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Country Commercial Guides
FY 2000: Finland
CHAPTER IV: MARKETING U.S. PRODUCTS AND SERVICES
Distribution and Sales Channels
Distribution channels in Finland are similar to those in the United States. Metropolitan Helsinki, the capital of Finland, is the major business center with a current population of about 900,000, housing many head offices of Finnish industrial, commercial associations and large corporations. Many foreign companies also use Helsinki as their regional headquarters for Baltic and Russian operations.
Goods may be sold through an agent, distributor, established wholesaler, or by selling directly to retail organizations. The majority of Finnish commission agents are members of the Finnish Foreign Trade Agents' Federation, which has 18 divisions for different products. These commission agents are relatively small, private companies, most of them operating in sectors such as textiles, apparel, furnishings, and raw materials.
Privately-owned wholesalers and trading houses are particularly strong in certain specialized sectors, such as electronics, electric components and instruments, pharmaceutical and health care products, technical products and machinery, raw materials and chemicals. Most of these importers and wholesalers are members of the Federation of Finnish Commerce and Trade, which is a central organization for 41 trade associations covering the bulk of foreign goods sold to Finnish trade and industry.
Typical Product Pricing Structures
Prices are set individually by companies. Products in Finland are usually priced using the following method: CIF price + import duty + excise tax + profit + VAT (value added tax).
Use of Agents and Distributors; Finding a Partner
One exclusive agent/distributor is usually appointed to cover the entire country, mainly due to the relatively small size of the Finnish market. Finnish importers often represent several different product lines. In selecting a representative, the exporter should check whether that company handles competing products. Consumer goods and similar merchandise requiring maintenance of stock are often imported through wholesalers or trading houses. Such products may also be sold directly to retail chains, department stores, and other retail outlets.
Contacting local trade associations for a list of importers is a good way of finding a distributor in Finland. Finnish importers also attend major trade fairs in Europe and in the United States in order to find new products and ideas, but also to find new representation. The Commercial Section of the American Embassy also assists in finding agents/distributors for U.S. exporters through Agent/Distributor Search, Gold Key Service, and other networking activity.
Franchising
The total market for franchising in Finland was estimated at $1.9 billion in 1998. According to a survey made by the Finnish Franchise Association (FFA), there are about 150 franchise chains in Finland of which about one-third are foreign owned. In 1998, the sales of franchising companies increased by 15 percent. Franchising has increased in popularity during the past few years, as investors better understand the business concept, e.g. franchising involves lower risks for companies expanding their operations. For more information on franchising see chapter V -- Best Prospects.
Direct Marketing
Direct marketing as a media includes direct mail and direct response advertising (press, radio, television). As a way of selling it covers mail order, direct selling and telemarketing. Both direct sales and mail order sales are showing a steady growth in Finland.
The Consumer Protection Law and the Data Protection Law are the two most important laws controlling direct marketing and sales in Finland. The Finnish Direct Marketing Association (FDMA) has also adopted "The Rules for Fair Play", a code of ethics, which all of its member companies have to observe in Finland. FDMA also maintains a so-called 'Robinson's Register' consisting of people not wanting their contact information to be used for direct marketing.
Joint Ventures/Licensing
Licensing agreements are quite common in Finland because of the good quality of Finnish manufacturing, the small size of the market and the relatively high cost of transporting goods to the country. Royalties and licensing fees may be freely transferred out of Finland.
Several U.S. companies have established themselves in the Finnish market with subsidiaries or joint ventures, with particular interest access to Finnish-Russian joint ventures. A number of Finnish firms are interested in using their long-established contacts in the former Soviet Union and the Baltic countries to market U.S. goods. Due to its physical proximity, and Finland's network of rail road and air connections, there are many strong selling features regarding access to Russia. As a full member of the European Union, Finland has its feet firmly planted in the west but possesses unique access to and expertise about the Russian market.
