The Suitable for Growth (SfG) project is a joint effort by the Danish Industry Foundation and the Universe Foundation.
The project seeks to strengthen the competitiveness of Danish industrial exporters by demonstrating a new approach to innovation targeting middle class customers in emerging markets.
In these markets we see new and highly innovative companies achieving high growth. They are very responsive to the needs of the rapidly growing middle income groups. Their innovation is built on low-cost manufacturing and in-depth insights into the context, wishes and needs of the local consumers. We have coined this specific innovation strategy: “Suitable”.
In contrast, many Danish companies in emerging markets currently see their growth lagging behind the general market growth. It is a widespread strategy within Danish industry to export premium products aimed at the high end of the market. Exporters often see their products imitated and offered at much lower prices by local companies. In the long run, they find themselves competing with powerful low cost imitators even in their traditional western markets and in Denmark.
The wind turbine industry provides a telling example. In just the past three years, non-Chinese producers have lost market share in China from 30% to 17% on new installations.
We suggest that Danish industries should supplement their efforts in the high end of the market by developing new solutions that are "suitable" for the lower segments of the emerging markets. These segments are growing dramatically both in wealth and population – by hundreds of millions of consumers over the coming decade – and will be the largest and most dynamic market segments for a long time to come.
By tapping into this extraordinary growth potential, Danish enterprises should be able to find new ways of creating value and employment both abroad and in Denmark.