The prize is handed out in Oslo.

The $311 billion Danish economy is forecast to expand 1.1 percent in 2012 and 1.4 percent next year, the European Commission said in May. The country emerged from a recession in the first quarter after businesses boosted investments and exports grew, proving resilient to turmoil inside the euro zone.

While Chinese growth is slowing, gross domestic product still rose an annual 8.1 percent in January-to-March.

Denmark’s 2011 exports to China amounted to 15.1 billion kroner, equal to just 2.5 percent of the nation’s total, according to data from Statistics Danmark.

“The visit is a big opportunity for us,” Carlsberg CEO Joergen Buhl Rasmussen said at the presentation of the Chinese investment on June 12.

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net. Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at Jbergman@bloomberg.net

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