Vilma Rissanen from Business Finland offered insight into how Finnish companies should go about expanding into the Swedish market and what they need to take into account when planning their market entry. Business Finland helps promote Finnish innovation and companies abroad. What changes will the current global situation bring about in the market?
Based on its market size and location alone, the Swedish market is a great place for Finnish companies to experiment with their export potential and product development. Finland and Sweden are very similar countries, not only culturally but also structurally. However, because of this similarity, Finland is not seen as particularly exotic, forcing Finnish companies to directly compete with Swedish companies. Nevertheless, commercial prospects are good as Finns have a good reputation in Sweden and are generally seen as trustworthy.
However, differences between the countries should also be considered. Swedes excel at productisation and commercisalisation, meaning it needs to be taken into account, particularly in a company’s sales strategy. Swedes also tend to highlight customer needs and benefits in their sales and marketing instead of focusing on technical details.
According to Rissanen, Sweden came through the previous financial crisis slightly better off than Finland and has shown good growth since then. The financial instability caused by the COVID-19 crisis will impact the Swedish economy, but, according to forecasts, Sweden is likely to survive the crisis fairly well thanks to its financial stability.
Rissanen concluded by highlighting new business opportunities for Finnish companies, including:
Emil Westrin, Vainu’s Sweden Country Manager, explored Vainu’s entry into the Swedish market from a sales perspective. Vainu, a Finnish company established in 2013, specializes in software that aids B2B sales and opened their first Swedish office in 2015.
Before entering the Swedish market, Vainu had only operated domestically in Finland. They set clear goals for its Swedish business operations from the start, such as setting a clear target customer number, aiming for 10% of sales calls to lead to meetings and 10% of meetings to lead to sales, with the intention of reaching them within a year. The company noticed that entering a new market is more demanding for the sales team in the new country than the domestic sales team. For its outbound organisation, it meant having to hire more sales staff in Sweden than in Finland.
Vainu began its Swedish prospecting by simply taking a look at its Finnish clients. Once this client group had been surveyed, Vainu looked for similar companies in Sweden. After profiling potential clients, it was easy to gear sales towards these companies. Marketing was also targeted towards this segment.
Westrin listed his most important tips for entering a new market:
KPMG’s experts Johanna Fagerholm and Kaj Grüssner explained the legal and tax-related aspects that Finnish companies need to take into consideration when entering the Swedish market.
Planning is essential for a company considering expansion in order to avoid unnecessary complications along the way.
Tax treatment and tax liabilities vary depending on the chosen business model. Although the legal culture in Sweden is similar to Finland, there does exist differences between the two.
When entering the Swedish market, a Finnish company needs to settle on a business model for the new market. The business model is chosen based on the business strategy.
The most commonly used models include:
If the company is trying to establish itself in the Swedish market, a branch or subsidiary model is the recommended option. A subsidiary is separate from its parent company and a separate legal entity under Finnish law. A branch is legally a part of the parent company and operates on behalf of the Finnish company. It should be noted that in Sweden a branch is obligated to be audited. The two options, a subsidiary and a branch have very similar reporting obligations.
Contracts are part of a company’s risk management, both domestically and abroad. However, the importance of contracts is even more so important in a new market. A clear contract helps you avoid misunderstandings or disputes with retailers, agents and or other parties. When the contracts are in order, you can focus on your core business and developing it.