Steps to Establishing an Office
If a foreign organization intends to establish an office in Finland, the following steps should be followed:
1) Drafting the Memorandum of Association
2) Drafting the Articles of Association
3) Subscription of the shares
4) Constituent meeting of the shareholders
5) Adoption of the Articles of Association 6) Payment of the capital share
7) Registration of a limited companyFor further information, please contact the Employment and Economic Development Center.
Selling Factors/Techniques
Selling factors and techniques are very similar in Finland to those in the United States. Terms generally applied to international trade with industrialized countries apply to selling in Finland. When selling to the Finnish market, it is recommended that a local agent/distributor who has a sales network covering the whole of Finland be appointed. Only one local distributor is needed to cover the whole country since Finland is a small market population-wise, but distances are long and therefore a distributor with a country-wide network is most desirable. Consumer goods and similar merchandise requiring maintenance of stock are often imported through wholesalers or trading houses. These products can also be sold directly to retail chains, department stores and other retail outlets. U.S. suppliers should provide the local distributor with English language product literature and export prices. Strong promotion efforts are very important to introduce new products into the Finnish market.
Advertising
Over $1.2 billion was spent on advertising in the Finnish mass media in 1998. Newspapers account for 48 percent of all media advertising, television 18 percent, periodicals 14 percent and radio 3 percent. From 1997-98, advertising on the Internet grew 120 percent. All media in Finland is open for advertising.
There are two different acts concerning marketing, the Consumer Protection Act and the Act on Unfair Business Practice. Advertising is controlled by the Consumer Ombudsman and the Marketing Court. The general rule is that advertisements may not contain claims which cannot be substantiated or which are offensive to minorities (race, sex, etc.). There are also restrictions concerning the use of children in advertising. Advertising of tobacco products and spirits is completely prohibited in Finland's mass media. However, advertising of beer, wines, and low alcohol level beverages has been allowed since 1995.
Major Newspapers
Helsingin Sanomat
P.O. Box 975
FIN-00101 Helsinki, Finland
Tel: 358-9-1221
Fax: 358-9-605 709Aamulehti
Pieni Roobertinkatu 11 A
FIN-00130 Helsinki, Finland
Tel: 358-9-853 9560
Fax: 358-9-853 9579Business Magazines/Journals
Kauppalehti (Business daily)
P.O.Box 189
FIN-00101 Helsinki, Finland
Tel: 358-9-507 81
Fax: 358-9-660 383Taloussanomat (Business daily)
P.O. Box 1230
FIN-00101 Helsinki, Finland
Tel: 358-9-1221
Fax: 358-9-122 4070Talouselama (Business weekly)
P.O.Box 920
FIN-00101 Helsinki, Finland
Tel: 358-9-148 801
Fax: 358-9-685 6650Trade Promotion
There are seven fair centers in Finland with approximately 1.4 million visitors in 1998. The Finnish Fair Corporation (Helsinki Fair Center) dominates the market followed by the Jyvaskyla, Turku, Tampere and Lahti Trade Fair Centers. For further information, please contact:
The Finnish Fair Corporation
P.O. Box 21
FIN-00521 Helsinki, Finland
Tel: 358-9-150 91
Fax: 358-9-142 358Turku Fair Center Ltd.
P.O. Box 57
FIN-20201 Turku, Finland
Tel: 358-2-337 111
Fax: 358-2-2401 440Tampere Trade Fairs Ltd.
P.O. Box 163
FIN-33201 Tampere, Finland Tel: 358-3-2516 111
Fax: 358-3-2123 888Jyvaskyla Fair Ltd.
P.O. Box 127
FIN-40101 Jyvaskyla, Finland
Tel:358-14-334 0000
Fax: 358-14-610 272Lahti Fair Ltd.
P.O. Box 106
FIN-15141 Lahti, Finland Tel: 358-3-525 820
Fax: 358-3-525 8225Hartwall Areena/Markkinointi Areena
Karvaamokuja 2
FIN-00380 Helsinki, Finland
Tel: 358-9-3487 0897
Fax: 358-9-3487 0899Pricing Product
All goods and services are subject to VAT, which ranges from 8 percent on books, drugs and pharmaceuticals, 17 percent on agricultural goods to 22 percent on industrial goods. Excise taxes are levied on fuel, electricity, alcohol, beer, tobacco, candy, soft drinks and mineral water.
Imports from the EU (European Union) and EFTA (European Free Trade Association) countries enter Finland duty free if the products have been manufactured in one of these countries. However, import duties are levied on imports from countries such as the United States, Australia, Japan and Canada depending on specific product lines.
Sales Service/Customer Support
As a rule, one exclusive agent/distributor is appointed to cover the entire country. Finnish importers often represent several different product lines. Importers may serve large customers themselves while dealers work with smaller customers, often located outside the Helsinki metropolitan area. Dealers are often specialized in supplying a specific industry area. Training, usually organized and carried out by dealers, is an important aspect. Service points should cover the whole country rather than just the southern parts.
Selling to the Government
The legislation of public procurement became effective in the beginning of 1994. According to the law, all procurement has to be made available for competitive bidding. The legislation applies to purchases above the EU threshold and is binding for both central and local government bodies as well as government or municipality owned private companies in the fields of energy, transport and telecommunications.
Sources of Information - Announcements concerning purchases above the EU threshold are published in the EU supplement of the Official Journal and in the weekly Official Gazette of Finland in a special issue called "Public Procurement". Announcements under the threshold values are quite frequently published in the Official Gazette. Government tenders are also published in electric data nets (EU's TED-data base and the Finnish TATI-data base). For more information on Government procurement, please contact:
Ministry of Trade and Industry
Aleksanterinkatu 4
FIN-00170 Helsinki, Finland
Tel: 358-9-160 3265
Fax: 358-9-160 4022
Contact: Ms. Kirsti VilenProtecting Your Product from IPR Infringement
The Finnish patent and trademark laws are in accordance with the TRIP agreement (Agreement of Trade Related Aspects of Intellectual Property Rights), which provides the highest possible protection on IPR infringement. Trade secrets are protected by the Law of Inappropriate Business Behavior, which enjoins various forms of corporate espionage. In 1991, Finland passed a law granting specific rights to designers of integrated circuit layouts.
Patents: Patents are granted for a 20-year, non-renewable period. American nationals have a one-year period to file a patent application in Finland to receive the benefit of an earlier U.S. filing date. Process patent protection for pharmaceuticals and product patents are currently offered in Finland.
Trademarks: Trademark registration is valid for 10 years and is renewable for like periods. The use of the trademark is not a prerequisite for its registration in Finland. However, the registration may be forfeited after five years if unused without a valid reason. Americans have six months to file an application in Finland after filing in the United States to receive the benefit of the earlier filing date.
Copyrights: See section protection of property rights.
Need for a Local Attorney
As a result of Finland's membership in the EU, many EU directives and regulations have been incorporated into Finnish legislation. It is advisable that U.S. companies planning to operate in Finland or entering into contracts with Finnish companies contact an experienced Finnish attorney for legal advice.
In selecting a Finnish attorney, emphasis should be given to the special knowledge of the attorney in a particular field of law. Language skills and experience in working with U.S. entities should be taken into consideration. A list of Finnish attorneys can be obtained from the American Embassy, Consular Section, Itainen Puistotie 14 B, FIN-00140 Helsinki, Finland, tel: 358-9-171 931 ext. 271, fax: 358-9-652 057.
Performing Due Diligence/Checking Bona Fines of Banks/Agents/Customers
The major Finnish commercial banks service the whole country through branch networks. Commercial banks have extensive foreign networks of branch offices, subsidiaries, consortium banks and representative offices all over the world.
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Note* International Copyright, United States Government, 1998 (or other year of first publication). All rights under foreign copyright laws are reserved. All portions of this publication are protected against any type or form of reproduction, communications to the public and the preparation of adaptations, arrangement and alterations outside the United States. U. S. copyright is not asserted under the U.S. Copyright Law, Title17, United States Code.
